The reduction in international prices for fertilizers and fuels led to Raw Milk Production Input Index (ILC), calculated by the Economic Advisory Office of Farsul, registering deflation of 0.48% in June 2026. The result contradicted the sector's initial expectation, which predicted increased costs due to the appreciation of important inputs such as corn, soybeans, mineral salt, and electricity.
According to the organization, the main factor for the decline in the indicator was the sharp correction in international fertilizer prices. Another factor that contributed to the index's fall was the drop in oil prices, pressured by the easing of geopolitical tensions in the Middle East and the partial normalization of logistical flows in the Strait of Hormuz.
Despite the more favorable external environment, Farsul emphasizes that the effects on costs for rural properties are not uniform. According to the Economic Advisory, many producers anticipated the purchase of inputs during the period of high prices, given international uncertainties and the risk of supply disruptions. As a result, a significant portion of the activity still operates with stocks acquired at higher prices, limiting the immediate impact of the drop in global prices.
The entity also highlights that other components continue to put pressure on the profitability of production. For July, the expectation is for a resumption of ILC inflation, driven mainly by the rise in corn and soybean prices.
Over the last 12 months, the IPCA (Brazilian Consumer Price Index) for Milk and Dairy Products has registered an increase of 10.06%, reflecting the difference between the evolution of production costs and the behavior of prices throughout the production chain.
This text was translated by machine from Brazilian Portuguese.