Global Dairy Trends Show Resilience Amid Market Shifts
Current global dairy demand trends are expected to weigh on prices, especially as key global buyers become aware of increasing milk production. Concerns persist about weak Chinese demand, slowing economic growth, trade tensions and high Oceania whole milk powder prices, says Rabobank’s RaboResearch Food & Agribusiness division in its latest global dairy quarterly Q2 2025 report, “Too good to be true?”
“Dairy companies and downstream multinational consumer packaged goods companies will find it challenging to pass on higher dairy costs to consumers still grappling with post-COVID inflation,” says Mary Ledman, global dairy strategist at
RaboResearch. “We anticipate downside risks emerging in the second half of the year, driven by expanding supply and demand uncertainty. However, rather than a sharp downturn, we expect a recalibration from recent multiyear highs — a natural correction following a period of strong performance.”
Global Dairy Trends Defy Market Expectations
Against all odds, recent global dairy commodity prices continued to rise in recent months between most key exporting countries, though not all, the report notes. On the supply side, milk production growth has been modest, far from overwhelming the global market. This is welcome news given emerging signs of stress on the demand side, where several concerning factors are evident: near-record-low consumer confidence in the United States, troubling indicators of economic struggles in China and declining sales data from restaurants and consumer packaged goods companies across many regions.
Trade Volatility And Price Resilience
Amid these dynamics, global trade conflicts remain elevated, with volatility and rapidly changing tariffs emerging weekly — factors that are influencing global dairy trade flows, the report says. Nevertheless, dairy product prices, particularly in Oceania, have surged to multiyear highs. Recent trends at the Global Dairy Trade auction have been consistently positive, and Fonterra has announced a record-high forecast price for the 2025/26 season at NZ$10 per kilogram milk solids (kgMS), underscoring its confidence in sustained elevated prices in the coming months.
U.S. Dairy Shows Strength Despite Headwinds
Even in the United States, most dairy commodities have shown bullish trends into late May, supported by mixed-to-lower stock levels and strong exports throughout Q1, prior to the implementation of retaliatory tariffs by key trading partners China and Canada, the report adds.
Navigating Global Dairy Trends Amid Economic Uncertainty
In many economies, consumer sentiment has waned amid weak and uncertain global economic conditions. Retail dairy prices saw deflation in nearly all regions during parts of 2024. However, higher milk and dairy product prices in the second half of 2024 have continued into 2025, translating to higher prices for consumers at retail and foodservice outlets.
Modest Supply Meets Fragile Demand
Rabobank notes that in its last global dairy quarterly, it discussed the likelihood of price support driven by modest milk production gains while suggesting caution following concerning demand developments. That scenario has largely played out in recent weeks. But as the third quarter approaches, the question remains: Is it too good to be true?
In RaboResearch’s view, the answer is likely yes.
Much attention has been given to the “on again, off again” tariffs imposed by the United States on imports and the potential retaliatory tariffs by trading partners, the report notes. During this turbulent period, the U.S. dollar has weakened versus European and New Zealand currencies by 8.8% and 5.2%, respectively, between January and May 2025.
Early Export Gains May Reflect Pre-Tariff Rush
In the United States, despite ongoing trade uncertainty, total dairy exports are off to a strong start this season, although it is important to note that data is only finalized through the first quarter, i.e. prior to the April 2 “Liberation Day” announcement of additional tariffs on many countries, the report notes. March dairy exports surged to their highest level in two years (since March 2023), likely driven by importers frontloading purchases in anticipation of higher tariffs.
Keep Up To Date On Cheese Industry News
Find all of HART Design & Manufacturing’s current industry news here.
Source: Cheese Market News
