USDA Reports Projected Increase in Australian Milk Production by 2026
Australia's milk production is projected to grow by 1.4% to reach 8.6 million metric tons in 2026, as reported by the US Department of Agriculture’s Foreign Agricultural Service (USDA FAS). This marks a partial recovery from a significant 2.1% decline experienced in 2025, primarily due to drought conditions affecting the southwest Victoria and South Australia regions. The recovery is supported by improved seasonal conditions and strong farmgate milk prices set for the 2026/27 season.
Despite the optimism in production, domestic fluid milk consumption is expected to decrease by 0.5% to 2.4 million metric tons, aligning with a longer-term trend of declining consumption. Meanwhile, factory-use milk consumption is forecast to rise by 1.8% to 6 million metric tons, reflecting the overall increase in milk production.
The production of manufactured dairy products is expected to see slight increases, with cheese and skim milk powder (SMP) production projected to rise marginally. However, butter and whole milk powder (WMP) production are anticipated to remain stable at historically low levels. Cheese production is expected to remain a priority for dairy processors, absorbing about 61% of factory-use milk.
On the export front, fluid milk exports are forecasted to grow for the second consecutive year in 2026, driven by strengthening demand in key export markets. Cheese and SMP exports are projected to increase by 1.7% and 1.9% respectively, with butter exports also expected to rise from a low base. Conversely, WMP exports are projected to fall by 20% following weak performance in the initial months of 2026.
Import forecasts indicate a 4.3% increase in cheese imports, reaching record levels due to expanding US supplies overtaking those from New Zealand. Similar trends are observed in butter imports, which are expected to match the record levels of 2023, and WMP imports, which are driven by export demand for value-added products. SMP imports are anticipated to remain relatively stable.
