Global dairy prices fell in late 2025 due to record production, but New Zealand farmers stayed profitable amid rising exports to China.

Global dairy prices dropped in late 2025 due to record production in major exporting nations, including New Zealand, the U.S., EU, UK, and South America, with output rising 2.2% year-on-year. Butter, whole milk powder, and cheese prices fell 7% to 9% since October, while skim milk powder held steady. Despite lower prices, New Zealand dairy farmers remain profitable, supported by a forecast farmgate milk price of $9.50/kgMS and a tax-free capital distribution. Export volumes to China rose 17%, boosting total export receipts by 23%. Rabobank expects weak prices to persist into mid-to-late 2026 due to ample supply and weak demand, though supply growth is projected to slow to 0.12% in 2026, potentially allowing prices to stabilize by year-end.