The remarkable strength of the international dairy markets continues, however, there are signs that demand has eased slightly and prices are likely to moderate in the next several months. Nevertheless, supplies will likely remain tight particularly since the anticipated jump in Oceania production is not expected to materialize as a result of adverse milk producing weather in New Zealand. Consequently, although Australian milk production for the 2005/06 season is forecast to expand, this is likely to be offset by production shortfalls in New Zealand, absent a late season recovery. As a result, Oceania milk output is currently forecast to remain largely unchanged from last season.