In its quarterly dairy market report, Rabobank forecasts that global milk production will increase, while demand remains more uncertain.

High milk prices have encouraged farmers worldwide to boost production. As a result, output in the seven largest exporting countries (“Big-7”) is expected to peak in the second half of 2025, while demand remains weak due to inflation and low consumer confidence, Rabobank notes in its Global Dairy Quarterly Q3 2025 report.

Firm dairy product prices have pushed farmgate prices higher in New Zealand and Europe, rising 27% and 18% year-on-year, respectively. Well-supplied global feed markets have kept input costs in check. Overall, strong farmgate margins are supporting higher milk output, led by the US and New Zealand. In Europe, the picture is mixed: some regions are recovering from bluetongue outbreaks, while others are struggling with drought. Nonetheless, EU production is set to grow, particularly in Ireland and Poland.

Milk production across the Big-7 exporting regions is projected to peak in 2H 2025, with growth continuing into 2026, though at a more moderate pace. On an annualized basis, Big-7 milk supply is forecast to increase by 1.6% in 2025 and 0.6% in 2026, adding a combined 7.1m metric tons over the two years. The slowdown in 2026 mainly reflects strong year-on-year comparisons.

While supply rises, demand remains subdued. Food price inflation — including for dairy products such as milk, butter, and cheese — is restraining consumers. Restaurants and cafés in many major economies are also seeing weaker footfall, Rabobank notes.

Read more about the quarterly report HERE.

Foto: Megumi Nachev, Unsplash