Milk production for the first half of this year is down by 12.5% in Uruguay, 11.9% in Argentina and 4.5% in Brazil because of low prices and cold wet weather, according to Monica Ganley of Quarterra Consulting and Advisory in Buenos Aires.

Ganley said “even though the extreme weather has now given way to more normal climatic conditions, a lack of forage availability will prevent a rapid recovery in milk production in the region.”

Economic instability in Brazil and Venezuela is adding the problem with processors in Argentina and Uruguay still getting paid for all shipments.

While dairy farmers in South America are anxious to increase revenues by bringing additional volume back online as quickly as possible, she points out that several persisting factors will limit expansion, including low quality pasture and more expensive grains.

Meanwhile, the WASDE (World Agricultural Supply and Estimates) report by USDA (US Department of Agriculture) forecast a small decline in milk production in the US for 2016 but increasing again in 2017.

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