Dramatic recovery for milk volumes in Latin America

Despite most countries entering their seasonal trough period, year-on-year (YOY) volumes continue to grow, annualising on last year’s decline caused by severe weather and milk prices that were eroded by high inflation. In the first quarter of the year, total Latin American milk production grew by 5.6%, with all six reported countries recording increases.

Particularly strong growth was seen from Argentina, which is the main exporter in the region, where milk production was up 10.9% YOY in Q1 2025.

Healthy producer margins and mostly favourable weather have supported outputs. Recent weather in Latin America has generally been mild with sufficient rainfall, though there are exceptions. For example, Mexico has experienced dry conditions but still saw an improvement in yields.

Milk prices have remained firm alongside rising production. Processors reportedly hold low stocks and have been incentivising further production through attractive producer prices. Favourable operating costs have also been maintained. As the grain harvest progresses, the positive yield estimates are expected to hold prices stable.

Regarding the effects on global trade, export volumes are not likely to increase significantly, as domestic consumption is also growing.

Overall, farmer sentiment is optimistic and new financing options are enabling producers to expand but risks to the outlook persist.

YOY % change in Latin America milk production for Q1 (Jan-March) by region

Source: Quarterra

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