Cepea, November 5, 2020 – The price of the milk produced in September and paid to Brazilian dairy farmers in October increased for one more month, hitting a new real record in the series of Cepea. According to Cepea surveys, the net “Brazil average” in October was 1.25% higher than that in September, at 2.1586 BRL/liter. It is also 53.6% higher than the average in October 2019, in real terms. Thus, milk prices have increased by 57.4% this year (values deflated by the IPCA from September/20).
Price rises varied among the Brazilian states surveyed by Cepea. While in Goiás and Minas Gerais, quotes rose by a slight 0.1% from September to October, in São Paulo, Rio Grande do Sul, Paraná and Santa Catarina, valuations ranged from 3 to 4.5%. In Bahia, values increased by a staggering 6.4%.
The boost came from higher competition between dairy plants for milk, since production continued lower than the expected, while the demand for dairy products was high.
September is usually a critical month for milk supply in southeastern and central-western Brazil, due to the changes in temperature in that period. This year, lower rains and wide temperature range influenced milk production in Brazil. Besides, higher production costs are hampering investments in the activity. According to the Cepea Index for Milk Production (ICAP-L), milk production increased by 3.1% between August and September.
On the other hand, consumption continue firm. However, in September, trades between diary plants and distributors were more difficult than in previous years, due to the high price levels for dairy products in the Brazilian market. This scenario led to consecutive devaluations along September. Still, Cepea surveys show that, on the average of the month, prices for UHT milk, mozzarella cheese and powdered milk rose by 0.8%, 3.5% and 4.9%, respectively, compared to August. As regards the mild sold in the spot market of Minas Gerais, prices dropped in September, but the monthly average was still 1.1% higher than in August. The performance of these markets underpinned the prices of the milk produced in September and paid to farmers in October.