Period: August 3 – 28, 2020
In Argentina, Uruguay and Chile, Milk production continues to increase mainly due to improved weather conditions and good quality pastures. The increase in Milk production is expected to continue during the spring season.
The increase in production and the moderate operating costs helped to support farmers’ margins, even as farm-gate milk prices remained steady.
Raw milk supplies are enough to meet dairy processors’ needs. The industries in the sector are producing more UHT Milk to meet the needs of consumers, moreover, the production of cheese destined for pizzerias and restaurants is becoming more active as the food service sector continues to slowly reenter the economy.
Brazil-0.5% milk production January – June 2020 y-o-y
In Brazil, the dry climate, which has persisted for several weeks, is hampering the growth and the quality of pastures. As a result, milk production is lower than last year (January – June -0.5%). According to some operators in the sector, the climate situation is expected to improve in the spring season.
Unlike the rest of South America, in Brazil, raw milk volumes are less than enough to meet most processing needs. Dairy manufacturers continue to prioritize the production of UHT milk over other dairy products.
In the past couple of weeks, no major changes had happened in the South American skim milk powder (SMP) market, reflected on steady export prices.
WMP export prices, on the other hand, are decreasing: with more milk available for dryers, the amount of WMP on the market is increasing, leading to a surplus.
Some operators manage to export the WMP produced in excess, exploiting the weakness of the local currency. In Argentina, the export of WMP continues to be strongly positive, recording in July an increase of +185.6%. The main purchasing country remains Algeria.