Global milk supplies are expected to rise 0.8% year on year in 2025 as a result of improved market conditions, according to a new report.
In its latest forecast, Rabobank, the corporate and investment bank to the food, and agribusiness industries, points out milk supply volumes improved by 0.5% over the second half of the year across the largest dairy export regions, predominantly driven by gains in Oceania and the EU.
Furthermore, it claims the momentum is expected to continue in all seven key exporting regions – EU, the US, New Zealand, Australia, Brazil, Argentina, and Uruguay – in 2025. For the coming year as a whole, milk supply growth of 0.8% is forecasted against 2024.
Farmgate milk prices have been mostly favourable, and affordable feed costs are expected to continue which will support farm margins. Wholesale prices have shown signs of easing in Q4, but remain high.
In the EU and UK, deliveries in 2024 have been mixed. Improved weather and encouraging farmgate prices supported delivery growth for Q4, pulling the year of 2024 up to a 0.3% gain versus the previous year. A further increase of 0.5% is expected in 2025, in response to better prices, assuming that disease outbreaks lessen. Dairy farmers are expected to vaccinate against bluetongue in 2025 which should lessen the impact.
In China, stocks are rebalancing as production growth slows. Low farmgate prices as well as a heat wave in Q3 caused further exits from the industry, dampening down domestic milk supplies. Rabobank estimates a 0.5% year-on-year reduction in production over the second half of 2024 with a steeper 1.5% drop in 2025. However, better balanced production and some demand recovery in 2025 is expected to contribute toward a 2% increase in import volumes.
Global demand has been varied, with consumer spending still under pressure in many regions. The foodservice sector has suffered, while retail has benefitted from consumers trading down in some regions.
Demand is expected to improve in 2025, and dairy price deflation may drive volumes sold. Overall the market is expected to be fairly well balanced.
