June 7, 2017

Argentine Exports Down 23%

 |  By: Mike Opperman

While milk production in Argentina is forecasted to increase 2% in 2017 over last year, USDA has adjusted forecasted exports down almost 23% due to slow recovery in the dairy sector from a disastrous 2016.

Floods and other adverse weather events created catastrophic situations in 2016. According to the USDA Foreign Agricultural Service, between 500 to 600 dairy farms went out of business in 2016. For this reason, production capacity and subsequent recovery is limited, a situation exacerbated by the news that Sancor, Argentina’s largest dairy cooperative, is facing bankruptcy.

Better weather conditions and better prices have fueled the recovery. The milk price for April 2017 was $0.34 US per liter, which represents a modest 2% increase from March 2017 but a whopping 59% increase from April 2016.

Despite better prices, margins remain tight as farmers are forced to feed more corn due to floods and otherwise wet conditions.

Of the roughly 10 million metric tons of Argentine production in 2016—off 12% from 2016 due to floods and poor infrastructure—16.6% was exported. That puts Argentina in the top-five of export regions, behind the EU, U.S., New Zealand and Australia.