SLOWING MILK SUPPLY AND RISING PROTEIN DEMAND SHAPE DAIRY OUTLOOK

The latest global dairy industry outlook report from Rabobank suggests Australia’s dairy sector will continue growing through 2026-27, although at a more measured pace.

The report says global dairy markets are entering a period of transition, with slowing milk production growth, tighter farmer margins and strengthening demand for dairy proteins shaping the outlook.

RaboResearch senior dairy analyst Michael Harvey says Australian producers remain supported by stable domestic market conditions and resilient international demand, particularly for protein-rich dairy products.

Australian milk production finished 2025-26 slightly higher year-on-year at an estimated 8.35 billion litres, with stronger performances in New South Wales and Tasmania and production stabilising in Victoria.

“The key watchpoint for Australian dairy farmers is weather,” Mr Harvey says, with potential El Niño conditions and below-average spring rainfall posing risks to pasture growth, feed availability and milk supply.

Globally, milk production growth across major exporting regions slowed to 1.4% in the third quarter, with growth forecast to slow further to just 0.5% during the second half of 2026.

RaboResearch says dairy protein markets are outperforming milk-fat markets, driven by growing demand for health, nutrition and protein-enriched products, while improving conditions in China are expected to provide greater support to global dairy trade.