Butter, milk and cheese prices slide as ‘stunning’ production floods global markets

Butter, milk and cheese prices are falling as a surge in global milk production floods the market, prompting warnings of a looming period of weak prices.

“Too much milk for the market, combined with strong milksolids growth, has contributed to a sharp decline in commodity prices,” Rabobank senior agricultural analyst Emma Higgins said in a report Thursday, describing the output as “stunning.”

Global production has accelerated across major exporters. New Zealand farmers set new monthly milksolids records from May to September, with October marking the third-highest peak on record, according to the report. The EU, UK, US and South America have also delivered strong growth.

That means supply is now outstripping demand, Fonterra Cooperative Group Chief Executive Officer Miles Hurrell said in a statement ahead of the cooperative’s annual meeting Thursday.

Butter has fallen 9% since the start of October and sits 24% below its peak earlier this year, while whole milk powder and cheese are each down about 7% this quarter, Rabobank said in its Global Dairy Quarterly Report. It’s an abrupt shift from a few months ago when butter prices in most of the world were lingering near record highs, resulting in more cost pressure on consumers’ favorite foods.

Earlier in the year, Fonterra, the world’s biggest dairy exporter, said payments to its farmer suppliers jumped 30% to NZ$16.2 billion ($9.4 billion) in the 12 months through July due to a record price of NZ$10.16 per kilogram of milksolids and a 57-cent dividend, which was also a record.

Last week, Fonterra said its 2026 forecast for Farmgate Milk Price per kilogram of milksolids was NZ$9.00 to NZ$10.00.

Despite the current slump, in October Fonterra said it is increasing butter production at one of its New Zealand plants to tap what it sees as increasing global demand for more natural foods.

© 2025 Bloomberg

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