In the second edition of the digital newsletter for the dairy sector, we can access the update in the month of June 2017 for the calculation of Reference values of the liter of raw milk developed under the convention INTA-IAPUCo, a work that constitutes a huge 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 argentina in the last 8 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 new 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.
We see there an evolution that started in November 2016. As of February 2017 is a sample of the period lose-lose that spanned the 18 months prior to the start of this convention where the price paid for the raw material (blue line) was not covered by the values necessary to cover costs of production of the raw material (dotted line) and exceeded the possible values of pay for the milk (red and yellow lines). As of April 2017, the system begins to generate net positive and we met in June 2017 with a situation where the curve of price generates positive margins for the primary production and also for the sector processor (Smes ripped out better then decline and the big industry, generating for June, a top margin). The evolution for the coming months will largely depend on how it follows the domestic consumption and the delivery of milk "surplus", that while there is no official information, it seems to be moderately higher than last year for this period.
It is interesting to observe the evolution of Net Values Retained (VNRS) by each actor of the dairy chain, noting an accumulated loss of +62% higher in the entire series for the sector of primary production:
Clarifications: The reference values of the Demand (MyGEs= Medium-sized and Large enterprises and small-medium enterprises and those with a receipt under 500,000 lt diaries) are those possible to pay for the purchase of raw material without marginal revenue for the industry, and the reference values of Offer are that primary production would need to receive to cover their costs also no income marginal to the producer.