In the 25th edition of the digital newsletter for the dairy sector, we can access the update in the month of MAY 2019 the calculation of Reference values of the liter of raw milk developed under the convention INTA-IAPUCo, a work that constitutes a contribution unreleased and featured to generate transparency for the stakeholders of the Dairy Chain. All values presented here were adjusted for inflation rate wholesale using the IPIM (Index of Wholesale Prices Internal) of the INDEC becoming the current prices published by IAPUCo in constant prices of may 2019. This helps for a better understanding of the factors operating in the market.
We present the graph that summarizes the dynamics of the supply and demand of the dairy market argentino in the past 31 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 copied the evolution of inflation while the price received by the producer as well as the reference values in industrial lost purchasing power of accumulating negative balances up to march 2019, a month, from which, and after 16 months, the chain began to accumulate positive balance.
For may 2019 the producer prices exceeded for the first time, the purchasing power of the milk of the 2014 year prior to the crisis, marking a significant recovery (+31% in constant currency so far this year), allowing to overcome the costs of production of the models for the 3rd consecutive month, which was not the case since August, 2017. This recovery price in a good part arises from the increase in the participation on the final values of the dairy, reaching for may almost 35% of the mix, the Total System.
For the industrial side, Smes are showed in purchasing power higher than that of large-scale Industry (+12,2%) for the third consecutive month thanks to the update price of the cheeses that are the dairy most climbed so far in 2019 (Avg. Indec for Hard, Medium and soft : +50,3%). Will also be interesting to analyze the impact that is having on the business Smes proliferation of business of direct sales to the public, in a strategy of members of APYMEL out of the wholesale market and capture a portion of the profit margin on the sale of dairy products. Since September 2018 the big industry are paying in excess of their capacity at the expense of costs imputed (or not provided), fighting between the idleness (last data MINAGRI brand that is receiving 39% of the installed capacity) and the need to move toward a payment system that encourages the production of solids in order to improve the efficiency of their production process.
The values retained net (VRN) for the Dairy Chain were positive for the third time since September 2017, thanks to the marked improvement obtained by the link primary production.
With the values of the milk today, the producer is approaching 0.35 US$/lt locating the value between the cases of higher prices they observed a frequency historic 5% of the months series of 20 years (see "graphicsDistribution price milk...") . This situation could be maintained by the shortage of milk and the new profile competition for the raw material that raises the income of Adecoagro to buy plants Sancor in a Mortar and Chivilcoy.
