In the 26th edition of the digital newsletter for the dairy sector, we can access the update in the month of JUNE 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 32 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 June 2019 the producer prices exceeded for the second time, the purchasing power of the milk of the 2014 year prior to the crisis, marking a significant recovery (+34% in constant currency so far this year), allowing to overcome the costs of production of the models for the 4th 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 June almost 36% of the mix, the Total System (the largest share of the sample from 2013 to 2019).
For the industrial side, Smes are showed in purchasing power higher than that of large-scale Industry (+6%) for the fourth consecutive month thanks to the update price of the cheeses that are the dairy most climbed so far in 2019 (Average INDEC for Hard, Medium and soft : +56%). We have begun to see significant sales of cheese intended for the EXTERNAL market, which by the deterioration of the business exporter have turned to the domestic market jamming the sales and depressing prices that will surely be posted in the next publication of the INDEC. Because of this the industry Smes claim removed from withholding on the export of dairy.
It will 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 (this is something that you should copy large-scale industry).
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 (it is estimated that the industrial sector as a whole is working at 50%) 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 fourth time since September 2017, thanks to the marked improvement obtained by the link primary production.
The drums are growing in production at a rate higher than the brand's total stats at the national level, suggesting a current scenario with the lowest number of milking cows. Probably the production of this spring, to be similar to or a little lower than that of 2018.
