Global Dairy Protein Prices Rise as Milk-Fat Markets Weaken
Global dairy markets are moving in different directions, according to analysts at Infagro. Prices for protein-based dairy products have been rising, while milk fats have come under pressure as raw-milk availability increases and buying activity remains restrained.
European deliveries to processors have exceeded earlier expectations, although the rate of production growth is beginning to slow. The additional supply has contributed to lower spot prices for raw milk and cream, while butter and related products have also faced weaker conditions. Farmgate prices have not followed a uniform pattern: some large processors are still raising payments to farmers, reflecting differences in contracts, procurement policies and raw-milk requirements.
Milk output is also expanding in New Zealand, Australia, the United States and parts of South America. In America, much of the extra milk is being channelled into cheese, providing processors with an outlet for higher volumes. Weather remains a source of uncertainty in Oceania, where deteriorating conditions could reduce yields; the possible effects of El Niño are also being monitored by producers and exporters.
Infagro’s market assessment indicates that global milk production may grow by 2.2% in 2026, followed by an increase of about 1% in 2027. The slower rate would bring supply and demand closer to balance over time, but the forecast does not imply an immediate rise in dairy prices.
Demand has remained weaker than expected in both retail and food manufacturing. Inflation, changes in crude-oil prices and high interest rates are adding uncertainty for processors, farmers and international traders. These conditions are affecting decisions on output, inventories and purchasing commitments.
The contrasting performance of proteins and fats is creating different commercial conditions for dairy companies. Businesses producing protein-rich ingredients may face a different market from those more exposed to butter and cream. Market participants do not expect a substantial increase in dairy-product prices during the fourth quarter of 2026, while milk availability remains high and demand subdued.
