Slower milk production growth in key exporting countries could support global prices

Milk production growth is slowing significantly in major exporting countries, potentially supporting global dairy prices in 2027. The sharpest slowdown is being observed in Europe and New Zealand, while the United States continues to expand output. According to analysts at Hoard’s Dairyman Intel, a further slowdown in global supply growth could strengthen prices, provided demand remains stable.

US milk production increased by 2.6% year on year in September 2026, while output adjusted for higher fat and protein content rose by 3.5%. Over the past two years, US dairy farmers have expanded their herds by 421 thsd cows, or 4.5%. This provides a basis for further production growth, which is expected to remain above average through the end of 2026 and well into 2027.

Meanwhile, combined milk production in the European Union and the United Kingdom increased by just 0.2% year on year in September, following growth of 5.5% in the first quarter and 3% in the second. The main reasons for the slowdown were lower farmgate milk prices, rising feed costs and unfavorable weather conditions. In particular, hot and dry summer weather in France and the UK negatively affected production, while declining profitability is limiting further expansion of dairy farming.

In New Zealand, milk solids production increased by 1.9% in September, compared with growth of more than 6% in both the first and second quarters. Despite relatively strong dairy farm profitability, the production outlook remains dependent on weather conditions, particularly the potential impact of El Niño. Analysts forecast that output could decline by approximately 1.7% in the first quarter of 2027, although the actual trend will depend on the severity of weather anomalies.

Slower milk production growth in Europe and New Zealand could limit global supplies of butter, cheese and other dairy products, supporting international prices. Meanwhile, expanding US production could strengthen the competitive position of American exporters, as their products may remain cheaper than those offered by other major suppliers. According to analysts, dairy price trends in 2027 will depend on the balance between global supply and demand, as well as weather conditions in key dairy-producing regions.

Tags: Milk, global market, dairy product