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Highlights
- Global dairy prices set to remain high despite modest supply growth.
- Australian dairy sector poised for improved margins in 2025.
- Weather conditions to play a crucial role in production trends.
Dairy prices are expected to remain at elevated levels through 2025, supported by steady global production expansion and strong export demand. According to a recent report, milk production in key dairy-exporting regions is forecast to see modest growth, while demand remains robust, keeping prices firm.
Global Dairy Outlook: Steady Growth, Strong Demand
The report highlights that milk production in the seven major dairy-exporting regions—including the European Union, the United States, New Zealand, Australia, Brazil, Argentina, and Uruguay—is projected to grow by 0.8% year-on-year in 2025. A similar trend is expected in the first half of 2026, ensuring a steady but controlled supply increase.
Despite this incremental rise in production, demand from key import markets continues to outpace supply growth, keeping dairy prices elevated. Various factors such as rising consumption, expanding global trade, and currency movements contribute to the sustained pricing strength.
Australia’s Dairy Industry Set for Growth
Australia’s dairy sector is well-positioned to benefit from favorable market conditions in 2025. Farm margins are expected to improve, driven by stronger farmgate prices, high returns from dairy commodities, and a softer currency. This combination of factors is likely to support profitability across the industry.
Production levels in Australia have already shown a 0.4% increase compared to last year, signaling a stable outlook for the sector. However, the trajectory for milk output in the upcoming seasonal peak and into the 2025/26 season will largely depend on weather patterns and rainfall conditions. With climate variability playing a crucial role, producers will need to closely monitor environmental factors that could impact output.
Looking Ahead
While supply growth remains moderate, the global dairy industry is expected to see continued price strength through 2025, driven by persistent demand and stable production expansion. For Australian dairy farmers, the improving economic conditions provide a promising outlook, but weather-related uncertainties will remain a key factor to watch.
With major exporting nations managing gradual supply increases, global dairy prices are likely to remain resilient, shaping the industry’s performance in the coming years.
