There are many variables at play in our dairy that have changed and are acting on the internal market...the fate of the 80% of our milk. The deductions have returned to the values set by the administration of Macri in 2018, restandole the profitability of exports of milk powder. Likewise, you need to see what happens with our foreign trade since the SBA presents an improved price/ton +20,2% with respects to dec/18 (row 20 Box Indicators of the dairy chain) and an improvement in the exchange rate, net export +52,7% (row 21). Export that 20% of the production is paramount to maintain or raise the prices of the Dairy Chain, a necessary thing to get the producer to the adjustment that is necessary to encourage the undecided production. With 34.4% of participation in the Value-Liter Equivalent Total System (VLE-TS) calculated by IAPUCo (row 16 in the Table), to obtain 0,30 US$/lt 18 $/lt, the VLE-TS should 49,88 $/lt Equivalent to 54,94 $/lt Equivalent...a +10% increase.
The low power internal (OCLA estimated an annualized 177 lt/hab/year 2019 vs 190-2018 (row 14) tap the market by adding a "surplus" of 5.7% in excess of the annual production in argentina. To recover that consumption (13 lt/hab/year for a population of 45 million, totalling an equivalent of 1.6 million litres per day) the rope is tensará soon as the primary production is located with fewer cows and with individual production increased to what we are used to seeing on a national average. Interest rates are down and there is a concern of the administration of Fernandez in improving the consumer, something that would affect favorably the dairy chain as a whole. 5.7% surplus generated by the low power need to add a production level of +4% greater for dec/2019 on dec/18 and stocks of +9.7% equivalent litres with respect to dec/2018, a total of approximately one month's milk.
By the side of the external front, China continues year after year to increase its demand for dairy (estimate 2019 with +12% above 2018). The production of the major exporters is stagnant (-0.2%), for the case of Oceania in the fall (New Zealand:-1% and Australia -fifth supplier to the Asian Giant - with -7% less), which stops at the 2020 at a healthy voltage. All dairy products remain firmly in your quote.
The tambero you need to recover 0,30 US$/litre, which was up to the STEP, and our perception is that it takes a little more than what is seen at the beginning of 2019 when, beginning in February 2019 she began to climb sharply (to coincide with the entry of Adecoagro in the ring who began deriving its 350,000 litres of own production at its new plant). The least amount of dairy cows existing (our accounts suggest that 250,000 cows less compared to 2015) and the increased competition for raw materials complicate the parsimony of the demand.
[twitter-follow screen_name=’dairylando’]
