SYDNEY, June 15 (Xinhua) -- Global dairy markets are moving back toward supply-demand balance as milk production slows following an intense period of growth, an industry report said.
In its Q2 Global Dairy Quarterly released Monday, Rabobank, the agribusiness lender, said global milk output growth eased in Q2 after four consecutive quarters of gains over 2 percent, with annual growth peaking at 5.2 percent in late 2025, one of the steepest increases on record.
Production is forecast to rise 1.5 percent year-on-year in Q2, flatten in Q3, and decline by 1.6 percent in Q4, the report said.
"Largely, it is our view that milk production growth will cease and that will bring a return of some semblance of balance within dairy product availability on the supply side," said RaboResearch senior dairy analyst Michael Harvey, the report's co-author.
The bank expects milk production to grow 1 percent in 2026, slowing from 3.1 percent in 2025, with a marginal contraction of 0.2 percent projected for 2027.
Rabobank said higher input costs, including energy, fertilizer and interest rates, are squeezing farm margins and have contributed to expectations of milk production contraction in future quarters.
The report said demand shifts could drive overall prices, with Middle East tensions and consumer health trends key to global trade moves. It also cited weather risks from a potential El Nino that could impact milk supply in South America, Australia, and New Zealand.
In Australia, milk production is expected to decline 0.3 percent in the new 2026/27 season amid tighter farm margins and low rainfall concerns, the report said, adding that retail dairy price inflation is re-emerging, while export performance varies across products. ■