Cepea, August 3, 2021 – The price paid to Brazilian dairy farmers in July related to the milk produced in June hit 2.3108 BRL/liter on the net “Brazil average”, a real record in the series of Cepea, which began in 2005 (data were deflated by the IPCA from Jun/21). Also, the price paid in July was 5% higher than that from June and 21.8% up from that in Aug/20, in real terms.
The Cepea Index for Milk Production (ICAP-L) rose by 2.12% between May and June, influenced by the average increase of 5.5% in the production in southern Brazil. However, higher production costs and the drought limited supply and increased the competition between dairy plants for the raw material in June, resulting in valuations.
Thus, price rises do not mean profitability has increased, but reflect the pressure from higher production costs.
With milk more expensive, dairy plants had to increase the prices of by-products to pass on milk valuations to consumers. The prices for the mozzarella cheese, UHT milk and powdered milk traded between plants and the wholesale market in São Paulo rose by 16.1%, 8.6% and 2.6%, respectively, compared to that in May/21, which underpinned the price rises for the milk produced in June and paid in July.