In August, Ukrainian raw milk market began to show signs of revival. But dynamics were insignificant compared to the expectations associated with the sharp devaluation of the fixed exchange rate of hryvnia at the end of July.
The situation can be explained by weak consumer demand and passivity of external buyers, as well as positive trends in supply of raw milk. In recent months, in a number of regions, we have seen the resumption of dairy complex construction projects planned before the full-scale war.
Despite the fact that the prices of grain and oilseeds on the domestic market “pushed off the bottom” due to the functioning of the sea grain corridor, the operating margin of milk production remains at high levels and, according to Infagro’s estimates, was about 42% at the end of the month.
The State Statistics Service has updated the estimates of the number of livestock and volume of raw milk production in Ukraine based on the results of 7 months. According to official data, milk production in the country during this period amounted to 4.4 million tons, which turned out to be 14.4% less than last year. Households reduced production volumes by 18%, at the same time agricultural enterprises managed to avoid such a significant drop, the decrease is “only” 6.3%.
According to the State Statistics Service, the number of cows in Ukraine as of August 1 was 1.4 million, which is 15% lower than last year on the same date. It should be noted that, according to official data, it is not possible to unequivocally determine their territorial affiliation. It is very likely that the statistics also include figures of dairy farms that has been under temporary occupation after February 24, but are able to report to the state body at the moment.
Taking into account the cumulative result for 7 months and calculated estimates of drop in production in spring, Infagro considers the trend for agricultural enterprises in recent months at the level of a decrease of -3-4% for the last months to last year. This is entirely explained by the economic attractiveness of milk production.
In September, we can expect an increase in raw milk prices due to the revival of export demand.