Trade Dynamics and Inventories Drive Milk Prices Down 25.8% in Brazil in 2025

Brazil’s dairy sector closed 2025 under strong deflationary pressure, driven by a combination of rising domestic production and persistently high import volumes. According to data from Cepea (Esalq/USP), prices paid to milk producers posted a real decline of 25.8% over the year, ending December at R$1.99 per liter — the ninth consecutive monthly drop.

Record imports and inventory pressure

The dairy trade balance played a central role in price formation in 2025. Despite a brief slowdown in the final two months of the year, Brazil imported 2.21 billion liters in milk-equivalent terms over the full year. That volume was only 5.9% lower than in 2024, which marked a record year for external purchases.

The heavy inflow of foreign products, combined with a 15.4% increase in domestic milk collection (ICAP-L), generated a supply surplus that processors were unable to absorb. The result was a buildup of dairy product inventories, forcing price devaluation across the entire production chain.

While imports remained elevated, Brazil’s export performance weakened. Dairy exports fell 31.6% in 2025, totaling just 67.58 million liters in milk-equivalent terms.

Data from Datamar’s DataLiner platform show that between January and November 2025, Brazil received 6,103 TEUs of dairy products by sea. That figure represents a 10.3% year-on-year increase.

Below are further details on Brazilian dairy imports, according to Datamar data:

Dairy Imports | January–November | 2022–2025 | TEUs

Source: DataLiner (click here to request a demo)

Low competitiveness of Brazilian products in external markets, combined with weaker demand from key trading partners, limited options for clearing domestic surpluses. This increased reliance on domestic consumption, which was already operating under tight margins.

Impact on profitability and costs

The unfavorable foreign trade environment was reflected directly in negotiations between processors and retailers. In December, average prices for mozzarella and UHT milk fell by 1.38% and 6.67%, respectively.

For producers, the crisis has been compounded by a loss of purchasing power against key inputs. With corn prices rising, the milk-to-feed exchange ratio deteriorated sharply: in December, 34.87 liters of milk were required to purchase a 60-kg bag of corn, an increase of 21.7% compared with the average of the previous 12 months. Without relief from exports and under continued pressure from imports, the sector’s operating margins enter 2026 at critical levels.

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