In an analysis titled “Russia and the dairy trade”the National Milk Institute (Inale) considered the impacts related to the armed conflict that takes place in the territory of Ukraine, after the invasion that Russia began 12 days ago and in this context he stated that the only certainty “are the widespread uncertainties at the level of the global economy”.
Those uncertainties, he noted, correspond to shipments to Russia, to the receipt of payments for completed business and how trade will unfold in the immediate future.
The work indicates that the prices of grains, the price of oil and fertilizers have increased.
Other aspects that are indicated as a consequence of the new scenario are the international inflationpossible new disruptions in international transport and a speculative component in the prices of commodities that make forecasts more difficult.
Destination of 10% of placements
In the last 10 years, exports of dairy products from Uruguay to Russia have averaged US$70 million.although in some years they exceeded US$ 100 million.
Russia represents 10% of the value of Uruguay’s dairy exports.
The main export products (and their share in total exports) have been:
- Butter with US$ 39 million (53%)
- Cheese US$ 16 million (22%)
- Whole milk powder US$ 12 million (17%)
- Skim milk powder US$ 4.5 million (6%)
- Whey powder US$0.8 million (1%)
On average each year, 10,000 tons of butter, 3,000 tons of cheese, 4,600 tons of whole milk powder, 1,400 tons of skimmed milk powder and 900 tons of powdered whey are placed in this destination.
Russia is a relevant market for butter exports; it represents almost 60% of the total exported tons of this dairy product.
It also represents 10% for the destination of cheeses, 6% for skim milk powder, 4% for whole milk powder and 5% for whey powder.
It is, specifically from Inale, average data for the period of the last 10 years.
As for the more structural components, for the moment milk production is stagnant and production costs discourage supply.
They also affect the environmental restrictions that will gradually come into force in the coming years (New Zealand, Germany, France and other European Union countries are in this line).
Demand is strongbut when international inflation reaches the consumer it would take pressure off demand.
There would be no indication that dairy prices behave differently from the one experienced in the coming months.
But, given the uncertainty that the Ukraine-Russia geopolitical aspect adds to the pandemic, it is necessary to closely monitor the situation in the commodity markets, concludes the Inale report to which it agreed. The Observer.
