Dairy market in motion: growth and uncertainties

The global dairy market is set for modest growth in 2025, driven by stable export demand and a moderate increase in supply. New Zealand is benefiting from record-high milk prices, while European milk production is expected to rise by 0.5%. At the same time, China remains an unpredictable factor, with declining production and a shifting role in the global market.

Limited supply growth and stable margins

After weak milk production in 2024, the dairy market is now entering a period of modest expansion. In the seven largest export regions—including the EU, the US, and New Zealand—milk production is projected to grow by 0.8% in 2025. In the EU, growth is expected to remain at 0.5%, while US production is still below 1%. Oceania and South America are also seeing a recovery, largely due to weak output in 2024.

Despite increased production, milk prices remain high, and margins in many regions are holding steady. New Zealand stands out with a record milk price forecast of 10 NZ$ per kg of fat and protein—exceeding the previous record year of 2021-2022. Combined with falling interest rates, this is boosting confidence in the sector.

China cuts production but increases imports

While other major export regions are ramping up milk production, China is heading in the opposite direction. In 2025, Chinese milk production is expected to decline by 2.6%. This follows a sharper-than-expected drop in the fourth quarter of 2024 and milk prices that are 15% lower than a year earlier. As a result, Chinese dairy farmers have little incentive to increase production.

On the demand side, however, an uptick is expected. Chinese dairy imports in 2025 are projected to be higher than in 2024, though the country no longer holds the same dominant influence over the global dairy market. Meanwhile, dairy exports to other regions remain strong. US cheese exports hit a record high in 2024, and New Zealand is finding buyers for its surplus milk production.

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