Global milk supply is expected to grow by 2.2% in 2026 despite challenging weather conditions, DairyReporter reports.

Key points:

  • global milk supply growth is forecast to slow to a more modest +1% in 2027;
  • global milk collections rose by about 1.4% in August;
  • the European Union (EU) annual milk production forecast has been restored to its pre-drought level of +1.9%;
  • the US annual forecast stands at +2.2%, while New Zealand’s growth could reach 4% or more;
  • the full impact of weather-related supply disruptions is unlikely to show before early next year.

Outlook for 2026–2027

According to Ornua’s Global Dairy Market Report for October, growth in 2027 is expected to slow to a more modest +1%, although the real impact of El Niño is «currently unknown».

With oil prices, inflation and interest rates all rising, macroeconomic uncertainty is also a «considerable» factor.

The report notes that milk flows have exceeded expectations, though global supply growth should ease as the effects of the European drought and El Niño take hold.

Collections rose by about 1.4% in August, with growth still seen in most major regions.

Despite this strong global supply, European dairy markets have remained relatively stable, the report says.

European Union

EU production rose by 1.1% in September, down from +2.5% in August, but flows were still better than expected given the drought.

As a result, the EU’s annual milk production forecast has been revised back to its pre-drought level of +1.9%.

United States

US milk volumes rose by 1.7% in July and August, and the annual forecast still points to a 2.2% increase. Strong beef prices and new cheese processing capacity remain the main drivers of growth, according to the report.

New Zealand and South America

New Zealand milk flows rose by 2.4%, with milk solids up 3.4%; at the current pace, growth could reach 4% or more.

In South America, favourable conditions lifted output in major producing countries such as Argentina, Brazil and Uruguay.

«Global flows are expected to continue expanding, albeit at a slower pace in the fourth quarter. The full impact of weather-related supply disruptions is unlikely to emerge until early next year», the report said.

Butter market

EU butter production increased in July and August, supported by strong exports to the US, China and Turkey.

Drought concerns, historically low prices and seasonal activity supported the market in August and early September. In the UK, however, production has slowed in recent months, though strong exports have provided some support.

In the US, butter supply has been robust, but domestic demand and strong exports have kept stocks low.

Source: DairyReporter