Dairy farmers’ marginality supported by contained feed costs [News South America n°16/2019]

Period: November 25 – December 6, 2019

Milk production in Argentina, Uruguay and Paraguay is decreasing seasonally. However, milk volumes are enough to meet most of the food processing industry needs.

According to the latest figures, milk volumes have recently declined in Brazil, and they could be well below the strong demands from dairy processors.

Despite the weak economy and a relatively low currency value, farm gate milk prices have remained marginally above operating costs. In fact, the good quality and availability of feed concentrates have been important factors in mitigating the operating costs of several tambos.

However, some small producers, with no capacity for economies of scale, continue to struggle with small profit margins and have sold part of their livestock to the meat industry.

In Argentina, the recent election of the new president has stirred uncertainty among participants of the country’s dairy industry since it could have an impact on trade agreement between Mercosur and the European Union.

SMP export prices continue to increase on light trading in South America. This niche market remains on a bullish position, parallel with international SMP markets. In the last few weeks, SMP production has been reduced since most processors focus on WMP production. SMP supplies are expected to be short at least during the summer when farm milk output is typically at the lowest seasonal point.

Export prices for WMP shifted slightly down. The WMP production is slowly increasing.

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CLAL.it - Farmgate Milk prices in Argentina

CLAL.it – Farmgate Milk prices in Argentina

Source: USDA summarized by the CLAL Team
Note: assessments about market trend are expressed in US$
More informations about dairy market in Argentina, Brazil and Chile are available on CLAL.it

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The CLAL.it team is composed of young people who with the help of Computer Science study the dairy market and develop tools to provide the Operators of the dairy sector with a comprehensive real-time view of the national and international market trends.

Posted in News South America, None, South America