Now as the market heads into the Southern Hemisphere peak, all eyes are looking to what impact New Zealand’s spring might have for dairy export prices.
Across the key exporting regions, global supply has shown mixed signals.
In the United States, signs of recovery have emerged following last year’s avian influenza outbreak in dairy cattle, with milk production rising 3.3 per cent year-on-year in June, supported by increases in both cow numbers and per cow yields.
On the other hand, Europe is facing more significant challenges, after a bluetongue outbreak and drier than average weather conditions in key producing countries weigh on milk volumes across the region.
Additionally, lingering fertility impacts from the bluetongue outbreak are limiting the number of replacement heifers, which may have longer term impacts on production.
Nonetheless, after four months of lower volumes, European production increased 1.2 per cent year-on-year in April 2025.
Meanwhile, NZ’s milk production continues to grow, with favourable weather on the South Island supporting pasture growth and strong farm gate milk prices incentivising supplementary feeding.
As such, milk volumes surged 14.6 per cent year-on-year, albeit at a lower producing time of year.
Looking ahead, the country’s production is tipped to remain strong, and volumes offered for some products (especially milk fats) on the GlobalDairyTrade (GDT) platform have started to rise, weighing on prices to an extent.
However, rising purchasing interest from buyers in key export markets (particularly for Oceania dairy) appears to be limiting some of the supply side impacts to pricing.
Despite some US product being competitively priced, trade policy announcements since February have caused some buyers to look elsewhere, namely NZ and Australia, while European dairy sits at a premium in most categories.
In the year to May 2025, imports into South-East Asia and Japan increased 3.3 per cent and 4.3 per cent, respectively.
In contrast, Greater China has maintained relatively stable import volumes over the same period, but have purchased about 6 per cent more from NZ while importing less from the Northern Hemisphere key exporting regions.
While milk production in China remains down and stockpiles somewhat limited, importing activity will likely stay buoyed in the meantime.
While global demand remains relatively robust, tighter product availability in key exporting dairying regions and higher farm gate milk prices will likely provide some level of support to Australian export prices.
The mounting weather challenges of last season, especially the dry conditions in southern regions, are expected to have longer term implications for milk production.
Operating costs remain high and there are less cows in larger milk producing regions which will likely weigh on spring volumes, despite a more favourable weather outlook over this period.
As such, Dairy Australia is forecasting that Australian milk production will drop two per cent in 2025-26, taking into account lower volumes across the Victorian regions.
The market has now caught glimpses of the potential impact of spring NZ product, however looking ahead, tightened product availability in Europe and robust demand for Oceania product may keep prices in some categories firm.
For Australia, the trade policy uncertainty that now characterises global markets has proved to be beneficial for Australian dairy, with global price support welcome as long as it may last.
Eliza Redfern is Dairy Australia’s analysis and insights manager.
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