Argentina’s uncertain exports
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Prevailing extraordinary factors make it difficult to estimate Argentinian exports for the rest of the year and the coming year, according to the US Department of Agriculture’s Foreign Agricultural Service. Other factors have been added to the recurrent volatility of the international dairy market.
On the one hand, China needs milk, but has introduced confinement measures in its two largest cities, Beijing and Shanghai, the engines that drive much of the nation’s economy, in an intransigent attempt to end the outbreaks of Covid-19. On the other hand, the economic restrictions imposed on Russia complicate imports, since Russia is the second largest importer of dairy products in the world. The issue of containers is still in force, affecting mainly Europe (where the price of powdered milk had grown the most). In addition to all the impact of this on the increase of cereals, this added cost to primary milk production worldwide.
Another key issue is the lack of cows, where six years ago there was a large drop in the numbers, according to the FAS. The crisis unleashed in mid-2015 generated a strong depression in milk production in Argentina by generating a strong discard of cows in the dairy farms (the least productive, with reproductive problems, etc.) and a reduction in feeding levels, due to cost adjustments, which affected individual production. The lack of cows is felt, which means that even with good production after six years from the peak of 2015, production has not recovered to that level and it will take another three or four years to reach 2015. Currently it stands at about 1.6 million cows.