Dairy auction ticks up a second time - but it’s a weaker increase

Wednesday, 21 January 2026

Driving prices down in the fact that in most milk exporting countries, including New Zealand, production is at all-time highs.

The latest Global Dairy Trade auction has moved up for a second consecutive increase in 2026, after a string of declines through the latter part of 2025.

But the increases have moderated from January, where they jumped up sharply by 6.3%.

Prices gained just 1.5% at this week’s auction. Most crucially for New Zealand, whole milk powder gained 1% to an average of US$3449/MT (or NZ$5900/MT). Skim milk powder gained 2.2%, to an average of US$2615/MT and butter rose 2.1%.

In the last auction, these three categories rose 7.2%, 5.4% and 3.8% respectively.

While auction prices can go up and down fairly regularly, sustained decreases in the auction last year were blamed on a glut in global milk production - or what Rabobank analysts called ‘stunning’ global milk production.

Countries such as Argentina, Brazil and Australia are also seeing record milk production into this year, even while the EU’s overall production will drop slightly and China’s is forecast to be flat in 2026.

Herd numbers are at historic highs in countries like the US. There were around 9.5-9.6 million milk cows on US farms in late 2025, bolstered by the breeding of dairy cows with beef bulls to create more valuable crossbred calves that both bump up meat and milk production.

The US and New Zealand are set for a year of record cheese exports, and New Zealand farmers had a highly productive milking season, setting new milk solid records each month from May to September 2025, with October the sector’s third highest output on record.

Rabobank’s senior agricultural analyst Emma Higgins predicted there’d be weaker commodity prices following the milk production growth across the second half of 2025, which had peaked in the third quarter of last year.

“Demand remains fragile and, in the absence of any supply shock to impede surplus milk, this raises the risk of prolonged weak pricing through mid-to-late 2026 as surplus milk enters the market,” she said.

“However, supply growth is expected to slow to just 0.12% next year, and weaker prices should eventually support a gradual recovery in demand, with commodity prices expected to return to historical averages by year-end 2026.”