Argentina: export tariffs could affect SMP and WMP prices [News South America n°3/2020]

Period: January 20 – 31, 2020

Farm milk output is seasonally declining in the key dairy basins of South America. High summer temperatures had taken a toll on cows’ comfort, lowering their productive milk yields. Dryness returned in South America diminishing the quality of pasture in several dairy areas.

Milk and cream volumes are less than adequate to meet all processing needs, while butterfat demands strengthen among the cream based dairy markets, particularly from ice cream/frozen dessert makers.

According to some industry participants, the political and economic instability, especially in the Southern Cone region, has contributed to the decrease in the internal consumption of dairy products.

SMP export prices in South America have been volatile in recent weeks, which is typical of a niche market, especially in uncertain circumstances, such as a new export tariff proposed in Argentina. SMP production is unsteady, market conditions are expected to be clearer during the next upcoming weeks.

Export prices for WMP in South America shifted up on moderate trading. The current prices are the reflection of the bullish pricing trends of the regional butterfat market and the global protein markets. WMP manufacturing is less active compared to one month ago.

The new proposed export tariff in Argentina continues being a main topic of discussion among the dairy industry in South America, as several industry participants are not sure of the immediate impact to the milk powder export prices.

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Source: USDA summarized by the CLAL Team
Note: assessments about market trend are expressed in US$
More informations about dairy market in Argentina, Brazil and Chile are available on CLAL.it