Dairy trade shows signs of optimism as spring peak passes

Dairy commodity markets are showing tentative signs of recovery, with prices stabilising for cream and cheddar and rising for skimmed milk powder.

However, wholesale butter values continue to slide, falling by a further £210/t on the month to £3,330/t.

Export markets are providing some support, with dairy export volumes up by 2% on the year during the first quarter of 2026.

See also: Beef sector warns falling prices may lead to fewer cattle

In its latest short-term outlook, the EU Commission projects raw milk prices to stabilise in the coming months, reflecting firmer dairy commodity markets and a gradual shift towards higher value-added products such as cheese and whey.

It noted that declining production and consumption trends for drinking milk may weigh on prospects for fresh dairy products, while yoghurt and cream production could increase due to strong demand.

Global outlook

Wholesale dairy values at the Global Dairy Trade (GDT) auction on 19 May lifted by a further 0.6% to average US$4,198/t (£3,124/t).

Global agricultural banking co-operative Rabobank expects the 2026-27 milk year to be characterised by high milk prices and higher costs.

Emma Higgins, senior analyst at Rabobank, suggested that the GDT price index had regained momentum.

She said: “The volatile operating environment farmers are now in underscores the need for wider-than-usual scenario planning across both costs and revenues, and for caution in treating price spikes driven by geopolitical shocks as structural rather than temporary.”

Ms Higgins added: “The ongoing closure of the Strait of Hormuz, now approaching its fourth month, is creating conditions reminiscent of past stagflationary shocks.

“Initial impacts, particularly higher energy prices, are now flowing through into key upstream dairy inputs, including diesel, fertiliser, and industrial goods.

“Second-round effects are also emerging, with elevated energy costs feeding into broader inflation expectations.”

Record spring peak

Provisional figures from the AHDB indicate that GB daily milk volumes reached a new high of 38.9m litres on 25 April, breaking last year’s record.

GB milk deliveries have since started to decline, averaging 38.1m litres a day in mid-May.

This is down by 0.8% on the week and 0.5% below the same week last year.