Brazil’s spot milk prices declined in the second half of October, reflecting increased milk availability, subdued domestic demand and growing competition from imported dairy products. The price pressure comes as dairy farmers face rising operating expenses, particularly for feed ingredients, creating additional challenges for producers already concerned about their margins.
According to MilkPoint Mercado, spot milk prices fell by R$0.059 per litre across the states monitored during the second half of October. Meanwhile, data from the Centre for Advanced Studies in Applied Economics (Cepea) showed that dairy farmers’ effective operating costs increased by 0.46% in September, following a 0.63% rise in August.
The combination of lower market prices and higher production costs highlights the pressure on Brazil’s dairy supply chain as the industry moves towards the end of 2026.
Regional Milk Prices Continue to Decline
Minas Gerais recorded one of the largest reductions in spot milk prices, with a fall of R$0.120 per litre bringing the average to R$2.589. In Goiás, prices decreased by R$0.040 per litre to R$2.490. Although prices continued to weaken, the declines were smaller than those recorded in the first half of October.
Farmgate payments for milk collected in August remained relatively stable. Cepea reported a net national average of R$2.8869 per litre, compared with R$2.8761 in July and R$2.7464 in June.
These figures measure different market transactions and periods. Farmgate payments reflect what producers receive for milk collected by processors, while spot prices relate to raw-milk transactions between participants in the supply chain. Nevertheless, farmers are concerned that continued weakness in spot negotiations could influence future payments from processors.
Higher Milk Collection Adds to Market Pressure
Brazil’s domestic milk supply has increased as production recovered seasonally. Cepea’s milk-collection index, ICAP-L, rose by 2.38% in July compared with June, followed by a further 3.86% increase in August.
The recovery was particularly evident in southern Brazil. Rainfall in other major producing regions could also support milk availability in the coming months, depending on weather conditions and farm management.
However, stronger collections have coincided with weak demand for processed dairy products. Retailers have reportedly adopted cautious purchasing strategies, replenishing inventories selectively and negotiating lower prices with dairy processors.
This imbalance between supply and demand is contributing to lower prices across several dairy categories. If milk collections continue to rise faster than consumption, processors may face further difficulties maintaining product prices and managing inventories.
Wholesale Dairy Products Record Further Declines
Cepea’s September survey of the São Paulo wholesale market showed widespread price reductions after adjusting for inflation.
| Dairy product | September price | Monthly change |
|---|---|---|
| UHT milk | R$4.69/litre | -4.76% |
| Mozzarella | R$34.91/kg | -2.77% |
| Milk powder in smaller packs | R$29.63/kg | -4.38% |
Preliminary October figures through 15 October showed additional declines of 2.32% for UHT milk, averaging R$4.54 per litre, and 2.05% for mozzarella, averaging R$34.97 per kilogram.
Separate fortnightly quotations from MilkPoint Mercado placed mozzarella at R$31.30 per kilogram, down from R$31.60. Whole-milk powder remained at R$24.00 per kilogram, while skimmed-milk powder declined to R$23.30 and smaller-pack milk powder increased to R$30.00.
Differences between these quotations reflect separate surveys, reference periods and market conditions.
Imports Increase Competition for Brazilian Dairy
Brazil imported dairy products equivalent to 249.6 million litres of milk in September, according to Cepea’s analysis of foreign-trade data from Secex. This represented an 8.38% increase compared with August and a 25.99% rise year on year.
Milk powder accounted for approximately 69.8% of imported volume, while cheese represented 29.6%.
These imports expanded the supply options available to domestic buyers at a time when Brazilian milk collections were recovering. The additional competition may limit processors’ ability to raise prices, particularly when retailers are cautious about purchasing and consumer demand remains subdued.
Rising Feed Costs Squeeze Farm Margins
Higher feed expenses are adding to producers’ challenges. Cepea reported that concentrate costs increased by 0.84% in September, with maize, soybeans and soybean meal becoming more expensive.
The relationship between milk prices and feed costs also weakened. In August, purchasing a 60-kilogram bag of maize required 23.19 litres of milk, compared with 22.54 litres in July. Although this remained below the preceding 12-month average of approximately 28 litres per bag, it indicated that producers needed more milk to purchase the same quantity of grain.
The impact varies between farms depending on milk productivity, feed use, purchasing arrangements and the prices received from processors.
Global Prices and Weather Could Influence the Outlook
International dairy market indicators offered some support. At the 414th Global Dairy Trade auction, the overall price index increased by 2.5%, reaching an average of US$4,021 per tonne. Whole-milk powder rose by 4.4% to US$3,760 per tonne, while skimmed-milk powder gained 3.4% to US$3,975 per tonne.
However, international gains do not automatically translate into higher Brazilian milk prices. Exchange rates, import competitiveness, domestic production and consumer demand all influence how global market movements affect local conditions.
Cepea also highlighted potential El Niño-related weather effects that could constrain subsequent milk-supply growth and moderate the pace of price declines.
As the industry approaches the beginning of 2027, producers and processors will be monitoring milk collection volumes, import levels, retail sales, feed expenses and upcoming farmgate payment indicators. These factors will help determine whether the current market weakness persists or whether tighter supply and improving demand provide relief to Brazil’s dairy sector.