Quarterly Argentina Milk Production Update – Jan ’17
Executive Summary
Argentine milk production figures provided by the Argentina Ministry of Agriculture were recently updated with values spanning through the first half of the ’16-’17 production season. Highlights from the updated report include:
Low farmgate milk prices, poor weather, high inflation and increased production costs have taken a toll on producers over recent months, contributing to recent declines in production. According to USDA, corn prices within Argentina increased by nearly 80% throughout the first half of 2016 due to the removal of export controls and the devaluation of the peso. In addition, floods generated by a strong El Niño have affected major milk producing areas. Severe rain experienced over the past several months has forced dairy producers throughout Argentina to use supplemental feed sources within rations as their pastures remain under water.
Recently experienced adverse conditions contributed to the Argentine dairy cow herd contracting by 4.0% throughout 2016, to 1.72 million head, the lowest figure on record. USDA is projecting the Argentine dairy cow herd to decline an additional 5.0% throughout 2017. The YOY decline in the Argentine dairy cow herd would be the fifth experienced in a row.
Argentina is the second largest milk producing country in South American, trailing only Brazil, and the fifth largest global dairy exporter, trailing only New Zealand, the EU-28, the U.S. and Australia. Of the aforementioned major dairy exporting regions, Argentina accounts for 4.0% of total combined milk production and 3.7% of combined cheese, whole milk powder (WMP), butter and nonfat dry milk (NFDM) export volumes.
The bulk of Argentine dairy exports are in the form of cheese and WMP. Argentina was the third largest exporter of WMP throughout 2015, trailing only New Zealand and the EU-28, accounting for 6.2% of global WMP export volumes. From a global perspective, WMP markets may be most affected by a continued decline in Argentine milk production.
- Argentine milk production remained lower on a YOY basis for the 13th consecutive month during Dec ’16, finishing down 19.3%. Low profit margins, poor weather, high inflation and increased production costs have contributed to the recently experienced declines in production.
- Recently experienced adverse conditions contributed to the Argentine dairy cow herd contracting by 4.0% in total throughout 2016. USDA projects the Argentine dairy cow herd will decline an additional 5.0% throughout 2017 to the lowest figure on record.
- Argentina is the fifth largest global dairy exporter, accounting for 3.7% of combined butter, cheese, nonfat dry milk and whole milk powder exports throughout 2015. The bulk of Argentine dairy exports are in the form of cheese and whole milk powder.
Low farmgate milk prices, poor weather, high inflation and increased production costs have taken a toll on producers over recent months, contributing to recent declines in production. According to USDA, corn prices within Argentina increased by nearly 80% throughout the first half of 2016 due to the removal of export controls and the devaluation of the peso. In addition, floods generated by a strong El Niño have affected major milk producing areas. Severe rain experienced over the past several months has forced dairy producers throughout Argentina to use supplemental feed sources within rations as their pastures remain under water.
Recently experienced adverse conditions contributed to the Argentine dairy cow herd contracting by 4.0% throughout 2016, to 1.72 million head, the lowest figure on record. USDA is projecting the Argentine dairy cow herd to decline an additional 5.0% throughout 2017. The YOY decline in the Argentine dairy cow herd would be the fifth experienced in a row.
Argentina is the second largest milk producing country in South American, trailing only Brazil, and the fifth largest global dairy exporter, trailing only New Zealand, the EU-28, the U.S. and Australia. Of the aforementioned major dairy exporting regions, Argentina accounts for 4.0% of total combined milk production and 3.7% of combined cheese, whole milk powder (WMP), butter and nonfat dry milk (NFDM) export volumes.
The bulk of Argentine dairy exports are in the form of cheese and WMP. Argentina was the third largest exporter of WMP throughout 2015, trailing only New Zealand and the EU-28, accounting for 6.2% of global WMP export volumes. From a global perspective, WMP markets may be most affected by a continued decline in Argentine milk production.