Can Dairy Markets Absorb Another Year of Fast Supply Growth

Global dairy markets are navigating a period of unusual imbalance as milk production accelerates rapidly while downstream prices weaken. The pace of expansion has outstripped normal growth patterns, creating a challenging backdrop for producers entering 2026. Markets are now assessing whether supply momentum will continue long enough to suppress prices beyond the first half of the year. The stakes are rising as margins tighten and global buyers respond cautiously to shifting demand signals.

Nate Donnay, StoneX Director of Dairy Market Insight, provides detailed perspective on how rapidly expanding milk production and evolving cost pressures shape risk for producers and traders in early 2026.

Key Themes from the Discussion

• Milk production growth reached roughly triple its historical pace in late 2025, expanding rapidly across major exporters.
• Falling farmgate prices and margin compression create early 2026 downside risk for dairy commodities.
• Any price recovery depends on when and how sharply milk production slows during the year.

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