Q2 2025 dairy market review

Milk production

GB milk deliveries through Q2 accelerated away, reaching 5.0% up on the same quarter in 2024.

April increased by 6.0%, May 5.7% and June by 6.0%. We are now annualising versus 2024’s underwhelming and damp summer which brought subdued milk volumes.

For 2025 so far, higher farmgate prices, creating a very favourable milk-to-feed-price ratio and a historically dry spring have led to much greater milk flows.

While many parts of the country have been struggling with drought, some of the higher milk producing regions such as the far South West and North West have has sufficient rain (excessive in some cases). 

The increase in Q2 deliveries brings the GB forecast for the 2025/26 season to 12.83 billion litres, a significant increase of 3.1% compared to the previous season and a record high.

Although the milk-to-feed-price ratio has declined very slightly, it remains near the 20-year high.

There are downwards pressures coming from a contraction in the herd size according to the latest BCMS data. There is also a decline in youngstock numbers with limited heifer replacement stocks due to the prevalence of BTV on the continent earlier in the year and end of 2024.

More block calving has exaggerated the milk supply figures for spring and autumn to some extent.

The share of GB farms in 2024 running any type of block calving system has risen to 19.6%, while the number of farms running an all-year-round (AYR)* system remained fairly steady at around 35%.

If we look over a longer time period, there has been a significant trend towards farmers adopting a specific calving system.

In 2021, 48.4% of farms were categorised as non-defined* in their calving pattern; in 2024 this had fallen to 45.8%.

Despite our growing milk volumes, the trend towards greater consolidation in dairy farming has continued.

In our latest survey of milk buyers, it is estimated that there were 7,040 dairy producers in GB as of April 2025.

When comparing to annual April figures, an estimated 190 producers (-2.6%) left the industry, indicating that the majority of exits took place over the winter months.

This has been an ongoing trend, with industry exits typically occurring before winter housing and additional input requirements, such as feed, become seasonally higher.

Despite this, the average milk volume per farm in GB has now risen to an estimated 1.77 million litres per farm for the year, from April 2024 to April 2025.

GB organic milk deliveries have continued to grow since the nadir in production seen last year and production was up by 12.6% for Q2.

There are also reports of declining organic supplies on the continent which could present opportunities for UK producers.

According to Nielsen, consumer demand for organic dairy is continuing to firm domestically as well which highlights a need to boost organic milk supplies to match demand. 

The GB milking herd totalled 1.62 million head as of April 2025, the lowest April number recorded, and a 0.9% decrease compared to the same month the previous year.

Youngstock numbers (under two years of age), continued to decline for the ninth quarter. The 2–4 years age category showed a similar decline of 16,000 head.

This low supply of youngstock raises concerns about sourcing heifer replacements at accessible prices.

Bluetongue spread and increased use of beef semen could impact herd size over the coming years. High beef prices have also driven a decline in the over 8-years category. Cows aged 4-6 years old were the only category to show growth.

Global milk production in April averaged 838 million litres per day, continuing the return to growth and now sits at 0.7% ahead year-on-year.

All regions recorded year-on-year volume increases except the EU. US rose by 1.5% and NZ by 2.5% driven by increasing herd size and better economics, Argentina continued their economic recovery and production rose by 15.2%.

Australian production looks questionable due to predictions of further poor weather. 

Milk deliveries in the EU averaged 411.5 million litres per day in April, a decline of 6.7 million litres per day (-1.6%) compared to the same month of the previous year.

Looking at the EU figure in greater detail, we saw the greatest year-on-year volume decline in Germany down 30 million litres (1.1%), Belgium down 26 million litres (6.5%) and Italy down 22 million litres (1.9%) year-on-year.

Looking forward, Rabobank predicts a small growth across the seven key exporting regions in 2025.

For the coming year as a whole, milk supply growth of 1.0% is forecasted against 2024.

Dairy commodities, but particularly dairy fats have been booming in price terms since last autumn, hitting record breaking levels before easing slightly.

However, Rabobank’s analysis signals that rising supply levels and potentially wobbly demand could unsettle the balance. President Trump’s ever-changing tariff arrangements are proving to be disruptive. 

Rabobank feel that a market recalibration could see prices aligning closer to traditional benchmarks.

The tone of the market based on recent GDT results are for softening prices but have been in contrast with the European picture ahead of the summer break, showing a lack of universal direction currently.

There is also a current mismatch between US and Oceania prices with the latter sitting at a premium.

For British farmers, certainly in the short term, prices are not falling sharply but are more likely to ease in the medium-term based on this analysis.

However, uncertainty remains high and the relative lack of milk on the mainland presents opportunities for British producers. 

Wholesale markets and prices

Overall price movements on UK wholesale markets were surprisingly stable in Q2, despite the flood of milk. 

BTV has eased in Europe to some extent but very dry conditions have proved to be difficult for milk production in Germany and the Netherlands.  

Prices remain at very high levels. Bulk cream and butter markets carried bullish sentiment through June, with weaker supplies on the continent and strong domestic cream demand supporting prices.

However, SMP and mild Cheddar markets were more muted.

Bulk cream prices were reported to have dipped at the end of May to around £2.50/kg, but since then have gained strength week-on-week, with quotes in the end of June near £2.80/kg.

Trading was said to be good, with buyers looking ahead to the summer holiday period. Warm weather and a bumper strawberry crop were also said to be driving some additional cream demand.

Likewise, butter followed the direction of cream, gaining around £100 month-on-month, but remaining within a tight range.

Supplies continue to be reported as tight, with a good amount of cream being sold rather than processed, which is supporting the butter price.

SMP remained very stable with thin demand. Mild cheddar average prices continuing to slip downwards. Demand was said to have improved slightly with buyer’s keener to commit and a better balance of stock post flush.

The GDT has shown some weakness towards the end of the quarter, although prices remain high. The very latest period saw an arrest in the decline. 

As of June, milk market values (which is a general estimate on market returns and the current market value of milk based on UK wholesale price movements and typical milk utilisation) remained fairly steady.

AMPE grew slightly by 1% to 42.6ppl, MCVE declined slightly by 1% to 42.4ppl. AMPE and MCVE remain ahead of this time last year by 5% and 11% respectively. 

Farmgate milk prices

The latest published farmgate price was for May, with a UK average of 43.1ppl. Please note we are currently checking the last few months' UK price movements with Defra. Latest announced farmgate prices were stable in July.

Steady to positive moves on the retail aligned liquid contracts by most of the producers. Sainsbury’s saw an increase of 0.09ppl while M&S have held on to their price for the last three months.

Co-op Dairy Group and Tesco have held their price for the last two months.

Non-aligned liquid contracts were also stable overall month-on-month. Crediton Dairy has held steady for the last seven months after continuous increases over the previous year.

No changes have been reported for Muller since December last year and Freshways from June this year. Paynes Dairies, Pembrokeshire Creamery and Yew Tree all announced no change to their milk price this month.

Cheese contracts followed the stability seen in liquid milk contracts with the exception of Wyke Farms, which made an announcement of a 0.4ppl increase in July.

At the time of reporting, Lactalis and Wensleydale had not made a public announcement.

All other participants on the league table made no change to their price in July (Barbers, Belton. First Milk, Saputo, Leprino and South Caernarfon Creameries).

Manufacturing contracts remained steady apart from UK Arla Farmers Manufacturing reducing their price by 0.15ppl.

Pattemores Dairy have held for the last nine months whilst Meadow held on to their price for the third consecutive month.

Demand

During the 52 weeks ending 14 June 2025, volumes of cow’s dairy declined by 1.1% year-on-year (NIQ Homescan POD, Total GB).

Spend on cow’s dairy increased by 3.5% year-on-year, driven by a growth in average prices of 4.7%. 

Cow’s milk volumes continued to decrease, seeing a 2.6% year-on-year decline (NIQ, 52 w/e 14 June 2025) with a corresponding decline in spend of 1.4%, driven by a decline in frequency of purchase and volumes purchased per trip.

Semi-skimmed cow’s milk, which represents 58.3% of all cow’s milk volumes, saw a 4.0% decline in volumes, while whole milk continued to see volume growth (+2.0%) due to an increase in shopper numbers.

Cow’s cheese remained in volume growth, up 2.9% year-on-year, with spend during the period increasing by 3.0% (NIQ, 52 w/e 14 June 2025).

Cheddar, which represents 41.6% of all cow cheese volumes, saw a 3.9% increase in volumes.

British regionals saw a 5.4% decrease in volumes driven by a loss of shoppers and volume per shop, while Stilton and British Blue cheese saw a 1.2% decrease in volume driven by a loss of shoppers and lower frequency of purchase.

Processed cheese also saw a decrease in volumes (-1.6%) despite a -3.8% decrease in average price. Plant based cheese volumes continued in steep decline (-17.3%).

Cow’s butter, at a total level, experienced a 2.3% decline in volume but a 6.4% increase in spend, which was driven by 8.9% increase in average price paid (NIQ, 52 w/e 14 June 2025).

Cow butter spreads, which represent 69% of all cow’s butter volumes, saw a volume decrease of 5.7%.

Block butter, however, continued to see volume increases of 6.0%, driven by an increase in shopper numbers and an increase in shopper frequency of purchase.

Plant-based spread volumes saw modest declines of -0.7% despite a -2.5% decrease in average price.  

Cow's yoghurt, yoghurt drinks and fromage frais volumes continue to see growth (+5.9%), with spend increasing by 9.2% (NIQ, 52 w/e 14 June 2025).

All products saw volume growth during the period, apart from fromage frais (-9.9%) and standard flavoured yogurts (-1.1%).

Cow’s fat free yoghurt saw the greatest actual growth with an additional 13.5m kilos purchased year-on-year (+9.0%), while cow’s standard plain yoghurt saw the fastest growth of 23.7% year-on-year.

Cow's cream volumes experienced a 1.4% increase year-on-year, driven by increased frequency of purchase and increase in volume purchased per shop (NIQ, 52 w/e 14 June 2025).

Clotted (+4.2%), double (+3.7%) and sour cream (+5.3%) all experienced volume growth and drove overall cow cream performance.

There has been notable growth for cottage cheese and other high protein options.

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

Trade

Total export volumes of dairy products from the UK for Q1 2025 are down year-on-year. However, they are higher compared to the last two quarters. Exports of dairy products to the EU declined by 24,000 t whilst increasing by 7,200 t to non-EU nations.

This was largely driven by a decline in exports of milk and cream which fell by 24,300 t (10.9%). There was also a decline in exports of cheese and curd of 3,300 t (6.4%) and a marginal decline of yoghurt exports by 400 t (3.9%).

In comparison, powders, whey and whey products and butter exports continued to grow year-on-year. Exports of whey recorded a new five-year high.

Powders saw the biggest year-on-year increase, up by 5,300 t – bound for non-EU nations such as Asian countries (Pakistan, Malaysia, Indonesia, Bangladesh), Algeria and the United Arab Emirates.

This was followed by exports of whey and whey products, which increased by 3,600 t and butter by 2,200 t during the period. Exports of powder picked up year-on-year after declining in the second half of 2024.

Though overall exports to the EU declined, they constituted around 90% of total UK exports. Ireland, Netherlands, France, Belgium, Germany and Poland are the major recipients.

In Q1 2025, exports to France increased by 30% to 10,000 t, Germany increased by 80% to 5,400 t and Poland increased by 16% to 3,900 t.

Conversely, exports to Ireland declined by 11% to 221,000 t, Netherlands declined by 7% to 20,100 t and Belgium declined by 14% to 7,300 t.

Exports to non-EU countries like Morocco, Saudi Arabia, and some Asian and African countries also declined during the period.

The recent series of announcements by US President Donald Trump regarding new tariffs on imports has sent ripples through global trade markets.

Among the industries affected, the British dairy sector faces significant challenges as the USA imposes an additional 10% tariff on all UK imports excluding those within the much-touted “deal” which has, as yet, provided scant detail on dairy products specifically (although has specified ethanol and beef within scope).

Trump’s tariff policy introduces uncertainty into the British dairy sector, disrupting established trade flows and forcing producers to reassess their export strategies.

While the UK remains committed to negotiating a trade deal with the US, the industry must prepare for potential shifts in demand and explore alternative markets to mitigate the impact of these tariffs.

Differential tariff arrangements, including those between the EU and US could cause displacement of product which could have a negative effect on prices.

We have undertaken a detailed analysis of our export prospects into the USA and other markets as part of this study: Prospects for UK agri-food exports

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