The new production season for Oceania has begun [The Austral - July 2021]

The Austral news offers the latest information on the dairy market in Oceania and South America.

Oceania: agreement to phase out tariffs on dairy exports between Australia and United Kingdom

Most dairy producers have dried off most cows

With an increase of +7.6% in May 2021, the dairy season in New Zealand ended with +2.6% on a tonnage basis. New Zealand sources believe that supplemental feeding helped to boost New Zealand milk  production in the season just ended.
On June 1st, the new season began and at this time of year most dairy producers have dried off most cows.

There is concern about the labor shortages due to the likelihood that migrant dairy workers will not be able to come into New Zealand to work for a number of months due to COVID-19 related travel restrictions.

CLAL.it - New Zealand milk production

CLAL.it – New Zealand milk production

Milk production in Australia recorded +2.6% in May 2021 and the overall trend of the first 11 months of the 2020-21 season reports an increase by +0.8%.

July 1 marked the opening of the new milk season in Australia. During the last few weeks leading into the new season something of a “bidding war” broke out. Major processors began lifting offering prices to be sure they have enough milk geographically located for dairy manufacturing plants they operate. As a country with a huge land area and climatic variety, prices offered in varied regions do differ from other regions.

The prime ministers of Australia and the United Kingdom reached an agreement in principle affecting dairy trade. Upon ratification, tariffs on Australian dairy exports to the UK will be eliminated over five years.
Following the announcement of this agreement, many dairy firms in New Zealand are pressuring officials there to secure a similar deal. There seems to be general agreement in New Zealand to pursue this course of action, however, dairy officials anticipate there is not likely to be an identical deal as was reached with Australia.

In May 2021, the export of dairy products increased both for New Zealand (+21.1%) and for Australia (+47.3%). China is the main destination for New Zealand’s WMP, Drinking Milk and Cheese, and for Australia’s WMP and SMP.

Dairy prices range widened

Average dairy prices in Oceania decreased and the price range widened. The lower range dip reflects the last GDT event of 6 July 2021 and the upper range prices reflect the interest of Asian buyers. Only the SMP showed a slowdown even in the upper range price, reflecting supply that has grown beyond demand.

South America: Argentina is the first WMP supplier for Algeria

Milk supply also increased in May 2021 in Argentina and Uruguay, by +3.4% and +6.2% respectively. The current production is meeting most production needs from dairy processors.

Cheese and Yogurt sales decrease seasonally. The priority destination in several processing plants is UHT milk.

SMP and WMP stock levels are increasing and their prices reflect the downward movement of the main international markets.

In 2021, Argentina is becoming Algeria’s main WMP supplier country. In the period January-May 2021, Argentina’s WMP exports to Algeria amounted to 39,365 tons (+66.8% compared to the same period in 2020).

CLAL.it - Argentina: WMP Export

CLAL.it – Argentina: WMP Export

Source: CLAL processing on USDA, IHS and local sources.
Note: assessments about market trend are expressed in US$

Posted in Argentina_en, Australia_, New Zealand, News Oceania EN, Oceania_, South America

Fonterra sets opening 2021/22 forecast Farmgate Milk Price [The Austral - June 2021]

The Austral news offers the latest information on the dairy market in Oceania and South America.

Oceania: increase in exports of Fresh Cheeses to Southeast Asia

In Australia, the new dairy season will start on July 1st. The data for the first 9 months of the 2020/21 season show an increase of +0.7%, compared to the period July 2019 – March 2020, with a production in March lower than the previous year (-1.8%). Mice have overrun New South Wales. The situation comes from from heavy rain, which created bumper crops, leading to ideal conditions for mice breeding.

New Zealand
Milk production+2.4%Jun20 – Apr21

The new dairy season in New Zealand began on 1 June and is currently near the annual low. In April, production increased by 11.7% compared to the same month last year, benefiting from favourable end of season milk production conditions in key farming regions of the North Island.
The South Island was recently hit by heavy flooding, which damaged infrastructure, fences and winter crops.

On May 26, Fonterra announced the opening Farmgate Milk Price range for the new 2021/22 New Zealand season: NZD 7.25 – 8.75 per kgMS, with an average price of NZD 8 per kgMS, +6% compared to the May forecast for the 2020/21 season.

Comparing the price of 4,71 €/kgMS to the prices of European milk is obtained:

  • 32.74 €/100 kg of milk with 4.0% fat and 3.4% di protein weight/weight (ref. Germany)

(current exchange rate taken as reference: 1 NZD = 0,58837543 €).

Fonterra’s CEO expectations

CEO Miles Hurrell says that the improving global economic environment and strong demand for dairy, relative to supply, are sitting behind the forecast Farmgate Milk Price range. Based on these dynamics, along with where the NZ dollar is sitting relative to the US dollar, milk prices are expected to remain at current levels for the near future.

In April 2021, exports of Fresh Cheeses increased significantly, both for Australia (10,026 tons, +34.7%) and New Zealand (6,486 tons, +75.1%). Southeast Asia remains the main importing region, driven by China and Japan.

In Australia, exports of SMP (19,161 tons, +58.3%) and Butter (2,671 tons, +317.6%) also increased.

The prices of the dairy commodities in Oceania decreased and the Global Dairy Trade event on June 15 confirmed this trend, recording an average price change of -1.3%. There were reductions for WMP, SMP and Butter, while the prices of AMF and Cheddar slightly increased.

CLAL.it - Australia: Fresh Cheese Export

CLAL.it – Australia: Fresh Cheese Export

South America: autumn temperatures support healthy milk production

In Argentina, the mild climate of the first four months improved the conditions of the pastures, favoring greater milk production (+4.5% compared to January-April 2020).

In April 2021, milk deliveries to Argentina (+3.5%) and Uruguay (+5.8%) increased, despite the increase in feeding costs. Chile’s milk supply slightly declined (-0.3%).

While remaining at a high level, the average prices of SMP and WMP in South America show a small decrease compared to the previous weeks, reflecting the global market trends.

CLAL.it - South America: WMP and SMP price

CLAL.it – South America: WMP and SMP price

Source: CLAL processing on USDA, IHS and local sources.
Note: assessments about market trend are expressed in US$

Posted in News Oceania EN, Oceania_, South America

Corn and Soybean: prices and market updates | June 2021

CORN

USDA released the June update on the Corn and Soybean markets.

Agricultural Year 2021/2022

The Beginning Stocks of Corn for the 2021/22 season are estimated to decrease compared to the May forecast, affected by the revisions on the current year. The projections on Global Production, Trade and Demand for Corn are substantially unchanged compared to the estimates of May, consequently the Ending Stocks are revised downwards.

corn-stocks-beginning

Agricultural Year 2020/2021

Corn Production for the season September 2020 – August 2021 has been revised downwards. Brazil, during the month of May, recordedlower than normal rainfall in the Central-West and South regions, negatively affecting the yields of the second Corn harvest.

As for the United States, for the current year, the data on Corn exports and on Corn used for the production of ethanol have been revised upwards, reducing stocks.
Ethanol prices have risen significantly in recent months, supported by a demand that is almost back to levels seen prior to COVID-19.

Market Prices

Average Corn prices in early June remain high, but at a lower level than the peaks reached in May. The average selling prices of Corn from 1 to 11 June in the USA (North West Iowa) stood at $ 276.2/Ton, +0.8% compared to May.

In Italy, the prices of National Corn quoted on 10 June in Bologna are up by + 1.5% compared to the previous quotation, ranging between 270 €/Ton and 276 €/Ton. However, the average prices in June are slightly down compared to May.

image (3)

SOY

Agricultural Year 2021/2022

Unlike Corn, the forecasts on the Beginning Soybean Stocks for the 2021/22 season are revised up by 1.5 Mio Tons, affected by the revisions on the September 2020 – August 2021 season. Projections on Global Soybean Production, Trade and Demand are substantially stable compared to the forecast of May. Consequently, the Ending Stocks are revised upwards.

soy-stocks-beginning

Agricultural Year 2020/2021

Soybean production for the current year (Sep 2020 – Aug 2021) has been revised upwards, driven by a higher Soybean harvest in Brazil.

Market Prices

The average selling prices of Soybeans recorded from 1 to 14 June in the USA (Western Illinois) stood at $ 605.8/Ton, down by -1.4% compared to the May average. Different situation in Brazil, where the average Soybean prices recorded in the same period in Paranà are up by + 1.7% in dollars compared to the month of May, reaching $ 548.5/Ton.

In Italy, the average price of Soybeans listed on 10 June in Bologna is 638 €/Ton, down by -2.0% compared to the previous price.

Bazil - Soybeans: monthly average price trend

For more details on the dairy, agricultural and swine markets, follow us on our websites CLAL.it and TESEO.clal.it.

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Posted in Brazil, Corn, Soy, United States

Corn and Soybean: prices and market updates | May 2021 [VIDEO]

First USDA Forecast for the 2021-2022 season for the Corn and Soybean markets: global production is estimated to increase, positively affecting the ending stocks, while prices in the main markets remain high.

Michele from the CLAL.it and TESEO Team illustrates the forecast and the market trends in the following video.

2021-05-21

CORN 

Global Corn Production for the 2021/22 season is estimated at 1,190 million tons, up 5.4% compared to the previous year. Increases are expected in all main producing countries, with record harvests for Brazil, China and Ukraine.

The Global Demand for Corn for the 2021/22 season is also estimated to increase, driven mainly by the strong demand for animal feed.

Corn exports for the next season are estimated to grow by +5.7%, driven by Brazil (+ 22.9%), Argentina (+ 5.9%) and Ukraine (+ 32.6%). United States exports are expected to decrease by -11.7% due to the greater competitiveness of Ukraine and Russia.

corn-export

The Global Ending Stocks of Corn, resulting from the balance between production, demand and export, are estimated to increase by + 3.1%, with important variations in the United States (+ 19.9%) and in Brazil (+ 70.7%) .

In the main global markets, the average selling prices of Corn from 1 to 12 May recorded further increases, with significant variations for the USA (+ 21.4%), Argentina (+ 12.1% in dollars) and France (+ 10.8%) compared to the April prices.

In Italy, Corn prices are increasing. Current prices in Bologna for Italian corn range between 277€/Ton and 283€/Ton.

corn-prices

SOY

Global Soybean Production for the 2021/22 season is estimated at 386 Mio Ton, up by  6.2% compared to the previous year, driven by production increases in Brazil, the United States and Argentina.

Imports are estimated to increase by + 2.9%, supported by Chinese demand, which is expected to grow to 103 million tons for the year 2021/22. Exports show signs of stability, with an increase estimated for Brazil (+ 8.1%) offset by a decline expected for the United States (-9.0%).

soybean-export

With demand growing at a slower pace than production, the Global Ending Stocks of Soybeans are revised positively, + 5.3% compared to the 2020/21 season.

The rally of Soybeans prices continues in the first days of May. The average selling prices of Soybeans from 1 to 12 May in the USA (Western Illinois) stood at $ 627 / Ton, + 9.8% compared to the previous month.
Similar trend for Brazil, where the average Soybean prices from 1 to 12 May recorded a variation of + 7.2% in dollars compared to April, and for Italy, with the average price of Soybeans listed in Bologna which has exceeded 700 € / Ton.

soybean-prices

For more details on the dairy, agricultural and swine markets, follow us on our websites CLAL.it and TESEO.clal.it.

Tagged with: ,
Posted in Corn, Soy

Dairy supply, demand and prices in Oceania and South America [The Austral - May 2021]

The Austral news concentrates the latest information on the dairy market in Oceania and South America.

Oceania: Fonterra has invested in a new foodservice application centre in China

Australian current milk production is near the seasonal low. Fonterra announced its opening milk price for Australia for the new season 2021/22: 6,55 AUD/kg MS. The price is 15 cents/kg MS higher than last year’s opening price.

Comparing the price of 4,17 €/kgMS to the prices of European milk is obtained:

  • 30,86 €/100 kg of milk with 4.0% fat and 3.4% di protein weight/weight (ref. Germany)

(current exchange rate taken as reference: 1 AUD = 0,63629103 €).

Milk deliveries New Zealand+1.8%Jun20 – Mar21

New Zealand milk volumes in March were 9.8% more than last year on a volume basis. Recent rain on the North island has helped maintain pasture conditions. The South Island remains quite dry and some dairy producers were prompted to dry their cows a bit earlier than normal as the season ends. In March 2021, New Zealand dairy exports grew by +22.2%, with significant increases in China, towards which exports of Butter, Cream and Cheese more than doubled.

As of 2024 dairy export to China will be duty-free

Under the upgraded FTA, all New Zealand dairy exports to China will be duty-free as of January 1, 2024.

Fonterra has invested in a new food service application centre in Guangzhou where it tests dairy innovations with its Chinese customers. Dairy products with added value are highly appreciated by the Chinese market.

CLAL.it - New Zealand dairy export to China

CLAL.it – New Zealand dairy export to China

New Zealand milk production is near the seasonal low, as the end of the season on May 31 moves closer, and upward dairy commodity price pressure is expected.

In the North Island areas of Waikato and Taranaki there is a greater concentration of Butter plants, and the increase in milk production in recent months in these areas is absorbed by a greater production of Butter. The addition of butter to GDT volumes resulted in weaker butter prices.

The price of Cheddar is also decreasing. Price quotes from the U.S. are often lower than from Oceania. This has imposed some downward pressure on Oceania Cheddar pricing.

SMP and WMP buying interest from China and countries in Southeast Asia has helped maintain firming prices.

The GDT event on May 18 recorded a slight decline in the average price (-0.2%), compared to the previous event. Positive changes for Cheddar (+1%) and SMP (+0.7%) and decreases for WMP (-0.2%) and Burro (-2.2%).

CLAL.it - Butter prices and offered volumes at GDT

CLAL.it – Butter prices and offered volumes at GDT

South America: some pressure on margins for dairy operators

The data for the first quarter of 2021 relating to milk deliveries in South America show increases in Argentina (+4.8%), Brazil (+1.3%, provisional figure), Chile (+0.4%) and Uruguay ( +6.8%).

Brazilian milk producers are experiencing an unfavorable scenario, due to the sharp increase in production costs and reductions in the price of milk. However, the weekly trend in Corn and Soybean prices signals a slight decrease in progress.

Although some locations in Brazil have been hit by the rains, the water deficit situation remains, with a negative impact on soil moisture.

Corn and Soybean prices in Argentina are at historical highs

In Argentina, corn and soybean prices in the first half of May are at historic highs: ARS 21,583 / ton for Corn and ARS 32,306 / ton for Soybeans.

Milk Powders prices are decreasing. After a period of increased demand for immediate needs, the SMP trading activities have slowed in the Southern Cone (Chile, Argentina, Uruguay and Paraguay). There is also a slight decline in demand for WMP. Manufacturers’ inventory levels are limited.

TESEO.clal.it - Corn prices in Argentina

TESEO.clal.it – Corn prices in Argentina

Source: CLAL processing on USDA, IHS and local sources.
Note: assessments about market trend are expressed in US$

Posted in Oceania_, South America

Supply, demand and prices in Oceania and South America [The Austral - April 2021]

The Austral news concentrates the latest information on the dairy market in Oceania and South America.

Oceania: demand from Southeast Asian Countries is supporting prices

Milk production in Australia in March decreased by -1.8% compared to March 2020. Overall, the growth in the period July 2020 – March 2021 was + 0.7% compared to the same period of the previous year.

Australia continued negotiations with the EU concerning terms of a possible free trade agreement. Under consideration is the extent to which Australian sustainability standards are consistent with those in the EU. Negotiations are scheduled to resume in June.

CLAL.it - Australia Milk Production

CLAL.it – Australia Milk Production

In New Zealand, the production season will end on May 31st. Several operators estimate an increase in production between 1% and 1.5% for the current season. Currently, the production of New Zealand milk in the period June 2020 – February 2021 is increasing by + 1.0%.

New Zealand: Cream Export +42.1%Jan-Feb 2021 y-o-y

Dairy exports of New Zealand, which account for 95% of production as confirmed by the dairy farmer Andrew Hoggard in the interview for CLAL, in the first two months of 2021 recorded an increase of + 0.8% compared to January-February 2020. Positive trends for WMP (+ 5.1%), Cheese (+ 9.2%), Milk (+ 21.0%) and Cream (+ 42.1%), while Butter (-7.3%) and SMP (-25.0%) slowed down.

In Oceania, the demand for Dairy products from China, Japan and other Southeast Asian countries is particularly active, especially for Butter and WMP. Many Buyers prefer to buy products from Oceania over European ones, despite the higher price.
Strong Asian demand, coupled with declining seasonal production, is supporting the prices of different dairy products.

The latest GDT event on April 20 shows signs of stability, recording an average price change of -0.1% compared to the previous event. Positive changes for Cheddar (+ 1.2%) and WMP (+ 0.4%), while Butter recorded a slight decrease. SMP prices are unchanged.

CLAL.it - New Zealand Export of Cream

CLAL.it – New Zealand Export of Cream

South America: significant increases in milk production

CLAL.it - Argentina Precipitation

CLAL.it – Argentina Precipitation

In Argentina and Uruguay, Milk production in the first two months of 2021 recorded significant increases, respectively of + 5.1% and + 5.9% compared to January-February 2020. Also in Chile and Brazil the volumes of milk produced in the first two months are higher than 2020.

In South America, between the end of March and the first two weeks of April, various rainfall contributed to a better quality of grass in the pastures. In Brazil, drier climatic conditions are worrying farmers about the second Corn crop.
The SMN (Servicio Meteorológico Nacional) weather forecast for the April-June quarter in South America estimates lower than normal rainfall and higher than normal temperatures.

Soybean prices remain high. According to some operators in the sector, the global demand for Soy will continue to grow. Rising feed costs and operating costs in some South American areas could put pressure on farmers’ margins.

The milk powder market in South America remains stable, with less interest in exports. The prices of the WMP and SMP are slightly up, respectively + 1.0% and + 0.8% compared to the previous quotation.

TESEO.clal.it - Argentina Soybean Prices

TESEO.clal.it – Argentina Soybean Prices

Source: CLAL processing on USDA, IHS and local sources.
Note: assessments about market trend are expressed inUS$

Posted in Oceania_, South America

Reducing market volatility with open markets: the opinion of the dairy farmer Andrew Hoggard

Andrew Hoggard - President of Federated Farmers of New Zealand

Andrew Hoggard – President of Federated Farmers of New Zealand

From Andrew Hoggard, President of Federated Farmers of New Zealand

The world of dairy is an interesting one.  On one hand you have great collaboration from all parts of the dairy sector value chain, globally coming together through organisations such as the International Dairy Federation.  We work together in the pre-competitive space on global standards, sharing knowledge on food safety and systems, and linking in with dairy groups such as the Dairy Sustainability Framework and the Global Dairy Platform, which have focuses around improving the environmental outcomes from dairy internationally and the marketing and value of dairy. Yet in the same breath dairy is one of the most political hot potatoes out there when it comes to supports and market access. Why dairy has such a high level of politicization around it? I do not know. If anything, given the hours that dairy farmers have to put in compared to other farmers, you would think they should be too tired to get political. Or is it recognition of the incredible nutritional value that dairy provides?

The impact of the volatility on the dairy farms


I have been asked to share my opinions on some of these contentious issues. One of the things I have picked up in my experience and dialogue with dairy farmers around the world is that market volatility hits us all, and that volatility can have a profound impact on the sustainability and viability of many dairy farms. Unfortunately, what I see whenever this happens is that globally you have farmers calling for actions that quite frankly will only further embed that volatility and make it worse.

If we look at the dairy market globally only a very small percentage of global dairy consumption is truly open to free trade. If we take my country, New Zealand, as an example: we export 95% of the dairy we produce, yet we are only able to access around 13% of world consumption at tariff rates less than 10%.
The NZ milk price effectively mirrors the world milk price and there is very little if any lag. So really this 13% of world consumption we can access is effectively what sets the world milk price.

The international milk market is a big bucket, and this tradeable component is a small glass

Picture this simple analogy: the international milk market is a big bucket, and this tradeable component is a small glass. If we get an increase in supply globally, we don’t put it in the bucket, we instead overflow the glass. Likewise, if there is increased demand it comes from the glass as well. This is where the volatility comes from. Because the level of milk in the glass is varying wildly as opposed to what would happen if we had the bucket available. This is then compounded by the supports that are given to farmers in many parts of the world that create a lag till when the true market signal hits them, meaning they get either the signal to increase or reduce supply well after the event. This creates further distortions in the marketplace, leading to more volatility.

If we had no glass and just the bucket, would we be getting such wildly varying prices? Most unlikely.

Farmers would be better off with open markets

I strongly believe that farmers globally would be better off if markets were more open, and then over time we look at ensuring that any support payments are not linked to production, which could have trade distorting implications.  Are those support payments really required?  We see globally some of the support is linked to outcomes that society supposedly wants, or if there isn’t support payments then this is often used as a reason for non-tariff barriers. Any non-tariff barrier should be based on true science, not just societies’ whim of the moment. The problem with just changing rules, such as banning glyphosphate for example, is that it removes any incentive for the consumer to offer more for the product they supposedly want. In fact, rules that are based on the whim of generally a vocal minority of society only keep milk prices down for farmers.

These rules can take many forms. I know from talking to French farmers they struggle to be able to add to their herds and have larger farms, because there is a view among urban voters that large farms are bad. But really? My grandfather milked at the most around 80 cows, I milk 560 cows.  Have I sacrificed outcomes to achieve this? No, what has happened is that technology allows me to do more than what my grandfather could ever do. The size of the farm is irrelevant; it’s the outcomes that are important.

I often hear from urban people who say that all these rules won’t be a problem for the small family farm, just the big corporate farm. The reality is completely the opposite. The big corporate farm can afford to hire someone to take care of all the compliance and form-filling, whereas the small family farm drowns under the weight of paperwork.

Consumers willing to pay the correct prices

So, I guess to sum up my views, we need a much more open global dairy market, we need rules that are based solely in science and focused around actual outcomes, and we need the consumer to be willing to pay the correct price to enable the farmer to produce the product if they want certain attributes with the product. End of the day, all the dairy farmers around the world currently produce just under 900 billion litres of milk per year.  If the entire population of the planet was to get the recommended daily intake of dairy we would need to produce 1.8 trillion litres of milk. That’s a strong market signal that we need fewer barriers rather than more of them.

Andrew Hoggard 3

Posted in Farming, Milk, New Zealand

Corn and Soybean: prices and market updates | April 2021

CORN

USDA released the April update on the Corn and Soybean markets.

World Corn production for the year 2020/21 is estimated at 1,137 Mio Ton, slightly increasing compared to the previous forecast, with positive changes in the European Union (including the United Kingdom), Pakistan and Ecuador. Production in Argentina was revised downward, due to the drought conditions caused by the climatic phenomenon La Niña.

Following an expected increase in Corn consumption, global ending stocks were revised downwards, with an expected change of -6.3% compared to the previous year.

World Corn Production, Utilization and Stocks

World Corn Production, Utilization and Stocks

The average selling prices from April 1st to 15th recorded in West Iowa (USA) stood at $218/Ton, +5.4% compared to the previous month.
The average price of Corn recorded during the same period in Bordeaux (France) was €210.2/Ton, slightly decreasing compared to the average of March 2021.

Current prices in Bologna for Italian corn range between €233/Ton and €239/Ton.

SOY

World Soybean production for the current season is expected to increase by 1.4 Million Tons compared to the previous forecast. In Brazil, production is revised upwards (+ 1.5% compared to the previous forecast), as it could be supported by higher production yields.

Global ending Soybean stocks for the 2020/21 season have been positively revised compared to the previous forecast, while remaining at levels well below the 2019/20 season (-9.9%).

 

Map of Soybean Yields

Map of Soybean Yields

The average selling prices of Soybeans from April 1st to 15th in the USA were $547.7/Ton, an increase of + 0.1% compared to the previous month.

Soybean prices in Italy continue to rise. The latest quotation in Bologna records an average price of €693/Ton, with a variation of + 6.1% compared to the previous quotation.

For more details on the dairy, agricultural and swine markets, follow us on our websites CLAL.it and TESEO.clal.it.

Tagged with: ,
Posted in Corn, Soy

Future perspectives and news from the South American Dairy Sector

By Observatory of the Argentine Dairy Chain – OCLA, Foundation for the Promotion and Development of Argentine Dairy – FunPEL

General features

The pandemic / quarantine / vaccines effect generates different direct and indirect impacts on employment, inflation, and the development of economic activities in local economies.

In general, climatic conditions have improved for corn and soybeans crops as well as for the development of pastures and the preparation of reserves (hay and silage).

The costs of milk production were strongly affected by the increase in the cost of concentrated foods (corn and soybeans).

Argentina

In the first two months, milk production increased by 5.1% compared to the previous year (+ 4.0% estimated for the first quarter), prices in local currency and in dollars have been improving (US $ 0.29 / liter for March).

CLAL.it - Argentina Milk Deliveries

CLAL.it – Argentina Milk Deliveries

Brazil

Milk production in Brazil lost strength in the fourth quarter of 2020 and advanced only 0.6% compared to the last quarter of 2019. The outlook for the first half of 2021 continues to be slow supply, given that the margins of the Producers continue to suffer from price stability and rising food costs.

Price of milk for March 2021: US $ 0.344 / liter (R $ 1.9384 to 5.64 R $ / US $).

Regarding the demand for dairy products in Brazil, the end of emergency aid in December 2020 had a significant negative impact on consumption in the first quarter of 2021. An extension of emergency aid from April 2021 may bring some recovery in demand in the second quarter, but it will also depend on the pace of the economy.

CLAL.it - Brazil Milk Deliveries

CLAL.it – Brazil Milk Deliveries

Chile

In the first two months of 2021 there was an interannual increase in milk production of 0.5%, the price for the month of February was US $ 0.41 / liter, an interannual increase of the order of 20.6%.

From the national dairy context, a growing consumption stands out that should continue to invigorate the market and strengthen prices, a welcome condition as it faces a rise in raw materials used for the production of concentrated foods and other inputs required in the fields like fertilizers and building materials.

CLAL.it - Chile Milk Deliveries

CLAL.it – Chile Milk Deliveries

Uruguay

In the first two months of the year, production grew by 5.9% year-on-year and in the last 12 months, the growth was 5.5%.

The average price to the producer was US $ 0.32 / liter, which implies a monthly increase of 2.4% and a year-on-year fall of 0.9%.

CLAL.it - Uruguay Milk Deliveries

CLAL.it – Uruguay Milk Deliveries

Final comment

The future prospects for dairy in the extreme south of the American continent, where the main milk-producing countries are located, are very favorable from the point of view of their comparative advantages (surface area, climate, water, etc.) but unfortunately they are not available in general competitive conditions that allow these dairies to deploy their full potential to be major players in the world dairy.

ocla

Sources: DNL-MAGyP and INDEC – Argentina, Cepea Esalq USP and Rabobank – Brazil, Fedeleche and ODEPA – Chile, INALE – Uruguay.

Posted in Argentina_en, Brazil, Chile, South America, Uruguay_en

Will Chinese demand continue to fuel prices in Oceania? [The Austral - March 2021]

The Austral news concentrates the latest information on the dairy market in Oceania and South America.

Oceania: New Zealand export expands in the North Asia

In Australia, recent rainfall could lead to an improvement in pasture growth, supporting milk production and reducing the need to supplement feed.

Milk production in New Zealand in January increased by +0.8% compared to January 2020. Overall, the increase in the period June 2020 – January 2021 was +0.8% compared to the same period of the previous year.

Australian export of packaged milk in the year 2020 increased by +6.1%, this increase is confirmed in January 2021, with a variation of +36.3%. The main destinations are China, Singapore and Malaysia.

CLAL.it - Australia Dairy Export

CLAL.it – Australia Dairy Export

In Oceania there is a lower availability of milk for processing companies, due to seasonality. Furthermore, in the first weeks of March, New Zealand exports to North Asia were particularly active.

Consequently, the prices of the dairy products recorded significant increases, especially for Butter (+8.9%) and WMP (+11.9%), and are higher than European prices.

CLAL.it - WMP prices in Oceania and in Germany

CLAL.it – WMP prices in Oceania and in Germany

This trend was anticipated by the Global Dairy Trade event on March 2, which recorded an average price increase of +15.0%. Subsequently, the latest GDT event on March 16 has recorded an average price change of -3.8% compared to the previous event. The variations were negative for WMP (-6.2%) and Butter (-2.8%), while SMP and Cheddar were substantially stable. However, average prices remain above the February levels.

Strong Chinese demand therefore contributes to strengthening prices. However, it is not known what the level of Chinese stocks is, nor if China intends to slow down purchases.

South America: SMP and WMP import from Brazil jumps

CLAL.it - Brazil Precipitation, February 28 - March 6

CLAL.it – Brazil Precipitation, February 28 – March 6

In South America, the beginning of March was characterized by rain showers which contributed to a better pasture growth. Some dairy operators have reported slight increases in milk production in some areas of Southern Brazil, Argentina and Uruguay.

Market participants argue that higher feed prices are increasing milk production costs.

Stocks of drinking milk are decreasing due to strong retail demand. Butterfat demands are healthy in the cream-based dairy markets, especially from ice cream/frozen dessert manufacturers.

Brazil’s import of milk powders continues to increase at a rapid pace. In the period January – February it recorded variations of +94.7% for the WMP and +101.6% for the SMP, compared to the same period of the previous year.

The reduced availability of milk has favoured an increase in the prices of milk powders, especially for the WMP.

CLAL.it - Brazil Import of WMP

CLAL.it – Brazil Import of WMP

Source: CLAL processing on USDA, IHS and local sources.
Note: assessments about market trend are expressed inUS$

Posted in Oceania_, South America