Period: June 10 – 21, 2019
During the last summer season high temperatures and constant flooding in several dairy basins kept milk output in Argentina and Uruguay below the previous year levels. Then starting from May the drier climate improved development and quality of grains, oilseeds and cotton crops in Argentina.
With a significantly ample corn harvest (Safrinha), mainly in Brazil, several South American tambos (dairy farms) reported a relief on feed costs.
During the time period of reference, the climate has been variable in South America. In Brazil, a sunny climate stimulated the rapid growth of corn and other field crops, while in Argentina, humidity conditions hampered soybean harvest.
The lower temperatures in the main regional dairy basins have increased the comfort of the cows and, therefore, milk production has improved. It is expected that milk production will continue to grow during most of the winter season, also supported by the higher milk prices and lower feed costs.
Milk and cream volumes are now readily available for most processing needs across the region.
The European Union and Mercosur states – Argentina, Brazil Paraguay and Uruguay, reached on June 28th a political agreement for a trade agreement.
Following the increased milk production, Skim Milk Powder (SMP) inventories are growing. As a result, SMP export prices shifted lower. However, SMP prices could stabilize or recover very soon, as this market is very volatile within the region.
Whole Milk Powder (WMP) export prices decreased during last month. Prompted by higher farm milk production, the production of WMP is very active while stocks continue building. The current WMP supply overpasses the immediate needs from customers.