Soybean global production for the season 2019/20 is forecast at 341,76 Mio Tons, -4.7% compared to 2018/19 season, but increasing compared to the previous estimates. This increase reflects the higher projected production in Brazil and Argentina.

For both South American Countries is expected a further increase in production of 1 Mio Ton compared to February prediction, reaching respectively 126 Mio Tons in Brazil and 54 Mio Tons in Argentina.

Brazil confirms itself as the world’s main Soybean producer in the 2019/2020 season, with an expected increment of 7.7% compared to the previous season. The increase of production in Argentina is mainly due to overall favourable conditions in higher-yielding central and north-western farming areas. Forecast for Soybean production in the US is unchanged at 96.84 Mio Tons (-19.6% compared to the previous season).

Considering a higher Soybean production in South America and an expected steady trend for consumption, it is expected a smaller decrease in stocks compared to the previous estimates.

Soybean export is positive, China main destination

Global Soybean export is expected to increase, +2.4% compared to the last season, driven by the higher exports for the main exporting Countries: US (+4.4%) and Brazil (+3.2%). This increase largely offset the projected decrease in export for Argentina (-9.9%).

China, which has accounted for the 57% of world Soybean import in the season 2018/2019, imported 88 Mio Tons in 2019, of which 57.7 Mio Tons from Brazil (65% of the total) and 17 Mio Tons from US (19% of the total). China’s average import price in December 2019 was 408 $/Ton.

TESEO – Soybean Production and Export

In Australia, milk production has been steady in recent months, with rainfall offsetting the impact of dry conditions in many regions and helping to check higher feed costs.

In January 2020, New Zealand milk production was down 0.7% compared to January 2019. Although the rain of the last weeks, the drought continues to be a problem for New Zealand dairy producers. The Agriculture Minister of New Zealand has now expanded drought classifications to more regions, leading to government assistance in affected areas.

Price of Dairy Commodities 

Butter prices are increasing in Oceania. The spread of Coronavirus does not seem to have slowed exports, considering that most Butter exports go to countries other than China. The prices are supported by the seasonal decrease in production. This trend is confirmed by the last Global Dairy Trade (GDT) event of March 17, which has recorded an increase of 0.3% for Butter and 1% for AMF.

Butter manufacturers are trying to fill orders, with the aim of building inventories for the next few months, where the production will reach the seasonal minimum.

Cheddar prices are decreasing. Buyers are currently well stocked and contracted for coming months. Slowed north Asian buying related to coronavirus is not believed to be much of a factor in this market. Cheddar production is simply a bit ahead of current demand. The last GDT event of March 17 has recorded an increase of the average Cheddar price of 2.6%.

Milk powder prices are decreasing in Oceania. The Coronavirus impact keeps slowing the demand of SMP and WMP from North Asia and China, and slowing Oceania’s export consequently. The results of the last GDT event confirm the decrease of milk powder prices, respectively -8,2% for SMP and -4.2% for WMP.

CLAL.it – Comparative overview of SMP prices

Uncertainty prevails on the market, the question is whether the lower export of SMP and WMP of (?) the last months will be compensated, once the normality returns.

The seasonal decrease in production that we are recording in Oceania could contain the diminish of milk powder prices. 

CLAL.it – GDT of March 17

– Dairy season: July, 1st – June, 30th (Australia), June, 1st – May, 31st (New Zealand);
– Source: USDA summarized by the CLAL Team

 The climate in Argentina, Brazil and Uruguay has been mainly dry and warm during the last weeks, promoting the growth of second-crop corn in southern Brazil and improved the development of summer grains in Argentina.

The good fodder quality and favourable weather led to an improvement in pasture quality and in farm milk yields in South America. Milk production is abundant and, apart from Brazil,it is able to meet manufacturing needs within the industry.

The demand of Fluid Milk and UHT Milk is improving for schools, grocery stores and restaurants. Cream demand is still in a firm position as supplies remain below adequate to meet all the needs of buyers and end users. However, cream volumes are anticipated to increase throughout the fall season.

CLAL.it – Brazil per capita Milk consumption

Due to a greater availability of milk, SMP production is higher, highlighting an increase of stocks.

SMP and WMP prices are decreasing, following the international bearish trend.

Milk powder demand is limited due to the outbreak of Coronavirus, especially in Brazil. This is leading to most Argentinian and Uruguayan manufacturers to lower their prices to be more attractive to buyers.

See all the information
in the new webpage dedicated to
the dairy market in South America
on CLAL.it >

CLAL.it – Brazil per capita Butter consumption

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

In Australia, January – December 2019 milk production decreased 4.3% from 2018. July – January milk production is lower of 3.7% compared to the same period of last year.

Considering the fire and drought impacts, as well as other indicators, dairy experts in Australia expect seasonal milk production to finish the production year below last season volumes. Weaker milk production is leading to dairy plant closures.

In Western Australia a combination of production costs and what is perceived as weak milk pay prices are resulting in more herd culling or outright herd sales for slaughter or export.

In New Zealand  a lower milk production is reported, which is helping to support farm-gate milk prices while the demand from China is lower, due to the impact of coronavirus.

Dry weather in the North and flooding in the South are impacting milk production. The government has formally declared drought conditions in some areas of the country, even well-prepared dairy producers are vulnerable to overwhelmingly prolonged periods of inadequate rain.

The quarantines in China have resulted in a big decline in eating out and in store food shopping in affected areas. Dairy processing is reduced and internal logistics have slowed, especially trucking.This virus confirms itself as a major unknown risk factor.

Prices of Dairy Commodities

Oceania Butter prices moved lower, mainly because of two factors. First, the lower prices in Western Europe are leading buyers on sourcing from there. Second, some buyers already stocked are more comfortable in slowing purchases in Oceania. This is occurring even as Oceania continues to experience seasonally declining milk production, leading to declining butter churning. Supplies are tight in Australia.

SMP prices are steady. Most of Oceania SMP customers are contracted. There are growing stocks of SMP in Western Europe, where the SMP price range is lower than in Oceania. The shipments to China are slowing resulting from Coronavirus side effects.

Cheddar prices in Oceania are stronger. While China is a customer for cheddar from New Zealand, the array of other export destinations keeps cheddar exports moving. Tight supplies in Australia have limited volumes available for export. Cheddar production is expected to slow down in coming months, so there is some confidence in ongoing pricing holding some strength.

CLAL.it – New Zealand Cheese Export

WMP prices in Oceania are lower. There are more uncommitted stocks available, hit by slowing exports to China attributed to coronavirus. Uncertainty over the pacing of possible future contracting is also a factor weighing on prices.

Even more uncertainty is once normality returns, will stocks move to China to make up for slowed current shipments?

The Global Dairy Trade Event of February 4 has recorded an overall variation of -1.2% compared to the previous event, confirming the decrease in prices of the dairy products.

- Assessments about market trend are expressed in US$;
– Dairy season: July, 1st – June, 30th (Australia), June, 1st – May, 31st (New Zealand);
– Source: USDA summarized by the CLAL Team

During the end of 2019 and the beginning of 2020, the southeast region of Brazil suffered of dry weather, which reduced the volume and quality of fodder in many dairy farms. As a result, milk cow production fell considerably during that time.

Currently, farm milk output in Brazil is steadily recovering as sporadic rains benefited pasture and emerging corn in some key dairy basins and crop areas throughout south-eastern Brazil.

Despite the recovering in production, raw milk supply remains short, below levels from the previous year, reflecting relatively high prices supported also by a strong demand among dairy manufacturers.

CLAL.it – Brazil Milk Deliveries

In Argentina and Uruguay, the mild weather favoured development of corn and soybean crops and helped to boost forage quality and volume in several dairy farms.

Farm milk production has stabilized, but is expected to improve ahead of the fall season. Fat/protein milk components remain at low levels, contributing to higher cream premiums paid by buyers.

Raw milk intakes are still adequate to fulfil most requests from manufacturers of bottled/UHT Milk, Cheese, and Yogurt. In contrast, cream supplies are very tight, while demands from butter churners, ice cream, and milk caramel processors continues to be strong.

In terms of production, SMP manufacturing is more active compared to the previous month, with more inventories available in the market. On the other hand, there is stable production of WMP, with several buyers that are adopting a wait and see approach before making any purchase or sign any contract.

In South America, export prices for SMP and WMP moved down. Some dairy operators attribute the drop in prices to the effect of Coronavirus in the international markets. In addition, for the WMP, other contacts suggest that also the new Argentinian export tariff is putting pressure on prices. However, it is not yet known, with certainty, what awaits for these markets.

See all the information
in the new webpage dedicated to
the dairy market in South America
on CLAL.it >

CLAL.it – Export prices of WMP 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

World corn production for the season 2019/20 is estimated at 1111.59 Mio Tons, unchanged compared to the last outlook. The overall production is expected to decrease by 1% compared to the previous season.

CLAL.it – Corn Production

The US lower Corn production forecast (-4.5%) could limits the surplus available to the export, which is expected in significant decrease. Considering that US Mais production accounts for 31.3% of the total production, this trend could have an impact over global prices.

According to USDA data, Chinese Corn production for the season 2019/20 is projected higher by 1.3% compared to last season, reaching 260.77 Mio Tons, but still not enough to completely meet domestic demand.

In Brazil, Corn collection has been already completed for about 50% of total harvested areas. Local farmers are waiting for adequate rains, which could prevent crop loss.

Favorable climate conditions in Argentina are supporting Corn production, estimated at 50 Mio Tons for the current season, slightly decreasing compared to the excellent 2018/19 season.

Production in Ukraine, the fourth world Corn exporter, is expected to be at the same high levels of the previous season. Ukraine accounts only for the 3% of the global Corn production but it has a significant share on the global Corn export (19%).

Global Corn stocks, according to USDA data, are lowered for the third consecutive year.

CLAL.it – Corn Production and Export

Export in decline for the main global Players

World Corn export for the season 2019/20 is expected lower compared to the last season. The main exporting countries are reducing their estimates: -16.5% for the US, -14.3% for Argentina and -6.9% for Brazil.

The delay of the brazilian second crop could affect the export of the United States. The exported volumes from the US could overcome the current estimates if the brazilian supply will not be enough to satisfy the demand from trade partners, or if the trade deal US-China will lead to higher chinese purchases.
Projections for trade flows with China are still uncertain following the current issues related to the Coronavirus outbreaks.

CLAL.it – Corn Export

Market uncertainty, Futures quotes slowing down

The ongoing spread of the Coronavirus through China are generating uncertainty in the financial and commodity markets. This uncertainty is also reflected in the futures’ market, which have maintained a range between $3.95 and $4.05 from mid-December until the first outbreaks of the Coronavirus in late January.  Since the emergence of the disease has begun, old crop futures continue to grind lower with July futures closing on February 25 at $3.79.

Corn July 2020 Futures – CME Group

Futures highlight closed contracts with lower prices compared to the previous weeks. Considering the lower Corn production expected for the season 2019/20, it could be possible to see a market Rally on Corn quotes in the next few months

In Australia, dairy impacts of the raging fires remain to be quantified. Producers had already been reducing herd numbers due to tight feed. The fire aftermath left many dead cows and destroyed crops, both planted and in storage. The effects will negatively ricochet in coming months, and longer.

Government officials have warned people in New South Wales to prepare for possible flooding as torrential rain continues over the weekend. Of course, this will be helpful in continuing to extinguish lingering fires, but it remains a tough season for Australian people.

Most of New Zealand is extremely dry at the moment, especially the North Island. Dairy officials expect that the drought will adversely impact milk supplies for February, and probably for March as well. Southland and the West Coast have had the other extreme recently, with some flooding from heavy rain. New Zealanders expect the dry conditions on the North Island to have a larger impact on milk production than the wet conditions on the South Island.

Heavy rains have left swollen rivers still rising in some areas. Some reports highlight that more than 100 dairy farms in New Zealand are being severely impacted by the extensive flooding. Many farms are either under water or cut off, with access roads flooded.

Farm impacted by flooding; Source: /High Country Helicopters

Prices of Dairy Commodities

Oceania WMP and SMP prices are lower. The decline is most often attributed to the impact of coronavirus, which has slowed the purchases of China. The decline in milk powder prices is confirmed by the last GDT event of February 18, where both powders decreased by -2.6%.

Butter prices in Oceania are lower according to the last GDT event, that recorded a decrease of -3.9% for Butter and of -5.5% for AMF. This decrease has approached the price of Oceania to the European ones.

Oceania Cheese prices moved higher, +5,3% at the GDT event. Oceania dairy sources are not surprised considering that production in New Zealand is ever lower and supplies have become tighter.

CLAL.it – WMP price at GDT 18/02

CLAL.it – SMP price at GDT 18/02

- Assessments about market trend are expressed in US$;
– Dairy season: July, 1st – June, 30th (Australia), June, 1st – May, 31st (New Zealand);
– Source: USDA summarized by the CLAL Team

Farm milk output is seasonally declining in the key dairy basins of South America. High summer temperatures had taken a toll on cows’ comfort, lowering their productive milk yields. Dryness returned in South America diminishing the quality of pasture in several dairy areas.

Milk and cream volumes are less than adequate to meet all processing needs, while butterfat demands strengthen among the cream based dairy markets, particularly from ice cream/frozen dessert makers.

According to some industry participants, the political and economic instability, especially in the Southern Cone region, has contributed to the decrease in the internal consumption of dairy products.

SMP export prices in South America have been volatile in recent weeks, which is typical of a niche market, especially in uncertain circumstances, such as a new export tariff proposed in Argentina. SMP production is unsteady, market conditions are expected to be clearer during the next upcoming weeks.

Export prices for WMP in South America shifted up on moderate trading. The current prices are the reflection of the bullish pricing trends of the regional butterfat market and the global protein markets. WMP manufacturing is less active compared to one month ago.

The new proposed export tariff in Argentina continues being a main topic of discussion among the dairy industry in South America, as several industry participants are not sure of the immediate impact to the milk powder export prices.

See all the information
in the new webpage dedicated to
the dairy market in South America
on CLAL.it >

CLAL.it – Export of WMP and SMP 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

India has the highest livestock population in the world, including cattle, sheep, buffaloes and goats. Milk most consumed worldwide is from cattle; while in India is preferred buffalo’s milk, which has a higher fat content (7,4%).

The Indian model for the dairy industry is mainly co-operative, with the purpose of helping Indian farmers to sell their milk at the highest possible price without the interference of intermediaries. This model has helped an increase in milk production, which in some regions grew higher than local demand.

Cooperative companies represent more than 55% of Indian milk transformation process. Several brands were created with this model, like: Amul, Nandini and Mother Dairy.

Indian Dairy Market

Indian Dairy Market is mainly based on milk, which represents for Amul, the main Indian co-operative, 55% of its revenue, while the remaining 45% comes from the other dairy products.

The main reason for this growing interest at the Indian dairy market for competitors worldwide is due to the increase of consumption of dairy products, which allow to make higher revenue compared to the raw milk.

Markets for value-added dairy products such as cheese, yogurts or flavoured milk are still weak, but here the companies are focusing their own efforts, because it is possible to make higher margins and to differentiate the offer introducing new products to the market.

Indian cooperatives had largely stuck to basic milk, butter, processed cheese slices and ice cream for many decades, leaving a gap in the market that allowed some of the new players to come in with new product offerings.

CLAL.it – India Dairy Export

Despite being the world’s largest producer, the Indian dairy sector is by and large in the primitive stage of development and modernisation. The average output of an Indian cow is significantly lower compared to its American counterpart The main reasons for this situation are lack of healthcare, lack of use of scientific practices in milking, poor quality of fodder, and poor transportation facilities.

However, the dairy sector is in continuous improvement, helped by a good demand and a sustaining growth of the Indian economy.

India is an important scenario for the future of the dairy industry, where it’s possible to see a change in consumption and in the companies’ design. The co-operative model that has allowed the development of this sector is now challenged by the main global players, while the tastes of the consumers are now oriented to new dairy products.

The questions that we need to face now are: the qualitative and quantitative improvement of the farm milk, matched with an increasing productivity, will bring India in the future to carve out a space on the dairy global market? In addition, how will evolve the Indian model based on little farms scattered on the villages that characterize the Country, with the aim to maintain at the minimum the difference between the price paid at the farmer and the price paid by the final consumer? 

CLAL.it – India milk production and export

CLAL.it – Amul presentation at CLAL Dairy Forum

Source: FnbNews

Australia received recent rains throughout much of the country, which led to some greening of crops and more planting. Anyway, hay availability remains tight in much of Australia and fire damage to some pastures and feed supplies is reported.

According to Fonterra’s latest report, New Zealand’s weather throughout December was varied, with warm and dry conditions in the North Island, impacting on pasture quality, and excellent conditions in the South Island, allowing for excellent pasture growth rates.

CLAL.it – New Zealand cumulative rainfall 30/01 – 05/02

Dairy Commodities Prices

The Global Dairy Trade Event of February 4 has recorded a decline in SMP (-4.2%) and WMP (-6.2%) prices, and an increase in butter prices (+0.2%), compared to the average prices of the previous event. The overall variation is -4.7%, recording the lowest average price since last September.

CLAL.it – GDT average winning price

The spread of the Coronavirus in China has affected the market, and could have impacted chinese consumption, especially during the Lunar New Year, started on January 25. This could lead to a decrease in New Zealand export, considering that China is the main importer of Milk Powder.

Butter prices moved higher. Demand is very active, but supply is tight.

Australian demand for New Zealand cheese is higher due to the disappointing Australian milk production results so far. New Zealand cheese export during the period January – December is 4.1 % higher than the same period last year. Considering this, Cheddar prices are stronger in Oceania, and this strength is expected to continue into at least February.

CLAL.it – Cheese export of New Zealand

- Assessments about market trend are expressed in US$;
– Dairy season: July, 1st – June, 30th (Australia), June, 1st – May, 31st (New Zealand);
– Source: USDA summarized by the CLAL Team

After several weeks of dryness, moderate to heavy rains returned to the central/southern regions of South America. In general, these showers were beneficial to several corn and soybean plantation areas, increasing soil moisture. However, this wet climate hindered milk yields due to sanitary issues in a few farms.

Milk and cream outputs are seasonally lower due to higher summer temperatures. Demands for milk and cream are very strong, but the volumes are less than sufficient to satisfy most of these needs, with the exception of bottled milk and cheese.

In South America SMP prices inched up, following global trends. In some instances, these higher prices have been slowing the SMP trading activity.

Most balancing plants are focusing on WMP production instead of SMP. In general, demand for SMP is strong, but supplies are limited, thus the market remains bullish.

Unlike the SMP market, WMP prices are steady in South America, with no significant changes on trading. Although farm milk intakes are seasonally lower, milk volumes are relatively available for WMP processing. In this way, WMP manufacturing is active throughout the region, while inventories are in balance with most needs.

See all the information
in the new webpage dedicated to
the dairy market in South America
on CLAL.it >

CLAL.it – Stock SMP Argentina

CLAL.it – Stock WMP 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

Cows in areas threatened by fire in some cases, can be moved to safer areas. Options are limited because cows need a place where there is food, water and the possibility to milk them.

As 2019 ended, strong hay demand in Australia has become even stronger. Continuing drought in many areas, coupled with fires burning since October, contribute to this situation.

CLAL.it – Australia Wildfires Map | last update 22/01

New Zealand milk production in December 2019 is down 0.5 percent from December 2018. This results in current season milk production through December being 0.43 percent lower than this point last season. However, milk solids production is still up 0.4 percent compared to June – December 2018.

This season weather in New Zealand has been dry, with less rain than normal, negatively affecting not only milk production but also supplementary crops. That could lead to some producers having to buy imported feed at current higher spot prices, adversely affecting margins. There is still time for rain to help, but for now, uncertainty prevails.

CLAL.it – Milk Production in New Zealand

Dairy Commodities Prices

The dairy commodities prices are increasing, due to the seasonal decline in milk production and a good demand.

Production of Butter and Cheddar is focused on filling existing deals, leaving the stocks mostly steady, while there are limited stocks of SMP to meet demand from buyers.

Manufacturers tend to favour WMP production over other dairy products; nevertheless,  a decline in production has been recorded.

The Global Dairy Trade of January 21 has confirmed an increase in prices, recording an overall variation of +1.7% compared to the last GDT event.

CLAL.it Results of GDT 21/01

- Assessments about market trend are expressed in US$;
– Dairy season: July, 1st – June, 30th (Australia), June, 1st – May, 31st (New Zealand);
– Source: USDA summarized by the CLAL Team

World production

Global Soybean production for 2019/2020 season, is forecast at 337.70 Mio Tons, -5.7% compared to the 2018/2019 season, but it is still slightly above the level of the previous forecast.

Soybean total use is continuously growing, and given the lower expected production, ending stocks should reach 96.67 Mio Tons (-12,34%).

Soybean production in Brazil, expected to be the world’s main producer in the 2019/2020 season, should reach 123 Mio Tons (+5.1% compared to 2018/2019 season). United States’ production is decreasing (19.6%) due to the diminishing of U.S yield of land, especially in North Dakota and South Dakota.

Global Export

Global export of Soybean for 219/2020 season is expected almost unchanged compared to the previous season. Higher predicted exports from Brazil and U.S. (overall +1,5%) compensate for the expected decrease from Argentina.

Brazil average export price in October is 0.37$ per Kg, while U.S. average export price is 0.36$ per Kg, both prices are increasing compared to last month.

Global Import

For the new season, China, the main world Soybean importer, should import more volumes: 85 Mio Tons, +3% compared to 2018/2019 season. China’s average import price in November is 0.40$ per Kg.

Italian Import

In the first 10 months of 2019, Italy increased Soybean imports: +29% compared to January-October 2018. Italy has recorded an overall variation of +84.2% of the imported volumes from U.S. and Brazil, which remain the main suppliers.

In the past couple of weeks, hotter climate conditions prevailed in Argentina, causing dryness in several dairy areas, reducing the volume and quality of forage. However, grain stocks remain broad throughout the continent at affordable prices for dairy operators.

Milk production at farm level is seasonally declining in Argentina and Uruguay, but has stabilized in Brazil. Apart from Brazil, milk intakes are enough to cover most processing needs. However, cream volumes are still too short to entirely satisfy the demand of favourite summer dairy products, such as ice cream and frozen desserts. Indeed, the levels of butterfat and protein component are lower because of the warm summer temperatures affecting cows’ comfort.

In Argentina, the newly elected president announced a possible implementation of export tariffs on agricultural commodities, including corn, soybean, dairy powders, among others, as a measure to increase government revenues. The imposition of this measure could discourage production and export of these products.

Skim Milk Powder (SMP) export prices adjusted down in line with WMP bearish pricing trends. SMP demand from the food processing industry is good, but less strong compared to the past quarter (Q4) manufacturing. SMP production is active and stocks are slowly growing.

Export prices for Whole Milk Powder (WMP) adjusted down. WMP production is active, but not at full capacity, since the supply milk is moderate. Consequently, WMP inventories are steady to slightly building.

See all the information
in the new webpage dedicated to
the dairy market in South America
on CLAL.it >

CLAL.it – Price of SMP and WMP in South America

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

Milk production in Australia continues the seasonal decline. During November, milk production was 3.4 percent below November last year.

High heat records were broken in the last weeks in Victoria. Melbourne record temperatures were into the 100° Fahrenheit (38° Celsius). Current milk supplies are being impacted by the current extreme weather conditions. 

Australia continues to struggle from a nationwide fire crisis. Wildfires have been burning in various areas for months. The current focal area is Victoria and New South Wales, which areas cover together approximately 78% of Australia’s milk production. It is very uncertain how long the fires will burn, or in which direction they may move in future weeks.

Ongoing drought is pushing feed and irrigation costs higher. The result is continuing disappointing margins for some Australian dairy producers.

CLAL.it – Milk Production in Australia

New Zealand production volumes are still relatively high. Heavy rains have led to flood waters in some South Island dairy areas, stopping some milk collection. In areas where rain was not excessive, it helped keeping good pasture growth.

There is increasingly voiced concern from agricultural lenders about dairy producer debt. This has led to more conservative lending practices. Mitigating this, more strength in New Zealand farmgate milk prices is expected for the current season.

Market activity in both countries has been quiet during the two-week holiday period.

Dairy Commodities Prices

Butter prices in Oceania moved lower during the first weeks of December, and now are steady. Butter production in Australia is active, while New Zealand dairy manufacturers tend to send milk to WMP rather than butter.

Skim Milk Powder prices moved lower during the first weeks of December and now they are unchanged when uncommitted SMP supplies are unexpectedly available.

This decline was unexpected by many dairy industry professionals in both commodities prices. Global demand remains good.

In Oceania, cheddar prices are unchanged. Demand remains good, especially within Australia.

Whole Milk Powder prices moved lower during the first weeks of December and they have remained unchanged in the last weeks. New Zealand WMP production continues to be active. Extra milk is often channelled to WMP over other dairy products, as current production is needed to build stocks to meet demand when seasonal milk production declines further.

The Global Dairy Trade of January 7 has given a result of +2,8% in the average price of the different commodities. This increase is probably due to the lower availability of milk.

CLAL.it – Results of GDT January 7

- Assessments about market trend are expressed in US$;
– Dairy season: July, 1st – June, 30th (Australia), June, 1st – May, 31st (New Zealand);
– Source: USDA summarized by the CLAL Team

World Corn production for the 2019-20 season, which began on September 1, 2019, is estimated at 1108.62 Mio Tons, +0.6% from November outlook. 

Production is expected to decrease by 1.4% compared to the previous season.

The two main world producers of Corn have opposite trends: a lower production is expected for United States (-5.3%), partially offset by higher expectations for China (+1.3%), reflecting increases to both cultivated area and yield. Corn production forecast is unchanged for Brazil and slightly higher for the EU-28 (+0.5%).

U.S. ethanol production is expected to be higher for the months of November and December.

Global Export

World Corn exports for the 2019-20 season are expected at 166.51 Mio Tons, -7.6% compared to the 2018-19 season, lower from the record level anticipated in the recent forecasts.
A decrease in exports is estimated for the 4 main players (United States, Brazil, Argentina and Ukraine), with an overall reduction of 8.3%.

Global Import

The European Union, the main Corn importer, should reduce its purchases (-16.7%).
The growing trend of imports continues for Mexico (+4.8%) and Vietnam (+12.7%), which now ranks 4th among the global.
World Corn imports are expected higher (+2.9%) for the 2019-20 season.

Italian Import

Italy for the period January-September 2019 increased its imports of Corn by 11.4%. Italian imports from Hungary, Slovenia, Romania and Croatia, are growing sharply, with an overall variation of +43.8%; Ukraina, instead, has reduced its exports towards Italy.

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.

See all the information
in the new webpage dedicated to
the dairy market in South America
on CLAL.it >

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

Milk production in Australia during October was 5.5% below October last year. The current season milk production through October is 5.8% lower than July-October 2018.

The fires burning in Australia for weeks continue to be a big problem, and great anxiety is present.

In New Zealand, recent weather conditions are reported as decent. Forage quality is good for dairy producers. A key variable to be followed at this time is the pace of the decline in milk production from the seasonal peak.

Dairy Commodities Prices

Oceania Butter prices are lower, as butter production is close to seasonal high levels. Even if milk production has begun to decline, Butter remains available since many buyers are already covered.

Australian butter demand is steady. New Zealand Butter export is good, and stocks seem able to meet demand.

Skimmed Milk Powder (SMP) production is higher in Oceania, as demand for SMP remains firm.

Cheddar prices are stronger also thanks to an active competition among buyers. Cheese production is mostly steady as some manufacturers are keeping milk in cheese plants as a priority.

Whole Milk Powder (WMP) prices in Oceania are steady to higher. WMP production is contracting because of the lowering milk production. There is good demand for utilization in nutritional and reconstituted beverage markets for developing countries.

CLAL.it – Price of SMP in Oceania

- Assessments about market trend are expressed in US$;
– Dairy season: July, 1st – June, 30th (Australia), June, 1st – May, 31st (New Zealand);
– Source: USDA summarized by the CLAL Team

Daytime temperatures continue to rise in South America, boosting heat stress on dairy cows and diminishing farm milk production, particularly in Argentina, Chile and Uruguay.

In other countries of the continent such as Brazil, Perú, and Ecuador, farm milk intakes are at or reaching the peak of the year.

Milk volumes are still adequate to meet the main dairy manufacturing needs in the key exporter countries, particularly Argentina and Uruguay.

Milk supplies moving into dairy powder processing are less than usual, making it impossible for balancing plants to reach full capacity.

SMP export prices adjusted higher in South America. SMP production is very limited as most processors are focusing on converting less than usual whole milk volumes into WMP to meet contractual requirements.

WMP export prices are higher, prompted by a strong demand, but also by higher manufacturing costs. The WMP market tone remains on a firmer position as supply is not enough to meet customers’ immediate needs.

See all the information
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CLAL.it – Milk Deliveries in South America

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

Ireland is leading the climb with an increase in exported quantities of +154.9% in October. Of the SMP imported from China in October, 12% comes from Ireland.

The question remains: is the competitiveness of European SMP price, compared to that of New Zealand, the main driver of this increase?

Overall, China’s dairy imports in October 2019 increased by +7.3% in volume and decreased by -0.5% in value, compared with October 2018.

CLAL.it – China’s Dairy Import – Jan-Oct 2019

Global Snapshot, from CLAL.it Home page

Analyze China’s dairy market by using the updated Slideshow >