December 9, 2013
Brazil''s milk prices drop on lower demand
The Comprehensive Economic Partnership for East Asia (CEPEA), the research centre linked to University of São Paulo, has revealed that milk purchases have increased in almost all states in Brazil but demand has weakened.
Therefore, the average price paid to producers dropped for the first time this year. CEPEA data indicate that milk quotes have moved down in almost all states surveyed, except in Bahia and Santa Catarina.
The average gross price in Brazil (including freight and taxes) closed at BRL1.1011 (US$0.47) per litre in November, a decrease of 1.5% compared to October. As for the net price (neither freight nor taxes are included), the average was BRL1.0196 (US$0.44) per litre in November, down 1.87% in relation to the previous. These averages are calculated by CEPEA and are weighted by the volume purchased in October in Goiás, Minas Gerais, Paraná, Rio Grande do Sul, Santa Catarina, São Paulo and Bahia.
The milk purchases increase in almost all states surveyed by CEPEA was attributed to the pastures recovery, due to rains. From September to October, the Index for Milk Purchases (ICAP-Leite CEPEA) soared 3.93%. Except for Rio Grande do Sul and Paraná, other Brazilian states registered increases of milk purchases in October.
Most players from dairy companies/cooperatives surveyed by CEPEA expect new price decreases for milk. Roughly 90% of agents surveyed, which accounts for 94% of the sample, indicates that quotes will drop in December.
In the by-products'' market, the demand decrease, due to high price levels over the last months, affected decreases of dairy products'' quotes. In the wholesale market of São Paulo State, UHT milk and mozzarella cheese prices dropped 5.65% and 2.12%, respectively, from October to November, traded at BRL2.18 (US$0.94) per litre and BRL12.81 (US$5.51) per kilogramme in the partial of the month (until November 27). 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 November, the gross price of milk paid to producers dropped in almost all states surveyed by CEPEA, except in Bahia and Santa Catarina, where increases were 1.41% and 0.21%, respectively.