February 2026 dairy market review

Milk production

Domestic

GB milk deliveries in February totalled an estimated 986 million litres, up 3.7% compared to the same period in 2025.

Deliveries averaged 35.2 million litres per day. Production for this year’s milk season so far (April to February) sits at 11,887 million litres, up 5.3% compared to the same period in 2025 and the highest volume logged for February on record keeping pressure on processing capacity.

Milk supplies have been running well ahead of the five-year average since Autumn 2024. For the milk year to date, GB milk supplies are 5.4% or 504 million litres up on last year.

The GB milking herd totalled 1.60 million head as of January 2026, the lowest January number and the lowest number recorded in a decade, and a 1.3% decline from the same month the previous year.

The GB female herd total stood at 2.47 million head, a 1.6% decline year-on-year. A fall was seen across all age groups with the exception of 4–6 year olds that stayed elevate as the youngstock boom of 2021/22 ages through the herd.

The milk to feed price ratio (MFPR) continues to be well in the expansion zone incentivising farmers to push production. However, milk price announcements have been falling since November and have meant as much as 15ppl decline for some.

This has been variable by contract, however, and those on organic or retail-aligned contracts have not yet seen much decline.

We do expect the MFPR to continue to fall once the new Defra data comes through before stabilising which could take it into the stabilisation zone with a milk price of around 35ppl on average.      

Declines in headline prices will be partially offset by strong milk composition with fat and protein in the milk still running at very high levels. 

There are now signs of stabilisation in the milk price ahead as commodity markets have passed their floor but could take some time for recovery to materialise

Organic milk supplies

GB Organic milk deliveries have soared ahead alongside the strong growth in total GB milk deliveries volumes.

Volumes have shown year-on-year growth since March 2025, with the latest GB organic delivery estimates (February) showing a 10.2% growth year-on-year for the month.  This makes the milk year to date at 35.4mn litres above the previous year or 11.1%.

However, in comparison to the 2021/22 year supplies are still behind by 26%. Again, this growth is reflective of industry pushing recovery back to normal levels, rather than oversupply.

The widening gap between conventional and organic milk prices suggests stronger demand for organic milk and need to maintain organic milk supplies 

Global

The latest global production data estimate shows global milk flows now continuing to grow strongly in most regions. 845.5 million litres per day in December, an increase of 40.9 million litres per day (+5.1%) across the selected regions, compared to the same period in the previous year.

Milk deliveries in the EU averaged 379.7 million litres per day in December, a substantial increase of 23.4 million litres per day (+6.6%) compared to the same month of the previous year, and the strongest December on record.

This was driven by Germany, up 265 million litres (+10.8%), France, (+7.3%), and Italy (+8.8%). Disease recovery, low input prices, good forage quality and elevated milk prices for most of the year boosted volumes.

US production was up 11.2 million litres per day (+4.2%) year-on-year: disease recovery, increasing herd size, yields and improved margins drove growth. New Zealand deliveries were up by 2 million litres per day (+2.5%) year-on-year.

Farmer confidence was supported by firm milk prices and favourable weather conditions.

Australia recorded a year-on-year increase of 0.5 million litres per day (1.9%) compared to last year, to sit at an average of 26.3 million litres per day. This marked a recovery from the recent months of decline

Argentina’s deliveries continued to grow, up by 1.7 million litres per day (+5.2%) in December, year-on-year. Dairy industry investment, favourable weather conditions and good dairy producer economics drove higher productivity.

Dairy trade

Total export volume for 2025 was 1.35 Mt, an increase of 113,000 t (9.1%) from 2024. The majority of the increase in exports went to the EU, followed by some non-EU nations.

Growth in volume terms was recorded in all categories except yogurt (which still grew in value terms). However, in value terms all product categories recorded growth.

In non-EU destinations, the biggest increases went to:

• The United Arab Emirates (+5,800 t)
• Nigeria (+5,600 t)
• Algeria (+5,500 t)
• Pakistan (+4,000 t)
• Egypt (+3,300 t)
• Morocco (+3,200 t)
• Indonesia (+2,700 t)
• New Zealand (+2,500 t)
• Malaysia (+2,000 t)
• Bangladesh (+1,800 t)
• Saudi Arabia (+1,800 t)

The leading export product to most of these countries was milk powder due to price competitiveness in the global market. However, the increase in exports to New Zealand was in the whey and whey products category.

Wholesale markets: February

The market turned a corner in February. Despite continuously high milk supplies and product stocks market sentiment rallied as many speculative buyers were forced to cover positions.

With the spring flush now firmly in sight it is too soon to tell whether this shift in direction will be substantive or purely sentimental. Recent weeks have seen notably volatility, partly driven by the outbreak of war in Iran.

Bulk cream 

Prices have moved in a more positive direction after last months losses and have gained £64/tonne over the period to sit at an average of £1249/tonne for the period. Compared to butter, cream is currently an under-valued commodity.

Butter 

Prices have been described as overall quite flat despite some market volatility early in February with buyers securing product to cover short positions.  The average for the period was £3,670/tonne, a modest rise of £70/t or 2%.

The outlook remains constrained by strong milk volumes and high levels of stocks with some imports still coming in.  Butter is at a considerable premium to cream which will spur more production.

Mild cheddar 

Has remained quite quiet but also talk of relatively limited stocks. Mild cheddar has regained £60 of value and sits at £2,920/tonne.

SMP 

Prices continued their upwards movement. Price movements have not necessarily been linear with some bouncing occurring mid-month.

Stronger demand, as reported last month, has continued with buyers now keen to secure volumes before prices rise further.

The average price for the period was £2,040/tonne, a rise of 13% which was the biggest seen amongst the commodities this month.

The uplift in commodity prices means that market indicators AMPE (Actual Milk Price Equivalent) and MCVE (Milk for Cheese Value Equivalent) rose by 9% and 3% compared to the previous month respectively. These are still down by a quarter on the previous year.     

The latest GDT (Global Dairy Trade) auction results have been surprisingly positive in the first six auctions of the year, although the latest only rose by a scant 0.1%.

The auction, which is New Zealand-based but a barometer of global dairy sentiment has seen a rise of 28% since the beginning of the year.

SMP has been the biggest driver with returning demand and a sense of the market being at the bottom sitting at the heart of this. 

Farmgate milk prices 

The latest published farmgate price was for January 2026 was announced by Defra as being 37.75 ppl, down 2.05 pence (5.2%) on the previous month.

Latest announced farmgate prices remained negative for some but mostly steady into March.

Aligned liquid contracts remained steady with the exception of Sainsbury’s which made a price reduction announcement of 0.05ppl, counteracting the positive movement of 0.04ppl made for February.

Muller Co-op Dairy Group, M&S and Tesco made no change to their price in March.

On non-aligned liquid contracts, all the buyers on the AHDB league table announced another month of price declines apart from Freshways, which held steady after four months of consecutive declines, probably as a result of weakness in the cream market. Muller Direct and Payne’s Dairies made a price reduction of 1ppl each.

Crediton Dairy and Pembrokeshire Creamery made further cuts, reducing their price by 2ppl and 1.34ppl, respectively.

There were more price cuts to cheese contracts likely as a result of high milk volumes ahead of the flush. Barbers, Saputo and Wensleydale Creamery reduced by 1.90ppl,1.50ppl and 1.29ppl, respectively.

Belton Cheese announced the largest price decrease of 3ppl, to mark the fifth month of consecutive price decline. Leprino increased their price by 0.40ppl, on the grounds that producers use soya free feed. First Milk, Lactalis, South Caernarfon Creameries and Wyke Farms held for the month of March.

Announcements on manufacturing contracts were mostly stable, with the exception of Dale Farm GB which reduced the March price by a further 0.25ppl. Meadow, Pattesmores and UK Arla Farmers Manufacturing made no change to their price.

Input costs

Since publishing our latest nitrogen fertiliser market outlook, geopolitical tensions in the Middle East have intensified. While there has been no confirmed physical disruption to fertiliser supply into the UK, risk premiums have increased across gas, oil and freight markets which could impact input costs for farmers. We assess the risks here.

Before the outbreak of war oin the region input costs had been much more stable than in recent years.  In the 12 months to November 2025, the overall API for agricultural inputs increased by 2.4%.  Throughout 2025, the price index remained relatively stable increasing by 0.6% from October to November. 

The animal feed production outlook states that as forage supplies are constrained, nutritionists have been prioritising energy from feed grains which have been under downward price pressure.

Volatility in grain markets quickly impacts the grain price which creates a risk for producers as this cannot easily be predicted.

Retail demand

During the 12 weeks ending 21 February 2026, volumes of cows’ dairy increased 0.3% year-on-year¹. Spending on cows’ dairy increased by 5.7% year-on-year, driven by a 5.4% increase in average prices paid. Despite farmgate prices decreasing, retail prices are still rising.

Cows’ milk

Cows’ milk saw a 0.7% decline in volumes purchased year-on-year², while spend saw a 7.2% increase, driven by an 8% increase in average prices paid.

Declines were seen for semi-skimmed, skimmed and other cows’ milk. Whole milk continued to see volume growth, with a 3% increase year-on-year, due to more buyers. Plant-based milk also saw volume growth.

Cows’ cheese

Cows’ cheese remained in volume growth, seeing a 1.8% increase year-on-year². Spend grew by 3.6% during this period, driven by volume gains and a 1.7% increase in average prices.

Cheddar, which represents a majority (43.8%) of all cow cheese volumes, saw a 0.5% increase.

Other cows’ cheese (+10.7%) and snacking (+10.4%) also saw growth.

These categories have seen growth due to consumers wanting a healthier option that is high in protein. This is driven by cottage cheese and snacking selection pack.

This growth offset declines in processed, British regionals, Stilton and British blue, and speciality and continental.

Cows’ butter

Cows’ butter saw a 0.8% decrease in volumes purchased year-on-year². However, spend saw a 1.8% increase year on year, driven by a 2.7% increase in average prices paid.

Block butter continues to be the only subcategory to see volume growth (+5.1%), due to consumers wanting less ultra-processed and more natural foods. However, this growth was not enough to offset the decline in cow butter spread volumes (-3.7%).

Cows’ yogurt, yogurt drinks and fromage frais

Volumes continue to see growth (+6.6%), with spend increasing 9.2% year-on-year².

This growth is due to increased occasions per buyer. Average prices paid grew 2.4%.

Cows’ standard plain yogurt saw the fastest growth of 20.8% year-on-year, while cows’ fat-free yogurt saw the greatest actual growth, with an additional 4.7m kg purchased year-on-year (+13.4%).

Cows’ cream

Cows’ cream volumes saw a 0.6% increase year-on-year, with an 8.1% increase in average prices paid, and an 8.8% increase in spend².

This growth is due to increased demand at Christmas.

Growth in aerosol (+5.6%), clotted (+1.2%) and crème fraiche (+0.7), volumes drove this performance. Whipping, single and sour cream saw volume decreases.

¹ NIQ Homescan POD, Total GB

² NIQ, 12 w/e 21 February 2026

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