Global dairy market conditions weakened in the second half of this year as milk production rose and demand remained sluggish, according to analysis by Maxum Foods.
In Europe, favourable pasture conditions, strong producer margins, and the absence of major bluetongue virus outbreaks have lifted milk supply. However, rising cream availability and subdued demand have weakened butterfat markets, putting pressure on cheese volume.
New Zealand’s early-season outlook is positive, with herd numbers expected to remain steady year-on-year. Analyst Freshagenda has slightly raised its forecast for milk solids output in 2025/26.
By contrast, Australian milk solids production is projected to decline 2.2 per cent next season, with a lower spring peak anticipated due to reduced cow numbers.
However, competition has also intensified, with low-priced US cheese gaining share in export markets. The US market remains oversupplied, with strong milk and cheese production outpacing soft domestic demand. Butter stocks are also described as chronically high.
China’s dairy outlook is unchanged. Inner Mongolia Yili’s first-half results highlighted ongoing weakness in the liquid milk segment, although categories such as cheese and milk powder recorded modest gains.
In Australia, forecasts point to above-average rainfall from September to November across much of the east, alongside higher temperatures in northern, western, and Southeastern regions.
Meanwhile, Southwest Victoria’s hay prices remain high but are easing as recent rain improves soil moisture.
“Global trade flows continue to expand despite geopolitical and tariff uncertainty, with growth driven mainly by cheese and fat shipments, while milk powders remain under pressure,” says Maxim Foods.
“Although tensions over US trade policy have eased, tariff arrangements are still unresolved.”
Maxim Foods supplies dairy ingredients – including milk powders, cheese, and butter – to medium and large-scale food manufacturers in the human health, nutrition, and animal nutrition sectors across Australia and New Zealand.
