For the moment El Niño impact has been minimal for the agricultural sector in South America, according to climate experts. The temperature has been favorable for crops and grass quality, and many milk producers are beginning to see some relief in feeding costs.
In Argentina and Uruguay milk production levels are below last year. Consequently, some processors are manufacturing dairy products exclusively to meet the strong domestic demand, but not for export purposes.
In Brazil, milk intakes are less than adequate to meet all manufacturing requests. Fluid and UHT milk orders remain strong. Compared to one year ago, the domestic demand for dairy products has increased considerably, mainly supported by a relative improvement in the economy of the country.
Skim milk powder (SMP) export prices adjusted lower in South America. Inventories remain readily available to meet immediate needs. The trading activity within and outside the continent is reported as sluggish with expectations to improve slightly during the upcoming fall festivities.
Whole milk powder (WMP) export prices increased. With lower milk production and strong bottled milk requests, WMP supply is scarce and below regional and international demands. In some cases, manufacturers are limiting exports, producing exclusively to satisfy the domestic demand of their respective countries.