Report Highlights:

Post forecasts fluid milk production to increase by 2 percent in 2015, supported by relatively strong domestic demand and mainly by exports of dairy items. Post has revised production and export estimates for dairy products for 2015 and forecasts for 2016 to reflect new estimates made by trade sources. Cheese exports are expected to increase by 2 percent as Brazil is expanding trade to Russia. Although the country is facing economic problems, such as inflation rates, the Brazilian dairy industry is optimistic about the slight growth of production of milk and increase of exports of dairy items.

Dairy, Milk, Fluid

Production:

Post revised 2014 and 2015 production estimates for the Brazilian dairy sector to reflect new estimates by trade sources and also to reflect official data published by the Brazilian Institute of Geography and Statistics (IBGE). Since last year, Post has aligned numbers with IBGE, which reports fluid milk production statistics, which are officially inspected by the Brazilian government.

Post estimates that national milk production under inspection of governmental officials in 2014, was 24,747 billion liters, which corresponds to 25,489 million metric tons (MMT). Post forecasts milk production under inspection of governmental official to reach 26,101 MMT in CY 2015 and 26,623 MMT in CY2016.

Other data sources report that total national milk production for 2014 was 36 billion liters, including official inspected milk and not inspected milk. Thus, the informal production accounts for almost 10,873 billion liters in CY 2014 which represents 11,199 MMT. The forecast for CY 2015 accounts for 36.2 billion liters in total, or 37.3 MMT, including 11,279 MMT of non-inspected milk. Post forecasts that CY 2016 total national fluid milk production will account for 36.8 billion liters or 37.9 MMT.

Minas Gerais is the main milk producing state in Brazil, accounting for 26 percent of total milk production, followed by Rio Grande do Sul with 15 percent, and Paraná with 12 percent. Minas Gerais increased its production by 14.5 percent in 2015, compared to previous year.

Consumption:

Post forecasts fluid milk domestic consumption to increase by 2 percent in CY 2015 to 10,982 MMT and to 11,198 MMT in CY 2016. The growth is derived mostly from an estimated increase in industrial use. Although the country is facing an economic crisis, trade sources believe that the fluid milk sector will suffer less than compared to other segments.

Trade:

Brazil imports and exports insignificant volumes of fluid milk. Typically packaged UHT milk imports are sold by companies from Argentina and Uruguay with commercial interests in Brazil.

The average fluid milk prices have decreased almost 2 percent compared to the same period in the previous year.

Fluid Milk Acquisition:

The Brazilian dairy sector experienced further consolations in the recent years. The thirteen largest dairy companies were responsible for the acquisition of 9.410 billion liters of milk in 2014. Most of these companies are investing in new plants and new technologies such as UHT milk without lactose, which is becoming popular in the supermarkets.

Stocks:

Current milk and dairy product stocks held by major dairy companies are considered operating stocks to meet short term demand. There are no government held stocks of milk or milk products in Brazil.

PSD: Dairy, Milk and Fluid (HTS: 0401.10; 0401.20)

Dairy, Milk, Fluid

2014

2015

2016

Market Begin Year

Jan 2014

Jan 2015

Jan 2016

Brazil

USDA Official

New Post

USDA Official

New Post

USDA Official

New Post

Cows In Milk

20680

16825

21300

17589

0

17941

Cows Milk Production

33350

25489

34250

26101

0

26623

Other Milk Production

0

11199

0

11279

0

11330

Total Production

33350

36688

34250

37380

0

37953

Other Imports

16

3

6

1

0

1

Total Imports

16

3

6

1

0

1

Total Supply

33366

36691

34256

37381

0

37954

Other Exports

0

7

0

7

0

7

Total Exports

0

7

0

7

0

7

Fluid Use Dom. Consum.

12390

10745

12858

10982

0

11198

Factory Use Consum.

20366

25457

20909

25896

0

26250

Feed Use Dom. Consum.

610

482

489

496

0

499

Total Dom. Consumption

33366

36684

34256

37381

0

37947

Total Distribution

33366

36691

34256

37388

0

37954

(1000 HEAD) ,(1000 MT)

PS&D data for fluid milk are reported in 1,000 metric tons and not in 1,000 kiloliters. One liter of cow's milk weighs approximately 1.03 kg.

Dairy, Cheese

Production:

Note: There are no official statistics on production and consumption of cheese in Brazil. Post production estimates for cheese are based on trade sources and also include "informal" cheese production.

Post forecasts cheese production in CY 2015 to increase by 2 percent to 751 MMT, boosted mostly by an estimated small growth in the fast-food sector and mainly in new opportunities to export the product. The forecast for CY 2016 is forecast to reach 177 MMT.

Some cheese manufacturers are strengthening their businesses through acquisitions or joint-ventures. This is likely to stimulate small and medium-sized companies to improve their operations by investing in machinery, broadening distribution, reducing costs and diversifying the product portfolio.

Consumption:

Post forecasts cheese consumption to increase by 2 percent in CY 2015 to 766 MMT and to 780 MMT in CY 2016, supported by consumer demand. Local companies are innovating and launching value-added cheeses which copy European style cheeses. They have also launched different varieties using buffalo milk and these cheeses are gaining in popularity.

Trade:

Imports:

Cheese imports in CY2015 are projected to decline by 11 percent. Dairy companies are expected to be less dependent on imported cheeses, as production increases. For CY 2016, Post forecasts a slight decrease in imports due to a sharp decrease in the value of the Brazilian real and a general weak economy.

Exports:

Cheese exports in CY 2015 reached 2.5 MMT and Post forecasts that cheese exports will increase by 2 percent in CY 2016 to 2.7 MMT. Brazil is not a strong cheese exporter, but companies are trying to improve in terms of machineries and will target exports to Russia in CY 2016. Recently Russia opened the cheese, milk powder and butter market to Brazil by registering some dairy plants to export to that country. This will explain the increase in cheese production and in the exports in CY 2016. The volumes for CY 2015 are still insignificants.

Brazil Export Statistics

Commodity: 0406, Cheese And Curd

Year To Date: January - August

Partner Country

Unit

2013

2014

2015

USD

Quantity

USD

Quantity

USD

Quantity

World

T

7658209

1654

8624699

1712

6859207

1564

Chile

T

2746168

689

2759263

668

1984967

639

Taiwan

T

1333140

201

1976858

268

1762425

211

Paraguay

T

1075610

235

1137053

245

843659

204

Argentina

T

1136686

294

767459

196

568141

177

Russia

T

0

0

0

0

447660

98

United States

T

282713

54

325376

55

313405

59

Venezuela

T

264657

55

0

0

284225

50

Ghana

T

325578

53

491602

80

280562

52

Angola

T

352486

52

625532

88

267638

50

Uruguay

T

45243

8

481900

105

71611

16

Bolivia

T

46147

8

25195

5

31378

8

Japan

T

49781

7

2860

0

2600

0

Cape Verde

T

0

0

0

0

936

0

Colombia

T

0

0

31601

3

0

0

Tariff Rate Table

Tariff Number

(HTS)

Product Description

Rate (%)

CXT *

Other Info

0406.10.10

Cheese, Mozzarella (1)

28

Mercosul: 27%

0406.10.90

Cheese, Other

16

Mercosul: zero

0406.20.00

Cheese: Grated or Powdered

16

Mercosul: Zero

0406.90.10

Cheese, with a fat content less than 36 %, by weight (1)

28

Mercosul: 27%

0406.90.20

Cheese with a fat content superior or equal to 36 % and

less than 46%, by weight (1)

28

Mercosul: 27%

* CXT: MERCOSUL Common External Tariff. The CXT tariff is applied to all imports other than from MERCOSUL. These tariffs are assessed on the CIF value of the product.

Note (1): Effective June 1, 2001, these types of cheeses were included on the "exception list" of the Common External Tax (CXT), of the MERCOSUL, per Resolution 16/01, of the Foreign Trade Chamber (CAMEX), which altered Annex Two of the Decree Number 3,704 of December 27, 2000. The 27% tax is charged in addition to the Import Tariff of 16 percent for all imported cheeses, including MERCOSUL members.

Stocks:

There are no official government stocks of cheese in Brazil.

PSD: Dairy, Cheese (HTS: 0406)

Dairy, Cheese

2014

2015

2016

Market Begin Year

Jan 2014

Jan 2015

Jan 2016

Brazil

USDA Official

New Post

USDA Official

New Post

USDA Official

New Post

Beginning Stocks

0

0

0

0

0

0

Production

736

736

751

751

0

766

Other Imports

21

20

21

18

0

17

Total Imports

21

20

21

18

0

17

Total Supply

757

756

772

769

0

783

Other Exports

2

3

2

3

0

3

Total Exports

2

3

2

3

0

3

Human Dom. Consumption

755

753

770

766

0

780

Other Use, Losses

0

0

0

0

0

0

Total Dom. Consumption

755

753

770

766

0

780

Total Use

757

756

772

769

0

783

Ending Stocks

0

0

0

0

0

0

Total Distribution

757

756

772

769

0

783

(1000 MT)

Dairy, Butter

Production:

Note: There are no official statistics on production and consumption of butter in Brazil. Post production estimates for butter are based on trade sources, and includes "informal" butter production.

Butter production is projected to increase by 1 percent in CY 2016, reflecting an increase in exports mainly to Russia. As mentioned before, this country opened the market for Brazil in September 2015 for dairy products: milk powder, cheese and butter.

Trade:

Import and export volumes for this product are insignificant in CY2015. Brazil mainly produces butter for its own consumption and occasionally, depending on market conditions exports or imports low volumes. Post forecasts a slight increase in butter exports in CY 2016, to export some product to Russia, but the volumes are small compared to other commodities.

Tariff Rate Table

Tariff Number

Product Description

Rate (%)

CXT *

Other Info

0405.10.00

Butter

16

Mercosul: Zero

0405.90.10

Butter Oil

16

Mercosul: Zero

PSD: Dairy, Butter (HTS: 0405)

Dairy, Butter

2014

2015

2016

Market Begin Year

Jan 2014

Jan 2015

Jan 2016

Brazil

USDA Official

New Post

USDA Official

New Post

USDA Official

New Post

Beginning Stocks

0

0

0

0

0

0

Production

93

85

95

87

0

88

Other Imports

1

1

1

1

0

1

Total Imports

1

1

1

1

0

1

Total Supply

94

86

96

88

0

89

Other Exports

7

6

6

6

0

6

Total Exports

7

6

6

6

0

6

Domestic Consumption

87

80

90

82

0

82

Total Use

94

86

96

88

0

88

Ending Stocks

0

0

0

0

0

1

Total Distribution

94

86

96

88

0

89

(1000 MT)

Dairy, Dry Whole Milk Powder

Production:

Note: There are no official statistics on production and consumption of powdered milk in Brazil. Post estimates for powdered milk production (nonfat and whole milk) are based on trade sources.

Post forecasts whole milk powder (WMP) production to 617 MMT in CY 2015 and an increase by two percent in CY 2016 and reach 629 MMT, strong domestic demand and reduced imports from Argentina are factors that explain this increase. Another factor which affects this situation is the food processing industry, which continues to grow and increase its utilization of milk powders. Another factor is the increase in exports of whole milk powder.

Consumption:

Post forecasts CY 2015 powdered milk consumption to 618 MMT and an increase by 2 percent to 630 MMT in CY 2016, supported by higher domestic demand.

Trade:

Post forecasts an increase in milk powder exports in 2015 and 2016. Based on trade sources, the numbers can reach 40,000 MT and 41,000 MT respectfully. It represents the large investments made by manufacturing companies to the export markets. This category represents 76 percent of total dairy exports from Brazil.

The country is not competitive in other categories and most of the times do not have surplus to export. Exports are mainly to Venezuela which accounts for 74 percent of the market.

Brazil Export Statistics

Commodity: _PSD WMP, (040221, 040229)

Calendar Year: 2012 - 2014

Partner Country

Unit

2012

2013

2014

USD

Quantity

USD

Quantity

USD

Quantity

World

T

876,371

153

6,292,903

2,842

211,613,232

39,197

Venezuela

T

-

-

5,235,770

2,672

162,160,122

29,157

Algeria

T

-

-

-

-

32,683,550

6,650

Cuba

T

-

-

-

-

9,840,653

2,000

Egypt

T

-

-

-

-

3,910,000

800

Bolivia

T

389,135

81

436,287

90

527,452

110

Others

T

487,236

73

620,846

79

2,491,455

480

Whole milk powder imports decreased 35 percent in 2014. In CY 2015 imports of this category reached already 40 MMT until September, a totally different scenario from 2014. Post forecasts that imports Argentina continues to be the major supplier of powdered milk responsible for 67 percent of the total imported. Trade sources indicate that milk powder imports for CY 2016 should increase by 2 percent, to supply domestic demand.

Brazil Import Statistics

Commodity: _PSD WMP, (040221, 040229)

Calendar Year: 2012 - 2014

Partner Country

Unit

2012

2013

2014

USD

Quantity

USD

Quantity

USD

Quantity

World

T

261,780,689

70,651

226,531,952

54,368

133,488,385

30,275

Argentina

T

123,445,754

32,903

115,705,262

27,560

91,359,885

20,259

Uruguay

T

128,899,682

35,298

93,238,752

22,704

26,948,924

6,544

Chile

T

9,433,477

2,450

17,583,987

4,104

15,179,576

3,473

France

T

1,776

1

3,951

1

-

-

Exports from United States:

The United States continues to be competitive in other dairy categories, such as ingredients (sweet whey powder, lactose and whey powder concentrate). Sweet whey powder imports from the U.S. totaled 30 percent and lactose imports represent 26 percent of total imports in 2014. The other category in which the United States is competitive is whey protein concentrates/isolate (WPC/WPI) accounting for 61 percent of this market. Most of sweet whey and lactose are used in the feed sector, the WPC/WPI is used in the supplement industry and some other food sectors. Whey protein concentrates/isolates are the most competitive ingredient imported from the U.S.

Stocks:

There are no official government stocks of powdered milk in Brazil.

Production, Supply and Demand Data Statistics:

PSD: Dairy, Dry Whole Milk Powder (HTS: 0402.21; 0402.29)

Dairy, Dry Whole Milk Powder

2014

2015

2016

Market Begin Year

Jan 2014

Jan 2015

Jan 2016

Brazil

USDA Official

New Post

USDA Official

New Post

USDA Official

New Post

Beginning Stocks

0

0

0

0

0

0

Production

612

612

600

617

0

629

Other Imports

30

30

60

41

0

42

Total Imports

30

30

60

41

0

42

Total Supply

642

642

660

658

0

671

Other Exports

40

39

20

40

0

41

Total Exports

40

39

20

40

0

41

Human Dom. Consumption

602

603

640

618

0

630

Other Use, Losses

0

0

0

0

0

0

Total Dom. Consumption

602

603

640

618

0

630

Total Use

642

642

660

658

0

671

Ending Stocks

0

0

0

0

0

0

Total Distribution

642

642

660

658

0

671

(1000 MT)

Dairy, Milk, Nonfat Dry

Production:

Note: There are no official statistics on production and consumption of powdered milk in Brazil. Post estimates for powdered milk production (nonfat dry milk) are based on trade sources.

Post forecasts nonfat dry milk powder (NFDM) production to reach 157 MMT in CY2015 and increase by 2 percent in 2016 and reach 160 MMT.

Consumption:

Post forecasts 2015 NFDM consumption to increase by 2 percent to 180 MMT, taking into consideration the needs of the food industry. Trade sources indicate that CY 2016 is 182 MMT.

Trade:

Imports come basically from Uruguay and Argentina and help meet domestic demand. Brazil does not have a competitive industry and surplus to export NFDM.

In CY2015, post forecasts imports of NFDM to maintain the same volumes as in CY2014 due to the launch of two new plants previously reported and that now are working at full capacity. In CY2015, imports are estimated to reach 23 MMT and a slight decrease in CY2016 to 22 MMT.

Stocks:

There are no official government stocks of NFMD in Brazil.

PSD: Dairy, Non Fat Milk Powder (HTS: 0402.10)

Dairy, Milk, Nonfat Dry

2014

2015

2016

Market Begin Year

Jan 2014

Jan 2015

Jan 2016

Brazil

USDA Official

New Post

USDA Official

New Post

USDA Official

New Post

Beginning Stocks

0

0

0

0

0

0

Production

154

154

157

157

0

160

Other Imports

23

23

30

23

0

22

Total Imports

23

23

30

23

0

22

Total Supply

177

177

187

180

0

182

Other Exports

0

0

0

0

0

0

Total Exports

0

0

0

0

0

0

Human Dom. Consumption

177

177

187

180

0

182

Other Use, Losses

0

0

0

0

0

0

Total Dom. Consumption

177

177

187

180

0

182

Total Use

177

177

187

180

0

182

Ending Stocks

0

0

0

0

0

0

Total Distribution

177

177

187

180

0

182

(1000 MT)