Conflict in the Middle East may affect the dairy market – Rabobank

High milk production continues to put pressure on world dairy prices, despite early signs of market stabilization.

This is reported by Rabobank.

According to analysts, milk production is growing in most key exporting countries, except for Australia. This is facilitated by relatively low feed prices, which maintain a high level of supply on the world market.

The largest price drop was recorded in the milk fat segment: from September to February they decreased by more than 40%. Whole milk powder (WMP) fell by about 30%. At the same time, protein products – skimmed milk powder (SMP), cheese and whey – turned out to be more stable: their prices decreased by about 15%, while whey is even becoming more expensive due to high demand for protein products.

Recent auctions of the Global Dairy Trade (GDT) showed several price increases in a row, which improved market sentiment. However, milk production in the EU, the US, South America and New Zealand is still above last year’s levels, so the market remains well-supplied.

According to Rabobank, milk production in the seven largest exporting countries will grow by just 0.2% in 2026, after a 2.6% increase in 2025.

The slowdown in production is expected to be most pronounced in South America, Australia and China. In Europe, milk production could fall by 0.9%, which would subsequently affect the markets for butter and skimmed milk powder.

Meanwhile, in the US, milk production is likely to continue to grow thanks to high beef prices. The bulk of the milk is used to make cheeses, including mozzarella and cheddar, as well as whey.

Analysts note that demand for dairy products from Asian countries remains stable. At the same time, geopolitical tensions, particularly in the Middle East, may affect the balance of the global market, as the region is an important importer of milk powders and other dairy products.

Tags: war