Rabobank has lifted its milk forecast by 30 cents to $10/kg MS for the 2024-2025 on a predicted slow to modest global dairy growth this year.
In its latest quarterly report, the bank expects milk production in Australia, New Zealand, Argentina, Uruguay, Brazil, the European Union, and the United States (dairy’s Big Seven) to expand by 0.8% year on year, with a similar gain in the first half of 2026.
This forecast is driven largely by a return to production growth in both the EU, where production has oscillated between growth and contraction in recent quarters, and the US, where the typical annual gains of 1%-plus have stagnated in recent years.
“US supply expansion is expected in 2025, but it’s likely to be modest at sub-1%,” report coauthor and Rabobank senior agricultural analyst Emma Higgins said.
Production gains are also expected from Oceania and South America.
“Overall, we anticipate milk production from the Big 7 will reach 325.8 million metric tonnes in 2025, up from 323.2t last year.”
Global supply growth in the second half of 2025 was likely to be stronger than the first.
China meanwhile was on a different milk production path to most regions across the world, with supply expected to fall further in the year ahead. Chinese dairy demand is expected to improve this year, but at a slower pace, reflecting domestic economic challenges.
Purchasing in other key regions is encouraging. US cheese exports surged to a record high in 2024, with positive signs for this year. New Zealand is also finding buyers for its additional milk, supporting a record-high milk price.
But potential challenges could disrupt this, primarily related to the rapidly evolving trade barrier landscape as the US shifts away from decades of global alignment.
“Dairy has not yet been negatively impacted by any disruption, but the threat remains serious. Reduced exports would be bearish for US prices,” Higgins said.
New Zealand export volumes are likely to remain strong over the first half of 2025, as higher milk flows earlier in the season and broad-based demand settings will ensure additional milk production finds a market.
“With milk price forecasts up by NZD$2/kg MS compared to this time last year, dairy farmer confidence is strong, and this positivity has been further buoyed by alleviating interest rate pressure following recent drops in the Official Cash Rate.”
While early summer rain made for happy farmers over Christmas, the report says, seasonal dry conditions have hit many North Island regions and the east of the South Island, hampering milk flows in recent weeks.
“If significant rain is not received over the coming weeks, there is a risk that the milk production season finishes abruptly in the western, middle, and north of the North Island,” Higgins said.
