El Niño could change the milk production scenario and put pressure on prices in 2027

The confirmation of a new episode of El Niño for the 2026/27 season has rekindled the attention of the Brazilian and international dairy sector. Although the climate phenomenon has not historically shown a direct relationship with total milk production, experts warn that its effects on pastures, food availability for the herd, animal health and production costs could significantly influence the market in the coming months.

According to NOAA (National Oceanic and Atmospheric Administration of the United States), there is a 63% probability that El Niño will reach very strong intensity between November 2026 and January 2027. The period coincides with the rainy season in the main producing regions of South America, considered fundamental for the formation of pastures and the development of crops intended for animal feed.

El Niño occurs when the surface waters of the Equatorial Pacific Ocean become warmer than normal. This warming alters global atmospheric circulation and changes rainfall and temperature patterns in different parts of the world.

In Brazil, the effects tend to vary depending on the region, while the South tends to record above-average rainfall, the Northeast typically faces drier conditions. The Southeast and Central-West tend to have greater irregularity in precipitation and higher temperatures.

According to Juliana Torres Santiago, market intelligence analyst at StoneX, the phenomenon requires attention because it directly interferes with production conditions.

"The main impacts on milk involve the availability of forage and thermal stress, with repercussions on production and animal productivity. There are also indirect effects, such as logistical and collection difficulties, a higher incidence of diseases in the herd and pastures, as well as an increase in production costs, especially with feed, both roughage and feed", he explains.

Despite these concerns, historical data analyzed by StoneX shows that there is no clear correlation between El Niño episodes and the performance of Brazilian milk production. This occurs because Brazil has a very wide geographic distribution of the activity, present in practically all municipalities in the country.

In many cases, the negative impacts observed in certain regions end up being offset by more favorable conditions in other producing areas.

"Although El Niño presents a slightly negative bias, the data shows that both periods of El Niño and La Niña can generate positive or negative deviations in relation to the production trend. The effects tend to be counterbalanced between regions", highlights Juliana.

In recent years, the Northeast has increased its participation in Brazilian milk production thanks to the adoption of technologies, improvements in the formalization of the chain and the use of forages adapted to the local climate. However, the advance of El Niño could represent an obstacle to this growth.

The states of Bahia, Sergipe and Alagoas are among those most exposed to the risk of reduced rainfall. Forecasts indicate a greater probability of water deficit between February and March 2027, a period in which water availability is essential for maintaining pastures and feeding livestock.

Reduced rainfall can compromise forage production, increase costs with food supplementation and reduce the productivity of dairy cows.

In the Central-West and Southeast, where some of the country's largest production centers are located, the challenge tends to be different. Minas Gerais, the national leader in milk production, and Goiás may face a scenario marked by irregular rains and above-average temperatures.

In these regions, concern focuses especially on the so-called milk harvest, a period between October and March. During these months, climatic conditions determine the development of pastures and crops intended for silage production, mainly corn.

In addition, rising temperatures represent an important risk for livestock. Heat stress reduces food consumption, compromises reproduction and directly affects milk production.

International

While part of Brazil may face difficulties, the South region and Mercosur countries tend to present a more favorable scenario. Argentina, Uruguay and southern Brazilian states are expected to receive above-average amounts of rain, which favors pasture production and the supply of silage for livestock.

This condition can contribute to greater food availability and better production rates. However, experts warn that excess humidity also brings challenges. Very intense rains can make farm management difficult, harm the planting of forage, increase the incidence of diseases and create obstacles to the logistics of milk collection.

The impact of El Niño is also closely monitored in the international market. New Zealand and Australia, two of the world's main dairy exporters, have production systems heavily based on pasture and, therefore, are often seen as more sensitive to climate change.

In Australia, hotter and drier conditions are expected in the main producing regions, which could limit pasture growth. In New Zealand, the effects tend to be more heterogeneous, with some areas recording more rain and others experiencing drier conditions.

Still, StoneX studies show that, as in Brazil, there is no consistent correlation between El Niño indices and milk production in Oceania. Structural, technological and economic factors tend to exert a more significant influence on the results of the activity.

Profitability

For analysts, the main point of attention is not necessarily on the production of 2026, but on the possible consequences for 2027. This year, the activity must still respond mainly to the producer's profitability levels and market conditions. However, if El Niño confirms the projected intensity and remains active for an extended period, the impacts on milk supply could become more evident.

In this scenario, a possible reduction in production in important regions, combined with higher feed and management costs, could alter the balance between supply and demand and sustain upward movements in the prices of milk and dairy products.

More than predicting a general drop in production, the analysis reinforces that the dairy sector will need to closely monitor the evolution of weather conditions over the next few months. In a market increasingly dependent on productive efficiency and cost management, producers' ability to adapt to changes imposed by the climate could be decisive for the activity's results in 2027.

https://stories.cnnbrasil.com.br/?post_type=web-story&p=530122

Source: CNN