Prices paid to Brazilian milk producers rise 6.2% in April to 1.0838 reais/liter, resulting from smaller milk production in March due to beginning of offseason period

Nevin Barich

PIRACICABA, Brazil , May 7, 2014 (press release) – According to information from Cepea, milk prices paid to producers soared 6.16% in April, reaching 1.0838 real per liter (gross price – including freight and taxes), regarding the “Brazil average”, an increase of 0.0630 real per liter compared to March. This was the second month in a row of price rises, a result of the smaller milk production in March, due to the beginning of the off-season period.

In real terms (IPCA March 2014), the net price (disregarding freight and taxes) averaged 0.9995 real per liter, 6.11% more than the month before, and 7.77% higher compared to that in March 2013. The averages are weighted by the volume purchased in Bahia, Goiás, Minas Gerais, Paraná, Rio Grande do Sul, Santa Catarina and São Paulo States in March.

Players surveyed by Cepea say that this increase is attributed mainly to the production drop in March, because of the off-season beginning in some producing regions and the stepping up of this scenario in others, such as South Brazil. This smaller supply pushes up the competition for raw material among companies, with a consequent price rise.

Therefore, the Index for Milk Purchases (ICAP-Leite Cepea) dropped sharply 3.85% from February to March. Even the occurrence of rains in some areas in the Central-Southern region was not enough to recover pasture areas affected by the dry weather in previous periods. Moreover, since March, pastures in Central-West and Southeast regions are less productive.

In the by-products market, values kept the upward trend in the partial April (until April 29). In the average of the wholesale market in São Paulo, UHT milk and mozzarella cheese prices rose 3.3% and 1.97%, respectively, from March to April. (Cepea-Brazil) 

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