USDA International Dairy Market Report - 2026 Forecast
The USDA Foreign Agricultural Service analysis forecasts for 2026:
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EU milk production down slightly (continuation of decline in cows)
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Butter, SMP and WMP production and exports down
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Slight increase in cheese production because margins are more favorable there
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Export markets generally weaker (especially butter & powder to China)
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Chinese provisional import tariffs on EU dairy products could make market access even more difficult
German producer prices have fallen sharply
According to current market reports, milk prices for German producers are falling sharply:
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Many dairies paid significantly lower farm-gate prices in November / early January (in some cases below 40 ct/kg)
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FrieslandCampina price quotedbelow 40 ct/kg for the first time
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Raw material value of many dairies is below 36 ct/kg
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Organic premiums remain high in comparison
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China imposes additional punitive tariffs on certain EU dairy products, which puts additional pressure on exports and prices
Global market dynamics: oversupply and pressure on prices
Market analyses show:
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Global milk supply exceeds demand, especially butter and powder, which puts pressure on prices worldwide
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GDT index fell several times, butter prices slide significantly, SMP and WMP spreads are also under pressure
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US butter exports are strong, putting pressure on EU regions
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Producers in Europe and Oceania are facing increasing competitive pressure
Long-term structural developments
A new EU Agricultural Outlook shows:
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Consumer trend towards higher value and more functional dairy products is increasing, which could change demand segments in the long term
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Milk and dairy production is becoming more productivity-driven, but herd sizes continue to fall
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Butter production +0.3% per year until 2035, but exports slightly declining, which may change margins in the medium term. ahdb.org.uk
Forecast & industry commentary - prices could still fall
Market forecasts suggest that butter and cheese prices could remain under pressure globally as surplus production meets weak demand.
ZMP Live Expert Opinion
The news situation shows a dairy market that will remain under pressure in the early part of 2026:
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Producer prices are falling sharply locally (e.g. Germany), which is a major burden for farmers.
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Global supply surpluses and price pressure continue, supported by continued strong milk output despite weak demand.
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Export opportunities have becomemore difficult, partly due to trade barriers.
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At the same time, there are bullish impulses, especially structural trends in demand (premium and functional products) and long-term production adjustments.
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