Dairy protein prices rise while milk fat prices decline on global market

Global dairy markets are showing increasingly divergent price trends, with dairy protein prices rising while milk fat prices continue to decline. According to Infagro analysts, despite a modest recovery in global demand, milk production is increasing across all major producing regions, limiting further price growth. Market participants do not expect a significant increase in dairy product prices in the fourth quarter of 2026 due to ample raw milk supplies and limited demand from consumers and the food industry.

Milk production in Europe continues to increase, although growth is gradually slowing. Raw milk deliveries to processing plants have exceeded earlier expectations, leading to lower spot prices for milk and cream. Against this background, butter and other milk fat prices are coming under increasing pressure. Meanwhile, some major processors continue to raise farmgate milk prices despite the overall weakening of market conditions.

Milk production is also expanding in New Zealand, Australia, the United States and South American countries. In the US, additional milk supplies are mainly being directed towards cheese production, helping processors absorb surplus volumes. However, weather conditions in Oceania may deteriorate in the coming months, potentially limiting further growth in milk yields. The possible impact of the El Niño climate phenomenon remains an additional risk for producers.

According to forecasts, global milk production is expected to increase by 2.2% in 2026, while growth could slow to 1% in 2027. Despite the anticipated slowdown in supply growth, the market will continue to face subdued consumer demand. Retail dairy sales have so far fallen short of expectations, while demand from the food industry is weakening. Inflation, fluctuations in crude oil prices and high interest rates are creating additional uncertainty.

In the near term, abundant raw milk supplies may continue to put downward pressure on prices for butter, cream and other milk fats. Meanwhile, the dairy protein segment is showing stronger price performance, creating different market conditions for producers of various dairy products. Further developments in the global dairy market will depend on milk production trends, a recovery in consumer demand and weather conditions in major exporting countries.

Tags: Milk, dairy products, global market