Rabobank Predicts European Milk Price Rise by Late 2026

Rabobank has projected an increase in European milk prices towards the end of 2026. This adjustment is expected as a response to declining milk deliveries and increasing production costs. The first half of 2026 saw a 3.7% rise in milk deliveries in the EU, but prices in June averaged 42.3 cents per kilogram, indicating a downward trend. In Spain, prices were higher, with Asturias at 49 cents and Galicia at 44.9 cents per kilogram.

The second half of the year is anticipated to see a change in trend due to reduced production. This could result in the last quarter's deliveries falling below levels seen at the end of 2025. The situation is exacerbated by a poor summer for forage crops, with expected declines in European corn harvests by 6% to 7% due to drought, and rising costs for diesel and fertilizers influenced by geopolitical uncertainties in the Middle East.

Rabobank predicts that milk prices will rise in autumn and winter 2026/2027. These price increases are seen as necessary to mitigate increased operational costs. The Portuguese dairy industry, represented by Lactogal, has reduced prices by 1.5 cents in August, impacting exports to Galicia.

Despite volatility in raw milk prices, the processing market remains robust due to strong internal consumption in the EU and an 8% increase in export volume in the year's first half. However, overall revenue from exports decreased by 2%, attributed to lower international dairy commodity prices, although a slight recovery was noted in skimmed milk powder and whey prices recently.

By year's end, both the European Commission and Rabobank expect that processing industries will attempt to pass on some of the accumulated logistical and transportation costs to retailers, potentially adding inflationary pressure on supermarkets. The dairy sector's rebalancing will depend on producers' ability to manage rising feed costs and maintain price structures that ensure farm viability.