Brazil's milk prices paid to producers rise on low production

Publish time: 3rd April, 2014      Source:
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April 3, 2014

Brazil''s milk prices paid to producers rise on low production


The price of milk paid to producers in Brazil rose in March brought about by the smaller production on the field, a consequence of the dry weather in the main producing regions in the first two months of the year and the off-season beginning in the South Brazil.



According to data of the Centre for Advanced Studies on Applied Economics (Cepea) (started in 2000), quotes paid to producers never dropped from February to March because of the off-season start.



Milk quotes (delivered in February) received by producers in March rose 3.22% compared to the previous months in the "Brazil average", to close at BRL0.9419 (US$0.41) per litre (net price) - this is the first increase after four months of consecutive drops. The gross price (including freight and taxes) paid to producers closed at BRL1.0209 (US$0.45) per litre in March 2014, for an increase of 3.02% in relation to February.



As for the Index for Milk Purchases, the decrease in February was 2.75% compared to the previous month, considering seven states that compose the "Brazil average". Still, the volume produced in February was 13.7% more than in the same period of 2013.



For April, milk prices are expected to remain moving up, still affected by the limited supply. Among players (dairy companies and cooperatives) surveyed by Cepea, 82.1% of them believe in new price rises. Another 16.3% say that quotes might be stable and only 1.6% expect price drops.



The by-products market followed increases of milk quotes. Ultra-heat treatment (UHT) milk and mozzarella cheese prices rose 11.86% and 3.76%, respectively, from February to March. The price rise is attributed to the increase of milk quotes and the fiercer competition among companies to purchase milk.