Global milk supplies forecast: growth to return in 2025

According to latest estimates, global milk production across the key producing regions is expected to come back to growth with a small increase of 0.6% year-on-year. This is higher than the 0.1% decrease recorded in 2024.  The growth should come from every region, bar Australia (which will be highly weather dependent).

Overall, dairy markets in the latter half of 2024, into early 2025 have been tending towards coming back into growth following a period of higher milk prices and cheaper feed costs. Disappointing Chinese import demand in 2024 has now begun to ease, with a small increase in imports recorded. We have also seen good growth from other importing regions such as Southeast Asia and the Middle East. The global economic situation has been less depressed than in the immediate aftermath of the pandemic years.  There are currently some vulnerabilities emerging which could have an impact on global economic growth.  A more protectionist US could make ripples in global demand.  Some further vulnerabilities in diseases such as BTV in Europe, a Foot and Mouth outbreak in Germany, and avian influenza in the US could also stem supplies. 

In the latter part of 2024 (September and October 2024) most regions returned to growth.

Australia (2.2%), New Zealand (1.2%), UK (2.0%) and EU (0.4%), are expecting to end 2024 in growth with the US (-0.7%) expecting to be in moderate decline.  Argentina continues to expect more severe declines (-6.9%) in response to the challenging economic conditions seen in the country, although less severe than the declines we have been seeing.

 The decline in herd size in the US has now stabilised and is expected to remain stable in 2025. Following a year with a sharp decline, Argentina’s milk production is projected to have the largest increase (4.7%) due to good weather conditions, improved pasture availability, and favourable milk-to-feed price ratios, which may allow for improved yields.

Australia’s milk production is expected to be flat, supported by improved market conditions but constrained by dry conditions during late 2024 and poor pasture conditions in the southern and southwestern regions of the country. If more rain falls, then this outlook could change.

New Zealand’s milk production is also expected to increase by 1.2% in 2025 as farmers expand herds and improve feed and management practices in response to higher global dairy prices.

The EU’s milk production is projected to increase by 0.4% as better weather and improved milk prices and lower costs boost production in some markets. BTV is a risk, however, depending on the speed of vaccination programmes.

Global prices could weaken through the year in response to growing milk supplies.  Demand is currently steady and will benefit from a growth in Chinese demand. However, ripples in the world economy as a result of ongoing conflict and changes in US trade policy could upset this delicate balance.

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