South American Dairy Exporters Navigate Adversities in 2024
Source: DairyNews.today
South America’s leading dairy exporters face a tough landscape this year, as adverse weather and economic turmoil hit the sector. Weak supply conditions have driven up milk prices, enhancing profitability.
With higher prices, milk production could rebound in Q4 2024, potentially increasing exports, according to Monica Ganley, an analyst at the Daily Dairy Report and director of the Buenos Aires-based consulting firm, Quarterra.
“In Argentina, the new president’s aggressive economic policies, enacted late last year, triggered sharp currency devaluation and surging inflation,” Ganley explained. “These reforms have pressured producers to cut costs, including drying off cows early and shifting away from costly concentrates in their feed.”
Argentina’s milk production plummeted by 13% in the first half of 2024 compared to the previous year. This drop, coupled with rising prices, bolstered producer margins to levels unseen in years. In response, producers ramped up production, gradually closing the gap with the prior year’s output. By July, the production deficit had narrowed to 4.8%, and by August, it stood at 6.2%.
Uruguay initially recorded a 2.2% production rise in Q1 2024, but excessive rains led to flooding in key dairy regions, reversing gains in Q2. “The heavy rains compromised pastures, cow comfort, and overall animal health, resulting in a 10.6% cumulative production drop for the second quarter,” Ganley noted.
The reduced milk supply in Uruguay also lifted milk prices during the Southern Hemisphere winter. Though prices did not exceed prior-year levels, the increase, combined with stable operating costs, provided producers with stronger margins. This drove Uruguayan farmers to boost production, reducing the year-on-year deficit to 9.2% in July and 5.3% in August.
“South America will continue to play a critical role in global dairy supply as the world’s demand for dairy rises,” said Ganley. “To meet this growing demand, however, it will be essential for the region’s exporters to see sustained production growth.”
“In Argentina, the new president’s aggressive economic policies, enacted late last year, triggered sharp currency devaluation and surging inflation,” Ganley explained. “These reforms have pressured producers to cut costs, including drying off cows early and shifting away from costly concentrates in their feed.”
Argentina’s milk production plummeted by 13% in the first half of 2024 compared to the previous year. This drop, coupled with rising prices, bolstered producer margins to levels unseen in years. In response, producers ramped up production, gradually closing the gap with the prior year’s output. By July, the production deficit had narrowed to 4.8%, and by August, it stood at 6.2%.
Uruguay initially recorded a 2.2% production rise in Q1 2024, but excessive rains led to flooding in key dairy regions, reversing gains in Q2. “The heavy rains compromised pastures, cow comfort, and overall animal health, resulting in a 10.6% cumulative production drop for the second quarter,” Ganley noted.
The reduced milk supply in Uruguay also lifted milk prices during the Southern Hemisphere winter. Though prices did not exceed prior-year levels, the increase, combined with stable operating costs, provided producers with stronger margins. This drove Uruguayan farmers to boost production, reducing the year-on-year deficit to 9.2% in July and 5.3% in August.
“South America will continue to play a critical role in global dairy supply as the world’s demand for dairy rises,” said Ganley. “To meet this growing demand, however, it will be essential for the region’s exporters to see sustained production growth.”
