Global dairy markets are experiencing a significant oversupply, with milk production rising sharply across major producing regions. Output is well above year-ago levels in New Zealand, China, the United States, and Europe, with especially strong growth in the U.S. and Europe during late summer and fall. Combined milk production among the world’s five largest dairy exporters rose 4.3% year over year in October, the fastest pace since 2014, intensifying competition in export markets.
This surplus has driven dairy prices lower worldwide. At the Global Dairy Trade auction, prices continued an extended decline, reaching their lowest levels since early 2024, with particularly steep drops in butter, anhydrous milkfat, and milk powders. U.S. dairy prices have also weakened: butter and Cheddar cheese hit multi-year lows, though low prices have helped sustain strong U.S. butter exports. However, growing European competition may limit future U.S. cheese exports.