Dairy Outlook 2026: Milk prices, production and what it means for your farm

With the recent sharp decline in milk prices, following the market been flooded with production we have taken a closer look at the outlook for 2026.

The GB production for 2025/26 is forecast to reach 15.05 bn litres, which is 4.9% higher than the previous year according to the AHDB December forecast update. The rise in production is mainly due to the 20 year high of the milk to feed ratio. Also the forage availability last Summer has resulted in additional concentrate feeding boosting production.

AHDB are estimating continued growth with the Spring flush, followed by a spell of level production. This is despite the falling milk prices, some contracts have been cut by as much as 15ppl, which has resulted in significant cashflow pressures.

Global production has also been particularly strong with an increase of 4.2%, with growth in all key dairy regions. The US production rose by 3.6% with an extra quarter of a million cows! EU returned to full production following disease outbreaks and New Zealand’s production also increased by 1.7%.

An unexpected increase at the first Global Dairy Trade (GDT) auction of 2026, followed by a further, smaller rise at the second auction, may indicate that the market has reached a floor. Reports of buyers in South East Asia and the Middle East returning to the market add to signs that values have bottomed out for now and could begin to recover.

Source: AHDB

UK Farmgate Prices

Farmgate prices are expected to remain under pressure for contracts exposed to weaker commodity markets until milk supplies are brought back into balance and begin to decline. Although buyer demand is forecast to return as excess global stocks are gradually absorbed, this is not expected to happen until after the spring flush. Consequently, producers on non-aligned conventional contracts should anticipate low milk prices persisting until at least the second half of 2026.

How we can support your business through these challenging times

We can assess the impact of declining milk prices on your individual business and model the most effective strategies to navigate the current market conditions. By reviewing herd technical performance and your cost of production, we can help identify opportunities to reduce spend while protecting long-term performance.

We have the following tools to assist:

• Marginal cow calculator
• Milk profiling
• Budget outturn
• Options to raise working capital

Give our team a call on 01666 817278 to discuss how we can assist your business with proven and effective strategies.