With low milk supply and high production costs, prices skyrocket in June

Cepea, July 2, 2021 – According to Cepea surveys, the net “Brazil average” for the milk produced in May and paid in June skyrocketed 8% compared to that in May, closing at 2.201 BRL/liter. This is a record for the month and is also 34.9% higher than that in June 2020, in real terms (data deflated by the IPCA from May/21). In the first semester, the average price closed at 2.05 BRL/liter, an increase of 33.6% compared to that in same period of 2020.

 

During the Fall and the Winter, lower rainfall usually damages pastures and reduces feeding. In order to avoid steep decreases in milk production, concentrated feed is crucial. However, this year, the drought has been more severe, and the sharp valuation of concentrated feed is hampering investments in dairy farming and helping to reduce milk production.

 

Between April and May, the Cepea Index for Milk Production (ICAP-L) dropped by 1.67%. With the low milk supply in May, the competition between dairy plants for milk increased, in an attempt to keep their market share.

 

(Cepea-Brazil)

 

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