Contrary to the expectation of a significant revival in the production of milk in Argentina, the 2018 finally close with an accumulated close to a +4.5% higher litraje 2017. It is not for less.., when in 2017 it seemed that at last out of the crisis longest history, the shudder devaluatorio, the setting, the tariff scheme full of conspiracies, as in the game of the Goose, we sent several boxes to the back.
We share some of the numbers that we're looking to generate concepts that provide us with guidance on the expectations that we have for the 2019 and the decisions to produce in the coming year:
The rising costs of the primary production in constant currency (+5% over dec/17), banking fees for the clouds (+174%) and the price of milk is adjusting to a slower pace of inflation and the falling dollar (-9% lower than perceived in December of 2017, adjusted by IPIM, and -25% in its value in dollars in December previous year) are factors depressants for the production of milk that is already fading toward the end of this year. The delay in recovering the purchasing power of the raw material (now 12 $/litre would recover the purchasing power compared to concentrates), which affects the account of power to a greater extent, will conspire against the production of the first half of 2019. The involvement of the producer on the value of the equivalent litre of the Total System reached 30.9 per cent, being close to 31.7% average in 2014, the year prior to the crisis.
The industry you will need milk in 2019, the year in which it is expected a revival of the competition that lies dormant since the beginning of 2017 when it was rendered the crisis of SANCOR. With sales in the domestic market with -6% loss, the landscape of consumption is not encouraging, the basket of dairy has lost -21% of its value compared with December 2017 and re-emerged the idea of thinking in the development of projects for direct sale to the public on the part of the big industries (copy what you already are doing with successful Smes). The export of dairy products will certainly be a great goal, especially of those value-added products. It is encouraging to see that the largest company in Argentina is veering in a paradigm shift business to a profile exporter with the changes of managers that were made recently. The State we could claim a measure to foster the dairy -and other regional economies - as it would be to backtrack to the deductions and reduction of withdrawals implemented last September that provide little, and hurt a lot!. This, as expressed by a study of the Sociedad Rural Argentina, it will enable an improvement in price to the producer of 1.25 pesos/liter.
The external market the higher expectations we have in China, the largest importer of milk on the planet, continue to grow in the consumption of dairy (2018 closed with a +6 more al 2017). The fall in the oil price (-14% over dec/17) will attenuate the purchases of the oil-rich countries that are responsible for about half of the purchases of dairy and Russia is little that can wait for now and is already being displaced by the 2° position as the world's largest importer of dairy products in Mexico. A fact encouraging it is to the decline of stocks of skim milk powder both in the European Union (-34%) and the Usa (-20%). The production of the major exporters of dairy products would close with a +1% from 2017, a percentage similar to the one observed in the year 2017...a rate of growth absorbable by the growing global demand.
The volatility price is a feature of the market, with which he will have to live permanently (see graph Evolution prices Oceania):
