Rabobank forecasts supply uncertainty in global dairy markets

The global dairy market is shifting from a period of production growth toward one defined by supply uncertainty, according to research from Rabobank. While global milk production expanded through the third quarter of 2026, the pace of growth has slowed to an estimated 1.4% year-on-year, marking the weakest quarterly growth since early 2025.

In New Zealand, Fonterra’s recent 50-cent cut to its midpoint milk price is expected to be short-lived. RaboResearch analyst Emma Higgins suggests the final price for the season could approach $10/kg MS. New Zealand production is forecasted to grow by approximately 1% in the 2026-2027 season, following a record-breaking previous season that exceeded 2 billion kg MS.

Global production trends show moderation across major exporters. While supply remains elevated in the US, New Zealand, and the EU, production in Brazil and Argentina is slowing due to heavy rainfall, and north-western Europe is facing heat impacts. Rabobank expects production across the seven major exporting regions to slow to 0.5% year-on-year in the second half of 2026, with a potential contraction of 0.2% in the fourth quarter.

Despite economic uncertainty, global dairy demand remains resilient. Import demand in Asia continues to support international markets, with China showing signs of stabilization and Southeast Asian demand remaining robust.