Higher Brazilian Milk Supply and Elevated Imports Put Prices Under Pressure
Brazil’s average raw milk price remained nearly stable in August at R$ 2.8869 per liter, even as milk collection increased 3.86%. Recovering domestic production, elevated dairy imports and rising feed costs are creating pressure on farmgate and wholesale markets.
Milk collection rises as farmgate prices hold
Brazil’s average raw milk price remained nearly stable in August despite a recovery in supply across important producing regions. Feed & Food reported that Cepea’s net “Brazil Average” reached R$ 2.8869 per liter, a real increase of 0.7% from July and 9.18% from August 2025. Relatively firm demand and support from some dairy product prices prevented the expansion in milk availability from producing a sharper decline in payments to farmers.
The Milk Collection Index, known as ICAP-L, increased 3.86% between July and August. The movement reflected recovering production, particularly in southern Brazil. The additional milk is now reaching processors and increasing the volume of raw material available for wholesale dairy production, changing the market balance after the stability recorded in August.
Regional prices diverge while feed becomes more expensive
Farmgate conditions varied significantly among the states monitored. Minas Gerais recorded the highest average net price in August at R$ 3.0446 per liter. Rio Grande do Sul, one of the states affected by the recovery in southern production, registered R$ 2.6545 per liter, while the average in Santa Catarina was R$ 2.7758. The gap illustrates how local supply, processing demand and regional market conditions are shaping producer remuneration.
Farm costs moved in the opposite direction to the expected pressure on milk prices. The Effective Operating Cost increased 0.63% in August, led mainly by expenses for feeding dairy herds. Concentrated feed became 1.2% more expensive following earlier increases in corn and soybean prices. Farmers therefore face a possible reduction in milk revenue at the same time that a central component of production expenditure is rising.
Imports add to domestic availability
Brazilian dairy imports declined 2.54% from July but remained elevated at 230.3 million liters of milk equivalent. According to Feed & Food, the volume was almost 40% above the level recorded in August 2025. Milk powder represented 72.3% of foreign purchases, equivalent to 166.58 million liters. These shipments are adding to the recovery in domestic collection and increasing competition for Brazilian raw milk.
Prices for major dairy products were still rising in São Paulo during August. UHT milk advanced 4.65%, milk powder gained 1.80% and mozzarella increased 0.62%. Those gains helped sustain demand for raw milk and limited the immediate fall in farmgate prices. By September, however, the greater availability of raw material had already begun to weigh on wholesale negotiations, indicating that the supply increase was moving through the processing chain.
September and October face further pressure
Cepea expects the recovery in Brazilian milk production and the continued high level of imports to pressure raw milk prices in September, with the movement potentially continuing in October. The impact on individual producers will depend on regional collection, processor demand and exposure to feed costs. For processors and dairy buyers, expanding supplies may improve purchasing conditions, while farmers face tighter margins if milk prices weaken before corn- and soybean-related feed expenses retreat.
