Milk price drops in the countryside – 06/21/2023 – Shuttle

Milk, another one of the inflation pressure items, is beginning to see a drop in prices in the countryside. Good for the consumer, but not so bad for ranchers, as production costs are also falling.

Due to the low supply in the first two months, prices rose sharply in the field, a trend also seen in the second. This year, the rise in milk prices in the countryside accumulates 12%, according to Cepea (Center for Advanced Studies in Applied Economics).

In the third quarter, however, prices began to fall. Domestic supply is still limited, but import price parity is favorable. From January to May, the country imported 878 million liters of milk equivalent, 213% more than in the same period last year.

High domestic prices and the decline in the dollar facilitate foreign purchases. The year’s imports represent 9% of the domestic supply of raw milk. In the same period last year they were 2.9%.

The fall is also due to a reduction in production costs, due to the fall in the prices of corn, soy bran, concentrates, fertilizers and correctives, according to an analysis by Cepea.

Last month, the farmer spent 25.8 liters of milk for a bag of corn. In December, there were 34.1 liters. For four months there has been an improvement in the purchasing power of livestock farmers. In May, the increase was 14% compared to April.

The new scenario of commodity prices in Chicago, however, may bring new costs to the producer. The weather factor is beginning to generate uncertainty in corn and soybean crops in the United States. An eventual break in grains from the American harvest will reflect on domestic prices in Brazil.

Another factor that inhibits further increases in retail milk prices is the weak consumer purchasing power, which has been reducing purchases, according to Cepea analysts.

In April, milk intake was up 0.21% compared to the previous month, and this is the first increase since November 2022. The prices paid to livestock farmers per liter of milk fell by 5% in May, when considering the national average of the seven states surveyed by Cepea.

The drop in prices in the field reaches consumers’ pockets. In the last 30 days, milk had a retraction of 1.12% in supermarkets, after high of 6.7% in April in retail in the city of São Paulo, according to a survey by Fipe (Fundação Instituto de Pesquisas Econômicas).

The fall in milk prices helps the retraction of food costs. This item, which closed May with average price stability, has accumulated an average drop of 0.73% in the second four-week period of this month.

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