Global Milk Glut Pressures Dairy Markets, Raising Fears of Price Instability
Global dairy markets face renewed pressure as rising milk production in the EU, US, and New Zealand drives commodity prices lower, according to a Maxum Foods report. While Australia struggles with feed shortages and declining output, surpluses elsewhere are eroding values. Analysts warn that supply is likely to outpace demand in late 2025, heightening instability in the dairy sector.
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Global dairy markets are bracing for turbulence as rising milk production across major regions pushes commodity prices downward, according to an August 2025 report by Maxum Foods. The surge in supply from the EU, US, and New Zealand is outpacing demand, eroding product values and creating an uncertain outlook for producers and processors worldwide.
The report highlights a weakening in market fundamentals after a brief period of price resilience earlier this year. In the European Union, supply constraints have eased, though a hot, dry summer threatens feed availability. The United States is experiencing strong growth in milk and cheese output, but sluggish domestic demand and lagging exports are fueling inventory buildup and driving values lower.
New Zealand, a cornerstone of global dairy trade, is on track for another strong season, with milk production expected to slightly surpass last year’s levels. While global trade remains active, demand is increasingly resistant to high prices, weighing on export momentum.
Australia, however, presents a contrasting picture. Despite improved rainfall in some regions, persistent feed shortages in the south have doubled hay prices since May. This stress has led to the highest herd culling rates in three years and is projected to cut milk solids output by 2% for the 2025/26 season.
Maxum Foods notes that geopolitical shifts and changes in US fiscal policy are further complicating the global outlook. With supply expected to exceed demand in the coming months, the report warns of heightened risks for the international dairy industry, as expanding production threatens long-term price stability.
