In the TWELFTH edition of the digital newsletter for the dairy sector, we can access the update in the month of APRIL 2018 the calculation of Reference values of the liter of raw milk developed under the convention INTA-IAPUCo, a work that constitutes a unique and outstanding contribution to build trust between the stakeholders of the Dairy Chain.
We present the graph that summarizes the dynamics of the supply and demand of the dairy market argentino in the past 18 months. Remember that this information should not be taken as a data point accurate given that it arises from more than 500 models evaluated, and presents a large scatter. It is rather a novel tool for actors in the sector to be ORIENTED to interpret what happens between the supply and demand of milk and observe the TREND that the market holds.
We observe an evolution that started in November 2016. Up to march 2017 is a sample of the period lose-lose that covered the 19 months prior to the start of this convention where the price paid for the raw material (blue line) was not covered by the values necessary to cover costs of production of the raw material (dotted line) and exceeded also the possible values of pay for the milk (red line for the Mega and Large-scale Industry and yellow to the Small and Medium-sized dairies). From April 2017 until September 2017, the system generated net positive. But as of January 2018 the costs of producing milk begin a climbing notorious sinking to the production in a drift not previously observed in the whole series. While in all this time, the purchasing power of the large-scale industry was higher than the price received by the producer, the buying capacity of the Smes declined until February 2018, a month, from which starts a recovery.
For APRIL 2018 continue to the margins positive for the industry, while those of the primary production continue to be negative, adding to the complicated situation that was restarted in September, and which will cause a drop in production in the current year. The severity of this is reflected in the following graphic that describes the evolution of net values retained for each link.
The industrial sector, as of April 2017 he began to generate net values retained positive build in the 18 months of the study period +446 million pesoswhile the sector of primary production accumulates in the same period a loss of –2.643 million pesos.
Swept away by the crisis in the primary sector, the system dairy total returns to net values held negative with the aggravating circumstance that the industry also accuses -due to the weight of Smes, which represent the processing of 45% of the receipt total, after 10 months of values retained positive, the fourth month in a row with a net worth negative.
From the outside you start to see sustained demand for dairy, but part of the improvement may be due to the toning of the price of oil, the growing Chinese demand and a smaller projection of the global production. All this contributes to a sustained value to the milk powder (our main dairy exportable) that remains stable in the futures market (around 3,200 US$/ton. until October). This situation, added to our devaluation that has taken the us dollar at 25 pesos presented an outlet for the milk that cannot be absorbed by the domestic market.
As in all crises, the weakest link suffers from the shudder to a greater extent, and this is the producer. In the current circumstances do not mediate a substantial upgrade of the price of the raw material, we will surely see a significant drop in milk reception for the months to come.