Milk powder market in MERCOSUR

Earlier Report Observations

The MERCOSUR milk powder market expanded from 797 thousand tons in 2018 to 872 thousand tons in 2020. This initial growth period coincided with the bloc's adoption of a mandatory technical regulation for milk powder identity and quality in 2018, which harmonized production standards and intra-bloc trade requirements. The consistent application of these rules provided a stable regulatory framework for the market.

Market volume then contracted to 713 thousand tons by 2022. This decline occurred amidst significant international price differentials that pressured domestic markets and influenced trade patterns. The internalization of the MERCOSUR technical regulation into Brazilian law in mid-2022, coupled with high global powder prices near $5,000 per ton, intensified import competition from Argentina and Uruguay within the bloc while export volumes from the region remained strong.

A sharp recovery followed in 2023, with market volume jumping 25% to 892 thousand tons. This surge was primarily driven by a substantial increase in imports, which reached 193 thousand tons, as the opening of an anti-dumping investigation by Brazil against milk powder from MERCOSUR countries and a proposed law to restrict the reconstitution of imported powder prompted accelerated shipments ahead of potential trade barriers.

Production milk powder in MERCOSUR

In kind, 2017-2020, K t

Top producers of milk powder, 2017-2020

World map of production of milk powder, 2017-2020

Milk powder production in MERCOSUR has increased for the third consecutive year. In 2020, the region produced 1 033 K t of milk powder, marking a 4.0% increase compared to 2019. Over the period from 2017 to 2020, production grew by 11.7%, with a compound annual growth rate of 3.8%.

Annual dynamics of production in MERCOSUR in kind, 2017-2020, K t

In value, 2017-2020, M $ US

Following a two-year decline, milk powder production in MERCOSUR rebounded. In 2020, the output was valued at 3 816 M $ US, up by 26.5% from the previous year. From 2017 to 2020, production increased by 16.5%, with a compound annual growth rate of 5.2%. The lowest value was recorded in 2019 at 3 016 M $ US, while the largest decline occurred in 2018, dropping by 6.3%.

Annual dynamics of production in MERCOSUR in value, 2017-2020, M $ US

Exports milk powder from MERCOSUR

Exports in kind, K t

Milk powder exports from MERCOSUR declined for the second consecutive year. In 2020, exports amounted to 266.8 K t, showing a slight drop of 0.6% compared to 2019. Over the period from 2017 to 2020, exports increased by 37.2%, with a compound annual growth rate of 11.1%. The peak was reached in 2018 at 282.2 K t, with the largest decline of 4.9% in 2019 and the largest increase of 45.1% also in 2018.

Annual dynamics of product's exports from MERCOSUR in kind, 2017-2020, K t

From 2017 to 2020, the main destinations for milk powder exports from MERCOSUR in kind were Algeria, accounting for 40.9% of exports, Russia at 5.2%, and China at 4.8%. Together, these three countries represented 50.9% of total export flows.

Structure of product's exports in kind by countries, 2017-2020

World map of product's exports from MERCOSUR in kind, 2017-2020

Exports in value, M $ US

In 2020, MERCOSUR's milk powder export volume reached 985.5 M $ US, reflecting a 20.9% year-on-year increase. Between 2017 and 2020, exports grew by 43.1%, equating to an annualized rate of 12.7%. The largest decline was recorded in 2019 at 7.3%, while the largest increase occurred in 2018, rising by 27.7%.

Annual dynamics of product's exports from MERCOSUR in value, 2017-2020, M $ US

Throughout 2017 to 2020, the three largest markets for milk powder exports in value terms were Algeria, Russia, and China, collectively accounting for 50.7% of total flows.

Structure of product's exports in value by countries, 2017-2020

World map of product's exports from MERCOSUR in value, 2017-2020

Imports milk powder to MERCOSUR

Imports in kind, K t

After a two-year decline, foreign milk powder supplies to MERCOSUR increased. In 2020, the region imported 106.1 K t of milk powder, marking a 29.9% rise compared to 2019. Between 2017 and 2020, imports decreased by 5.6%, with an annualized rate of decline of 1.9%. The lowest value was recorded in 2019 at 81.7 K t, and the largest decline occurred in 2018, dropping by 15.2%.

Annual dynamics of product's imports to MERCOSUR in kind, 2017-2020, K t

From 2017 to 2020, the country structure of milk powder imports in kind was primarily shaped by Chile and the United States, which together accounted for 3.7% of total import flows.

Structure of product's imports in kind by countries, 2017-2020

World map of product's imports to MERCOSUR in kind, 2017-2020

Imports in value, M $ US

Following a two-year drop, MERCOSUR's milk powder import volume increased. In 2020, import volume amounted to 350.3 M $ US, indicating a steep rise of 34.6% compared to 2019. The lowest value was recorded in 2019 at 260.2 M $ US, while the largest decline occurred in 2018, falling by 18.6%.

Annual dynamics of product's imports to MERCOSUR in value, 2017-2020, M $ US

In the period from 2017 to 2020, the two main sources for milk powder imports in value terms were Chile and the United States, together accounting for 3.6% of total imports to MERCOSUR.

Structure of product's imports in value by countries, 2017-2020

World map of product's imports to MERCOSUR in value, 2017-2020