Dairy commodity prices are “bouncing around the bottom of the bucket”, according to leading British analyst Nick Holt-Martyn.

But any suggestion of a recovery in prices this year was “wildly speculative”, he maintained.

The principal consultant with UK-based Dairy Group doubled down on his message from the Irish Creamery Milk Suppliers' Association (ICMSA) AGM in November that markets would only recover once milk supplies fell.

ADVERTISEMENT

“There is not much evidence of supply reacting to lower prices,” said Holt-Martyn.

European milk output hasn’t reduced, despite prices collapsing, while UK milk volumes are also holding up, he said.

Expanding US herd

Meanwhile, the US dairy herd is expanding at the fastest rate since 2008 and is anticipated to top 9.5 million cows this year.

The United States Department of Agriculture (USDA) has forecast that total US milk output will grow by 1.4% in 2026 compared with last year on the back of the increased numbers.

It is a similar story in New Zealand. Fonterra has raised its milk collection forecast for the 2025/2026 season to 1,545m kilogrammes (kg) of milk solids, compared with an earlier outlook of 1,525m kg of milk solids.

Fonterra also trimmed its milk price projections for the year on the back of what it termed were “strong milk flows” both in New Zealand and other milk-producing nations.

With global and local milk supplies continuing to grow or remain high, Holt-Martyn said dairy commodity prices will not recover.

He predicted that the financial pressures at farm level will start to build as the spring progresses and the impact of the lower milk prices hit home.

“The belt tightening will start to ramp up as we come into late spring,” he said.

Commodity prices could lift in March, ahead of Easter, but the real tone of the market for the year ahead will be set in the post-Easter period, Holt-Martyn maintained.

The latest prices from the Dutch spot market show that butter is holding at around €3,900/t. This has more than halved from the €8,050/t reached in September 2024.

Skim milk powder averaged €2,170/t, while whole milk powder (WMP) was on €3,020/t. WMP commanded €4,400/t this time last year.