Average gross price for milk in Brazil at 1.1178 reais/liter in October, up 20.6% year-over-year, CEPEA says

PIRACICABA, Brazil , November 22, 2013 (press release) – After moving up sharply this year, milk quotes paid to producers registered stability in October, considering Cepea’s “national average” (calculated by Cepea, weighted by the volume purchased in September in Goiás, Minas Gerais, Paraná, Rio Grande do Sul, Santa Catarina, São Paulo and Bahia). In some states, however, prices decreased for the first time in 2013. The average gross price in Brazil (including freight and taxes) closed at 1.1178 real per liter in October, slightly higher than the previous (0.15%), but a significant increase of 20.6% compared to the average in October 2012, in real terms (IPCA September 2013). As for the net price (neither freight nor taxes are included), the average was 1.0390 real per liter in October, an increase of 0.12% in relation to the previous.

The price stability in October did not bring any surprise to players. Many of them were already focused on the weakness of the demand in the wholesale market. Moreover, the milk production increased. Due to the return of rains, pastures have been recovering, resulting in a national milk production increase.

The Index for Milk Purchases (ICAP-Leite Cepea) shows that the volume bought by dairy companies/cooperatives in September rose 2.62% compared to August. The increase was affected by the production from the Southern Brazil, Minas Gerais and Goiás. In São Paulo, the volume purchased remained almost stable (0.16%). In Bahia, on the other hand, milk purchases dropped significantly 7.41%.

For the upcoming months, players from dairy companies/cooperatives surveyed by Cepea expect decreases and/or stability in prices.

In the by-products’ market, quotes moved down in October. In the wholesale market of São Paulo State, UHT milk and mozzarella cheese prices decreased 0.59% and 0.49%, respectively, traded at 2.32 reais per liter and 13.10 reais per kilo in the partial of the month (until October 28). Some wholesalers say that they kept prices high in order to cover losses in previous months, due to high prices of raw material. This research occurs daily with dairy companies and wholesalers, and is financially supported by OCB (Brazilian Cooperative Organization) and CBCL (Brazilian Confederation of Dairy Cooperatives).

In October, the gross price of milk paid to producers registered a relative stability in almost all states surveyed by Cepea, except in Paraná, where quotes increased 2.34%. (Cepea-Brazil)

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