Dairy imports grow 30% despite unfavorable exchange rates

Last month, despite the rise in the dollar-real exchange rate, Brazil’s volume of dairy imports grew 30% from May and almost 20% year-on-year, according to consultancy Milkpoint Mercado and data by the Foreign Trade Secretariat (Secex). As a result, the country’s purchases in June 2022 totaled 83.2 million liters in milk equivalent. Cheese and whole powdered milk were the items that the country imported the most.

Exports totaled 7.8 million liters last month, a decline of almost 60% compared to June 2021. Condensed milk and UHT Milk led shipments. As a result, the sector’s trade balance had a deficit of 75 million liters in milk equivalent in June – about 40% more than a year ago.

See below the track record of dairy products from Brazil from January 2019 to May 2022. The data is from DataLiner.

Dairy Product Exports | Jan 2019 – May 2022 | TEU

Source: DataLiner (click here to request a demo)

Dairy imports should continue to gain strength in the coming months, and the export window should remain closed, say analysts at the consultancy. The more restricted supply of raw material on the farms and the decline in international prices – which remain at high levels, even with the fall – contributed to the increase in imports.

Among the elements adding pressure to the quotations is the decline in Chinese demand – the country is one of the biggest global buyers of these products. According to the consultancy, China has reduced the pace of imports due to the Covid-19 control policy. In addition, fear of global recession is another factor weighing on prices.

Last week, the Global Dairy Trade (GDT) platform, one of the references for quotations in the foreign market, indicated a 4.1% decrease in the average price per tonne of milk derivatives to US$ 4,360 thousand. Even so, the value is above the quotations seen a year ago when the index was at US$ 4 thousand a tonne.

In Brazil, production and consumption continue to be meager. As the Brazilian Institute of Geography and Statistics (IBGE) recently indicated, dairy products captured 5.9 billion liters in the first quarter, or 10.3% less than in the same period in 2021.

The increase in production costs and inflation brings derivatives prices closer to historic levels in the domestic market. According to the Center for Advanced Studies in Applied Economics (Cepea, Esalq/USP), the cost of milk paid to farmers in the field has appreciated by 20.6% this year.

The lack of rain is one of the factors for the increase in prices. Still, economists from Cepea say in their most recent bulletin that “it would not be an exaggeration” to say that the responsibility for the increase is in the high production costs. As a result, the effective operating price of the activity rose 56% between January 2019 and May this year.

Source: Valor Econômico

To read the full original article, please go to: https://valor.globo.com/agronegocios/noticia/2022/07/08/importacao-de-lacteos-cresce-30-mesmo-com-dolar-mais-valorizado.ghtml

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