EU short-term outlook: Exports of dairy products in growth

Key points

• Milk production expected to increase 1.6% in 2026 year-on-year, with growth likely to be restricted in the second half of the year
• Increasing input costs amid geopolitical tensions in the Middle East squeeze farm margins
• Exports of dairy products expected to be in growth except WMP (whole milk powder)

Raw milk

In the latest EU short term outlook, the European Commission forecasts milk production to increase by 1.6% in 2026 compared to previous year. The strong growth seen in 2025 amid higher yields and favourable weather conditions, rolled into the start of 2026. Production growth remained strong in Q1 2026, mainly in the Netherlands, Denmark, France, Belgium and Poland. However, growth is likely to be restricted in the second half of the year. Grassland conditions could deteriorate following the recent heat wave on the continent.

An increase in the availability of fats and proteins have boosted the production of dairy products.

Average raw milk prices dropped in the last quarter of 2025 following the incredible growth in milk volumes. However currently prices are showing signs of stabilization. Continuing geopolitical tension in the Middle East is elevating input costs, thereby squeezing farm margins. This is driving up energy prices and adding to higher food inflation.

Figure 1. EU raw milk price (EUR/100kg)

Source: DG Agriculture and Rural Development

Figure 1 is a line chart with pink line showing EU raw milk equivalent price stabilizing currently. The blue line denotes weighted EU average prices, which is continuing to decline.

The EU dairy herd size continues the gradual slow decline in 2026. However, the higher milk production seen has been a function of increasing yield levels.

Figure 2. EU dairy cow herd (million heads) and milk yields (kg per dairy cow)

Source: DG Agriculture and Rural Development

Figure 2 shows EU dairy herd size on the vertical right axis and milk yields on the vertical left axis during 2018 -2026f. Though the herd size is declining, increase in milk yields contributed to higher milk production.

Dairy products

Milk solids including fat and protein continued to increase along with the surge in milk deliveries. These have translated into increased production of dairy products in 2026. Cheese and whey production are expected to increase by 1.8% and 1.4% respectively in 2026 compared to previous year. In the first half of 2026, processors were operating at full capacities.

Production of WMP and fresh dairy products is likely to fall by 3.1% and 0.6% respectively. However, yogurt and cream production is expected to increase.

In the first half of 2026, available supplies of cheese, butter and SMP increased in line with the increase in deliveries. According to the EU commission, exports of cheese and whey are forecast to increase 0.5% and 1.7% respectively. Exports of WMP will likely edge down by 5% amid weaker demand from the Middle East. Consumption of fresh dairy products is expected to decline mainly driven by a decline in drinking milk consumption. Globally, consumer demand for proteins remains strong. However, market conditions remain uncertain amid structural and environmental policy changes. This coupled with the Middle East war, trade deals, diseases and weather will be key watch points to monitor.

Figure 3. Annual change EU exports and consumption in 2026f (1000t of milk equivalent)

Source: DG Agriculture and Rural Development

Figure 3 is a bar chart with yellow bars showing expected consumption growth and blue bars denotes exports growth in 2026. Exports of all dairy products are forecast to be in growth except WMP.

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