Cepea, March 3, 2020 – The milk price paid to dairy farmers in February (related to the volume produced in January) averaged 1.4175 BRL per liter on the net “Brazil average”, 3.6% up (almost five cents) compared to that paid in January, according to data from Cepea. The upward trend of quotes, which has been observed for three consecutive months, is influenced by the fierce competition between dairy plants for milk, in a low supply context.
Milk production resumed decreasing in Brazil between December and January. The Milk Production Index (ICAP-L) dropped 3.7% on the “Brazil average” – production was lower in all the states surveyed by Cepea. This decrease was linked, among other factors, to the unstable weather and rains.
It is worth to mention that, in southern Brazil, milk supply should continue low in the coming months, since this region faced a severe drought for several months, which hampered the activity as a whole.
Besides, higher production costs and the slaughter of dairy cows (encouraged by the high price levels for beef cattle in the market) influenced farmers’ decisions in the last months. It is important to highlight that, compared to the difficulties observed in previous years, long-term investments in milk production were reduced, which is currently limiting the activity’s potential growth.