July 2026 dairy market review

Milk production

Domestic

GB milk deliveries in July reduced by an estimated 3.2% year-on-year with milk supplies now falling further as heat stress and drought continues.

Daily deliveries in July averaged 33.28m litres and totalled an estimated 1,032m litres, a reduction of 34m litres (-3.2%) compared to the previous year. This brings milk year to date (April–July) supplies for GB to 2% below 2025 levels.

Dairy economics, including the Milk to Feed Price Ratio (MFPR) have been worsening since Autumn.

There are a number of further factors that point towards further reductions in milk supplies: bluetongue virus has become endemic in the West Country which affects milk production in infected herds, input costs remain high impacted by the war in the Middle East and milk prices are not rising quickly enough to compensate. 

Additionally, questions have been raised about future availability of heifer replacements as the milking herd continues to shrink by 2% year on year and more beef semen is used to capitalise on strong beef prices.  Annual registrations of dairy females to a dairy sire have been reducing since 2021. The 2025 total was 463,373 head, a 3.1% decline year-on-year and the lowest total on record.

Figure 1. GB daily milk deliveries

Source: AHDB

Line graph shows GB daily milk deliveries over time that rise in the spring flush and then fall before rising through the autumn. The graph shows that in July the 2026/27 line (in light blue) continues to fall from the 2025/26 line (in navy blue) but then dips below the five-year average (in brown). 

Milk price announcements have seen some positivity  in July and for August with some small rises announced.  The latest Defra farmgate milk price is now around 34ppl on average for June with feed prices relatively steady.      

AHDB’s latest forecast predicted decline in milk supplies for this milk year with decline beginning after the flush and deepening through the autumn.  However, as a result of the heatwaves the decline has been more intense than anticipated.  The incursion of Bluetongue virus is likely to deepen this.  The forecast will be revisited in October.   

Organic milk supplies

GB Organic milk deliveries have been running slightly below last year since May.

Deliveries dipped into year-on-year decline from May 2026 and have remained well below the 5-year average. Milk year to date (April to June) volumes are now 1.2% lower, year-on-year.

The recent dip has shown a similar trend to total milk volumes, albeit with a weaker spring flush.

However, in comparison to the 2021/22 year supplies are still behind by 19%. 

The widening gap between conventional and organic milk prices suggests stronger demand for organic milk and need to maintain organic milk supplies which makes it important for production growth to be maintained. 

Global

• The latest global production data estimate shows growth in global milk flows continuing across milk-producing regions.  Global milk deliveries averaged 849.5 million litres per day in May, an increase of an estimated 16 million litres per day (+1.9%) across the selected regions, compared to the same period in the previous year. All regions, with the exception of the UK, recorded an increase.
• Milk deliveries in the EU averaged an estimated 428 million litres per day in May, an increase of 6.3 million litres per day (+1.5%) compared to the same month of the previous year (although not all markets had published data at the time of writing).
• Looking at the EU figure in greater detail, we saw the greatest year on year volume increase from Germany, up 172 million litres (+6.2%) for the month of May, followed by Poland and the Netherlands, up by 45 million litres (3.8%) and 42 million litres (+3.6%), respectively.
• US production was up 7 million litres per day (+2.5%) year-on-year in May. Expansion of the dairy herd has continued to drive the growth. Farm margins have now lowered from strong levels but remain positive, supported by dairy-beef revenue streams.
• Australia recorded a year-on-year increase of 1.1 million litres per day (5.4%) compared to last year, to sit at an average of 21.1 million litres per day in May. Milk volumes have varied between regions, primarily due to the differing weather and pasture available.
• New Zealand deliveries were up by 1.1 million litres per day (+3.6%) year-on-year in May with average daily deliveries at 32 million litres per day. Farmer confidence continues to be supported by firm milk prices and favourable weather conditions which increased milk flows.
• Argentina’s deliveries continued to grow, up by 0.6 million litres per day (+2%) in May, year-on-year. Heavy rainfall has slowed growth momentum and producer margins are beginning to reduce.

Dairy trade Q2

• Cheese export volumes continued to grow, and are now at an all-time high
• Milk powders also saw the biggest export growth in volume terms
• Total UK dairy export volume for Q2 2026 declined 25% year-on-year at 277, 800 tonnes driven by milk and cream, yogurt, whey and butter
• The EU drove export decline
• Total UK dairy export value stood at £487 million, down 17% year-on-year amid decline in volumes
• Total import volumes were also down, driven by milk and cream and butter

Wholesale markets: July

• The cream price saw some positive shifts in response to lower milk volumes produced by successive heatwaves here and on the continent
• Butter strengthened £80/t to £3,320/t as more fat sold directly as cream
• Mild cheddar prices moved upwards by £150/t to £3,050 as supplies tighten
• SMP followed suit, gaining £70/t to £2,360/t

Late June and July’s heatwaves constrained milk volumes sharply both in the UK and in mainland Europe, particularly France and Germany.  The UK saw temperatures in excess of 35C for several days in both June and July. Milk volumes fell to 4.5% below last years at one point with some processors hit harder than others based on regionality.  Both volumes and fat and protein content will have been affected.

European milk also fell with France the worst affected losing year-on-year volumes of 7.5% at times and Germany 3% behind. 

This has created scarcity in cream availability as well as ripples in other commodity markets as supply fears drove some short-term position covering. 

As temperatures have now moderated (although still causing a degree of heat stress) the jury is out as to how long supply disruptions could last for. Cream markets are already nudging downwards but hotter weather remains in the forecast.

Bulk cream

Bulk cream has been the most positive commodity due to dwindling milk supplies.  Average prices picked up significantly from the last reporting period moving up from the low 130’s to as high as £1.70/kg at times but have reduced in the last week as milk volumes have partially recovered. Prices in Europe are reported to be weaker.

The average price for the period was £1,530/t.

Butter

The price of cream meant it became uneconomical to churn butter beyond contracted volumes putting some tightening on markets.  However, stores are still reportedly full (although some is ageing) and availability remains high. 

The market remains quiet although some pockets of demand came in in anticipation of price rises causing prices to edge upwards.. 

Prices rose £80/t to £3,320/t.

Skimmed milk powder (SMP)

SMP followed suit with the churns not running for butter, smaller amounts of skim were produced pushing up prices slowly. However, the market was still described as quiet.    

The average price for the period was £2,360, a gain of £70/t.

Mild Cheddar

Again, with more milk diverted to cover fresh dairy production cheese stocks have tightened a little driving prices upwards.  More buyers are coming to the market keen to buy at yesterday’s prices, however with sellers preferring to retain stock in anticipation of prices moving northwards.  There were bargains to be had for those encountering motivated sellers however. 

The average price for the period was £3,050/t, gaining £150/t.

The latest GDT (Global Dairy Trade) auction results showed some positivity with a change in the index of 2.3% to $3,873/t.  This was driven primarily by SMP which rose by 7.6% to $3,502, WMP rose by 3.0% whilst cheddar rose by 0.6%. Conversely, butter fell by 2.0% and AMF by -6.0%.   

Figure 1. UK wholesale prices from early 2023 to July 2026

  Figure 1 shows average UK wholesale prices from early 2023 to July 2026 for bulk cream, butter (unsalted), skimmed milk powder (SMP) and mild Cheddar, measured in £s per tonne.

Butter prices remain consistently higher than the other products, although are now at low levels but have nudged up in last period. All four products show a steep decline from late summer 2025 into early 2026, followed by modest recovery in February and March 2026 with butter and cheddar declining in April to June, cream rising in the last two months and mild cheddar and SMP also gaining in the past month. 

Farmgate milk prices 

The latest published farmgate price was for June 2026 and was announced by Defra as being  34.38ppl, up 0.02 pence on the previous month

Latest announced farmgate prices saw some uplifts in the period.

Aligned liquid contracts continued their firm tone with the exception of Sainsbury’s, which made a price reduction of 0.01ppl. This is the second consecutive month of decline in price. Muller Co-op Dairy group and Tesco made a positive announcement of 0.12ppl and 0.34ppl after remaining steady previous month.

Looking to non-aligned contracts, all buyers held steady to firm. Crediton Dairy made a positive announcement of 1.40ppl after remaining steady last three months. Pembrokeshire Creamery increased their price by 0.92ppl. Muller and Payne’s Dairies held on to their price for another consecutive month.

Cheese contracts on the AHDB League table saw growth this month. Wyke Farms made the biggest positive move of 3.63ppl followed by Parkham Farms at 3.00ppl. Barbers Cheese and First Milk Manufacturing increased their price by 2.50ppl and 1.50ppl respectively. South Caernarfon Creameries and Leprino made a positive announcement of 1.00ppl after holding steady last few months. Belton Cheese and Saputo increased their price by 0.50ppl and 0.75ppl respectively. Wensleydale Creamery also moved up, increasing their price by 1.49ppl.

Manufacturing contracts moved in line with cheese contracts. Meadow increased their price by 1.00ppl for another consecutive month. UK Arla Farmers Manufacturing rose by 0.91ppl while Pattemores Dairy increased their price by 3.00ppl, the third month of positive movement in price.

Retail demand

During the 12 weeks ending 11 July 2026, cows’ dairy continued to be in volume growth, increasing by 0.5% year-on-year, while spend grew by 3.2%. High spend was driven by average prices increasing by 2.7%¹.

Cows' milk

Milk volumes declined by 1.0% year-on-year, around 8.7 m litres. This was possibly due to average prices increasing by 3.9% and as a result, spend increased by 2.9%.¹

Volume declines were seen for semi-skimmed and skimmed.

Plant based also declined in the period, losing 1.0% litres year-on-year.

Whole milk continued to see volume growth, with a 1.4% increase year-on-year. Other cow milk was in growth this period, with volumes up 10.5%.¹

Cows' cheese

Cow cheese benefited from lower average prices (-1.2%), encouraging shoppers to buy an extra 2.8 million kg and driving volume growth of 2.8% year-on-year.¹

The rise in volumes also supported value growth, with spend increasing by 1.6% year-on-year. ¹

Other cow cheese (+12.4%), snacking (+5.4%) and speciality and continental (+3.3%) were the main drivers of overall cow cheese growth. Within other cow cheese, cottage cheese remained the standout performer, with shoppers purchasing an extra 1.9 million kg year-on-year.¹

Despite accounting for 43.2% of all cow cheese volumes, cheddar volumes declined by 0.7% year-on-year. This was driven mainly by lower purchases of mild grated cheddar, mild cheddar and sliced mild. However, mature cheddars bucked the trend, with extra mature, sliced mature and block mature seeing the greatest volume increases.¹

Cows' butter

Butter saw a 1.5% decrease in volumes purchased year-on-year¹. Spend saw a 4.6% decrease, mainly driven by average price reductions of 3.2% year-on-year, ¹ with decreases in wholesale price feeding through to shoppers, as we predicted back in December.

Block butter continues to be the only subcategory to see volume growth (+4.5%), as the number of buyers increases by 4.3%. However, this growth was not enough to offset the decline in butter spread volumes (-4.1%).¹

Cows’ yoghurt, yoghurt drinks and fromage frais

Yoghurt, yoghurt drinks and fromage frais continued to see growth, with volumes up 8.0% year-on-year. Average prices also increased, up by 2.0%, and as a result spend increased 10.2% year-on-year¹. 

Most of the growth came from shoppers buying yoghurt more often and in greater volumes each time they shopped. The number of shoppers also increased. Healthy (+14.4%), standard plain (+21.4%) and fat free (+10.5%) yoghurt were among the strongest performing subcategories.¹  This reflects wider consumer trends towards natural, high protein foods that support health and gut health, as well as demand for less processed products.

Cows' cream

Cream volumes fell by 1.2% year-on-year.¹ This was a smaller decline than in the previous period. Spend rose by 1.7%, while average prices increased by 2.9%.¹

Volume growth was seen in several subcategories, including clotted (0.9%), double (1.7%), sour cream (0.7%) and whipping (3.8%).¹

Aerosol continued to record large volume declines (13.2% year-on-year). ¹ This decrease in volumes may reflect shifting attitudes by consumers towards ultra process foods.

See the full data and these insights visualised on our GB household dairy purchases retail dashboard.

¹ NIQ Homescan POD, Total GB, 12 w/e 11 July 2026  

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