Pastures in good conditions and lower demand press quotes down for the 2nd month

Cepea, Nov. 3 – The good condition of pastures in most Brazil, which increases milk production and purchase by processors, and weak demand in the country pressed down values paid to milk producers in October for the second consecutive month. According to Cepea data, the average price received by growers in the Brazil average (no freight or taxes included) was 1.3961 BRL per liter in the month, a staggering 8.5% down (13 cents per liter) compared to September.


Despite the monthly drop, price paid to growers is still 37.3% up this year, in real terms (values deflated by the IPCA from Sept/16). The average gross price of milk (freight and taxes included) dropped 8% from September to October, going to 1.506 BRL per liter. The averages calculated by Cepea are weighted by the volume purchased in September in the states of Goiás, Minas Gerais, Paraná, Rio Grande do Sul, Santa Catarina, São Paulo and Bahia.


Milk purchase increased in all states that compose the Brazil average, reflecting the pastures recovery, favored by rains in most milk producing regions. From August to September, the Index of Milk Purchases (ICAP-L Cepea) increased a staggering 6.24%.


For November, with pastures in good conditions, dairy plants consulted by Cepea pointed to new milk price drops. Most consulted agents (94.2%), who amount to 99.8% of the sample milk, indicate prices may decrease. Other agents (1.9%), who amount to 0.02% of the sample volume of milk, believe in stability. Based on the volume of rains below expected in some regions, some collaborators (3.8% of the agents, amount to 0.2% of the sample) expect quotes to rise in November.




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