Record High for New Zealand Milk Production Expected by 2026

New Zealand's milk output is forecast to reach a record 22.1 million metric tons by the marketing year 2026, as reported by the USDA Foreign Agricultural Service. This increase is largely driven by strong farm-gate prices and a rise in investments within the dairy sector.

The current average farm-gate milk price is NZ$9.70 (US$5.72) per kilogram of milk solids, with future prices expected to remain in the NZ$9 to NZ$11 range (US$5.31 to US$6.49). These prices are significantly higher than the average break-even price of NZ$8.36 (US$4.93), as reported by DairyNZ.

FAS/Wellington projects a 1% increase in the number of cows in milk for the marketing year 2026, reaching 4.72 million head, surpassing USDA's official forecast. The incentivization from higher farm-gate prices has led farmers to retain cows instead of culling them, a trend likely to persist into 2027.

The national herd is also expected to expand due to cropland-to-dairy conversions, particularly on the South Island and parts of the North Island, potentially adding 30,000 to 60,000 head.

On the downside, dairy cow slaughter is forecasted to decline in 2026, with a significant reduction of 66,000 head in the first quarter compared to the same period the previous year. This decrease is anticipated to lower beef production, as culled dairy cows are a major source of grinding beef.