Global milk supply is set to grow 2.2% in 2026
Milk collection has so far exceeded expectations in many major producing regions. The Ornua Global Dairy Market Report for October estimates that global supply increased by about 1.4% in August, although the pace is expected to weaken as drought in Europe and El Niño-related conditions affect production.
The report puts the expected increase for 2027 at 1%. It says the eventual effect of El Niño is “currently unknown”, while higher oil prices, inflation and interest rates represent a “considerable” source of macroeconomic uncertainty. European dairy markets have remained relatively stable despite strong global availability.
Milk output in the European Union rose by 1.1% in September, compared with 2.5% in August. Volumes were above expectations despite dry conditions, prompting the report to restore the bloc’s annual production estimate to its pre-drought level of 1.9%.
In the United States, production increased by 1.7% in both July and August, and the annual forecast remains at 2.2%. Ornua identifies high beef prices and newly available cheese-processing capacity as the main factors supporting the expansion. New Zealand recorded a 2.4% rise in milk flows and a 3.4% increase in milk solids; at the current rate, growth could reach 4% or more. Favourable conditions also lifted production in major South American producers, including Argentina, Brazil and Uruguay.
“Global flows are expected to continue expanding, although at a slower pace in the fourth quarter. The full impact of weather-related supply disruptions is unlikely to appear before the beginning of next year,” the report says.
European butter production increased in July and August, while exports remained firm, supported by demand from the United States, China and Turkey. Drought concerns, historically low prices and seasonal activity supported the market in August and early September. British production slowed in recent months, although steady exports provided support. In the United States, butter availability has remained strong, while domestic consumption and exports have kept inventories low.
