Global milk production set to grow as prices stay high

Better returns for dairy producers around the world, as a result of higher farmgate milk prices and lower feed costs, should lead to greater global milk supplies in the coming year.

Global milk production is forecast to increase by roughly 1% during 2025, with much of the gain coming from greater volumes in the EU, US and South America.

The global dairy market is set for modest growth, driven by steady supply expansion and increasing export demand, according to multinational banking group Rabobank.

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Much of the increase in global milk volumes is forecast in the first half of the year, coinciding with the spring flush in the northern hemisphere.

Rabobank forecasts further modest gains in milk production during the first half of 2026.

Lucas Fuess, senior dairy analyst at Rabobank, said: “While retail dairy prices experienced deflation in parts of 2024, offering relief after previous inflationary years, we expect higher farmgate milk prices to lead to increased consumer prices in 2025.”

Mr Fuess suggested that, despite the more optimistic outlook for the sector, trade barriers and potential tariffs could pose challenges for global trade flows.

He added that China had bucked the wider global trend, with milk production due to fall as a result of fewer cows in the country.

Global dairy markets generally remain firm, however, wholesale values did drop back by 0.5% at the latest fortnightly Global Dairy Trade auction on 4 March.

Domestic market

GB milk production is forecast to increase by 0.9% during the 2024-25 milk year, to roughly 12.4bn litres.

Industry analysts have suggested that, as the spring flush approaches and supplies increase, milk prices could come under pressure.

However, there is some optimism on the horizon with dairy commodities such as cheese and butter still in good demand and also the potential for increased interest for dairy products from China later in the year.

Both the actual milk price equivalent (Ampe) and milk for cheese value equivalent (MCVE) eased back slightly during February, but remain above last year’s levels.