Short-Term Dairy Market Outlook Positive, but Uncertainty Looms for 2025

Ireland 08.01.2025

Source: DairyNews.today

Dublin, Ireland — The short-term future for dairy markets looks promising, according to a new analysis from Teagasc’s Agricultural Economics and Farm Surveys Department. Researchers Trevor Donnellan and Emma Dillon predict that higher dairy commodity prices will boost profitability for farmers in 2024. However, the global market for 2025 remains difficult to forecast due to unpredictable factors such as potential La Niña weather patterns and geopolitical tensions, including the possibility of U.S. trade tariffs.

Short-Term Dairy Market Outlook Positive, but Uncertainty Looms for 2025

Positive Indicators for 2024 and 2025
The average milk price is forecast to rise by 5% in 2025 compared to 2024, driven by favourable trends in recent Global Dairy Trade (GDT) auctions. Supply is expected to grow modestly, with milk production from major exporters projected to increase by 0.3% in 2025. In the EU, assuming stable weather conditions, milk production could rise by 0.2%.

Profitability is also expected to surge, with dairy profitability per hectare projected to grow by 35% in 2025. Teagasc forecasts that the average net margin per hectare will jump from €1,578 in 2024 to €2,126 in 2025, while net margin per litre is expected to rise by 29% to 17c/L.

Challenges on the Horizon
Despite these positive trends, risks remain. Continued weakness in Chinese dairy imports could dampen global demand, though declining stock levels in China offer some hope for recovery. Additionally, researchers caution that the high price of butter—a key driver of rising Irish milk prices—may face downward pressure later in 2025 as markets adjust.

Irish Dairy Prices Leading the EU
Ireland has made significant gains in milk prices, climbing from the lower ranks of the EU milk price league in 2023 to surpassing the EU average in 2024. This growth has been fuelled by strong butter prices, which continue to play a pivotal role in supporting the Irish dairy sector.

Outlook Remains Optimistic but Uncertain
While the short-term forecast for the dairy market is encouraging, the long-term outlook remains clouded by external factors. "Farmers should prepare for potential volatility," Donnellan advised, noting that unforeseen developments could disrupt the current trajectory.

With rising profitability and improving prices, the next year offers opportunities for dairy producers, but vigilance will be key in navigating the global uncertainties that could shape the market in 2025.