Argentinian dairy outlook

Published 3 July 19

Argentinian dairy exports for Q1 softened from last year as tight domestic supplies put pressure on trade. Argentina is one of the world’s key dairy exporting regions, but milk production for the country remains below last year amid ongoing economic and weather concerns.

Argentinian milk production figures for May were estimated at 785 million litres, a decrease of 1.7% year on year. The gap between production figures has narrowed considerably from earlier in the season. Production for April was 5% lower than the same period last year.

The rise in milk production could be attributed to stronger margins. Large soyabean and corn harvests across South America resulted in plentiful supplies which has lowered feed prices in recent weeks. Tighter domestic milk supplies contributed to milk price increases of over 9% for May from April, according to Quarterra. Higher milk prices and low feed prices should encourage production in the run up to the peak in October.

Dairy exports have largely fallen from last year. Exports of milk powder in the first quarter this year were 8,300 tonnes less than the same period last year. Lower milk production has reduced throughput in factories, and processors have prioritised maintaining domestic supplies over exports. This should look to reverse, if milk production continues to increase with lower feed prices and better margins. The recently signed EU-Mercosur trade agreement raises the tariff-free limits for the South American members, which should give the opportunity for increases of dairy exports to the EU.

Argentina Milk Prod

Alex Cook