Global milk output growth slowing after four strong quarters
Rabobank sees 1% rise in 2026 before slight decline in 2027
1 July 2026
1 minute read
By: Global milk production growth is slowing after four consecutive quarters of expansion above 2% across the world's major dairy regions, according to Rabobank.
Output growth peaked at 5.2% in the fourth quarter of 2025. Supplies are expected to be 1.5% higher year on year in the second quarter of 2026, before flattening in the third quarter and declining 1.6% in the fourth. On a full-year basis, Rabobank estimates milk production will rise 1% in 2026 and decline slightly in 2027, supporting a rebalancing of global supplies after several quarters of strong growth.
The earlier surge in supply has weighed on prices, though trends vary by product. Gains on the Global Dairy Trade price index have been driven mainly by skim milk powder, followed by whole milk powder, while cheese and butter remain below 2025 levels due to adequate supply. Farmer margins are under pressure in some regions, particularly in the EU, where milk prices have declined.
Rising input costs are the most pressing concern across most regions, with energy, fertiliser and interest rates expected to squeeze margins into the second half of 2026 and into 2027. Ongoing tensions in the Middle East and the Strait of Hormuz closure are adding uncertainty around oil prices, fertiliser availability and feed costs.
On the demand side, Rabobank noted that food price inflation is likely to rise and affect purchasing habits, while continued interest in protein is supporting dairy demand overall.
