Q1 2026 UK dairy product available supplies shrink

Key trends

• Swollen butter stocks eased slightly due to lower imports and an increase in exports
• Supplies of cheese eased amid robust exports
• Cheese exports increased to the EU, Asia and Oceania, Middle East and North African countries

GB milk deliveries recorded new peaks closing the 2025/26 5% higher compared to the previous year. Favourable dairy economics during the season supported unprecedented milk volumes. UK milk deliveries in the first quarter of the calendar year (Jan-Mar) totalled 3,947 million litres (3.4%) higher year-on-year.

Cheese supplies dwindled

Cheese supplies came down after sitting in growth for nearly a year. Though production and imports increased during the period, it was masked by robust exports at the beginning of the year. Lower imports from New Zealand were displaced by an increase in imports from the EU (Ireland, Germany, Denmark and Spain) during the quarter.

Exports of cheese have been increasing since the second quarter of 2025 and are now at the highest quarterly level seen in the last six years. Export volumes of total cheese increased by 15.6% (+7500 tonnes) year-on-year. Overall demand remained firm due to cost competitiveness of British cheese compared to Oceania.

Globally, the biggest increase in cheese volumes were reported to the EU including the Netherlands (+3500 tonnes), Belgium (+1700 tonnes) and France (+700 tonnes). This was followed by an increase to Asia and Oceania including China (+500 tonnes) and Indonesia (+200 tonnes). Exports also picked up to the Middle East and North Africa (MENA): Bahrain (+600 tonnes), Israel (+200 tonnes), Saudi Arabia (+200 tonnes) and Lebanon (+200 tonnes), Sub-Saharan Africa (+400 tonnes). However, the current conflict in the Middle East could affect exports to the region in the second quarter due to logistical challenges.

Cheese production and imports grew by 1.6% (2000 tonnes) and 3.2% (4000 tonnes) respectively in the first quarter of 2026. However robust exports resulted in stocks shrinking by 1.1% (-2000 tonnes).

Butter supplies eased due to lower imports

Butter supplies continue the downward trajectory for another consecutive quarter. Production remained mostly at par year-on-year in Q1 whilst imports declined by 13% (-2100 tonnes) during the period. Volumes of exports were limited. Prices in the global market were competitive compared to Oceania, however it was costlier compared to the US and the EU.

The biggest increases went to Europe (Belgium (+1100 tonnes), Germany (+600 tonnes), Poland (+600 tonnes) and Malta (+600 tonnes)) followed by the Middle East and North Africa (+1000 tonnes). A decline in exports to Asia and Oceania (-200 tonnes) limited the overall upside movement. Exports to the EU remained on the positive side despite butter being slightly costlier in the UK.

Overall higher exports amid at par production and lower imports led to shrinking available supplies by 8.5% (-4700 tonnes).

Figure 1. 2026 Q1 (Jan-Mar) Year-on-year change in UK product availability¹

Source: Defra, HMRC Compiled by Trade Monitor LLC

1product availability is defined as: production + imports – exports

N.B. – Supplies of milk powders are not available due to lack of data on production issued by Defra

Figure 1 is a bar chart which shows UK availability of butter and cheese in Q1 2026 compared to Q1 2025. The available supplies of both butter and cheese have declined during the period.

Production (light blue bar)
Imports (dark blue bar)

Exports (Green bar)

Available supplies (Dark red bar)

According to our June dairy production forecast update, GB milk production for the 2026/27 season is expected to decline 0.9% compared to the previous milk year. This means slightly lower production of dairy products in the coming months. Any recovery in prices will depend on the demand scenario in the market, which looks subdued ahead of summer holidays as well as milk supplies elsewhere in the world. Traders are well covered for near-term requirement. Given the current macro-economic scenario, consumers are spending cautiously.

According to Rabobank, global milk production in the calendar year 2026 is expected to increase 1% year-on-year. Production is expected to be stable in Q3 2026 before declining around 1.6% in Q4 2026. Farm margins will be squeezed with input costs rising amid the Middle East turmoil. Expectation of a likely El Nino is likely to affect milk production in South America, Australia and New Zealand. Trade dynamics coupled with weather will be important watch points influencing available supplies in the coming months.

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