In the THIRTEENTH edition of the digital newsletter for the dairy sector, we can access the update in the month of MAY 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 19 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.
The analysis starts in November of 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 that are needed to cover the 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. This added to the tenuous situation of the Smes are combined to that of 2018 to accumulate values retained negative of the whole chain:
The industrial sector, as of April 2017 he began to retain net values positive accumulating in the 19 months of the period analyzed +346 million pesoswhile the sector of primary production accumulates in the same period a abultadísima loss –3.333 million pesos.
The evolution of relative prices will mark the 2018 as the worst year of the crisis tambera started in may 2015. In the graph below, we can see the shot of the dollar (the 67% of the costs of milk production are tied to the american dollar), the increase of food (80% corn + 20% pellet soy) key input for the cost of feeding of dairy cattle, as well as the soybean reference to contracts for the rental (49% of the land in production is rented), and of the growing value of fuel (diesel affects around 17% of the costs of production):
In the graph we see as of may 2015 is the start of a drift of the inputs with respect to the milk, a situation that continued for 24 months up to April 2017 month in which you initiate a recovery of the price of the raw material. As of January 2018 the variables are escaping again but with intensity significantly higher than the previous times. The point of balance requires 9$/liter (30 hp US$/lt) to achieve the triggered inputs.
Fortunately the external front has turned out to be profitable thanks to this devaluation, and it is expected that the polveras begin to search for milk to build their businesses. The power to pay +20% over the current price of the milk would lead to a recovery of the price paid to the producer.