Global and Corporate Dairy News
Rabobank: Further upside to price rally:
According to Rabobank’s “Dairy Quarterly Q4 2016” report regarding dairy news, the current rally in global dairy markets has more upside, as significant recovery in output and export availability will be postponed until the second half of 2017, despite improving producer payouts. However, a further strengthening of the American dollar and weaker product demand on the international market, given improving commodity prices, could provide headwinds to the recovery. With falling local milk production and low opening 2017 stocks, the report projects a 20% YOY rise in Chinese dairy imports for 2017 in milk equivalent terms. Across the global dairy complex, commodity prices are tipped to diverge given higher butterfat demand and excess protein inventories. WMP (FOB Oceania) prices are projected to reach a high of US$3,800/t during 1H-17 but fall to US$3,400/t by the end of the year as supply recovers in key export regions. SMP prices are projected to be flat at US$2,500/t over 2017.
Argentina’s WMP exports fall:
Argentina’s dairy shipments declined for the third consecutive month in November – down 24% in YOY terms. Exports for the January to November period were down 17% compared to the same period in 2015, despite a 39% rise in shipments to Brazil. During the first 11 months of 2016, Argentina’s WMP exports to South America were down 40% hit by a 75% fall in shipments to Venezuela. Over the 12-month period to November, Venezuela accounted for just 18% of total Argentinian WMP quantity shipments, down from a high of 57% in October 2015. As well as reduced demand, lower shipments reflect falling local product availability with Argentina’s milk production declining 12.1% between January and November.
US milk output up 2.4%:
US milk production rose 2.4% YOY in November, with cow yields once again accounting for most of the increase. Per cow yields jumped 2.2% while cow numbers rose 0.2% YOY, an increase of 17,000 head on the same month in 2015, and 4,000 more than the previous month. Leap-year adjusted YTD milk growth was 1.5%. Combined milk output growth in south-west states was higher relative to other states for the second consecutive month in November, up 2.6% versus 2.2%. California’s November output was up 0.2% while production in Texas rose 11.4% YOY. Idaho and New Mexico output rose 3.6% and 3.7% relative to the same month last year. Among other major milk-producing states, Wisconsin’s YOY growth rate remained unchanged from the prior month at 2.2%. New York, Pennsylvania and Michigan recorded stronger growth rates of 4.4%, 2.5% and 5.3% respectively.
EU milk supply worsening: EU-28 member countries continue to post worse-than-expected milk output during Q4-16. Based on 32% of Eurostat reported milk for November, output declined 9.7% when compared to the same month in 2015, with Dutch output now flat in YOY terms. Major milk producers such as Germany, France and Ireland, have still not reported actual figures for November. However, based on local weekly information published ahead of official Eurostat figures, our preliminary estimate is that November 2016 total EU-28 milk output declined 4% in YOY terms.
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