Brazil milk prices climb as supply tightens, demand grows - Cepea

 Milk prices in Brazil continued to rise in February, driven by tighter supply and stronger demand, according to a recent market report from Cepea. 

The national average price reached BRL 2.7734 per litre ($2.10 per gallon), a 3.3% increase from January and 18.1% higher than February 2024, adjusted for inflation.

This marks the second consecutive month of gains, fuelled by heightened competition among processors vying for limited raw milk supplies. The decline in availability is largely attributed to unfavourable weather, with high temperatures and dry conditions impacting production.

According to Cepea's Milk Production Index (ICAP-L), national output dropped by 4.6% between January and February.

Alongside the production dip, demand for dairy products rose last month. This combination of factors supported price increases for both UHT milk and mozzarella cheese in São Paulo's wholesale market.

Despite constrained supply, Brazil’s dairy exports surged nearly 27% in February, reaching the equivalent of 6.2 million litres. Imports also continued to grow, rising 3.76% month-over-month to 216.2 million litres.

The market remains closely attuned to weather patterns and international trade flows, both of which are expected to influence pricing trends in the coming months.