July 4, 2025 – According to Rabobank’s latest “Global Dairy Quarterly Q2 2025: Too Good to Be True?”, the international dairy market may soon undergo a cooling phase, as trade tensions, supply inconsistencies, and slowing demand begin to destabilize the record-high price levels seen since late 2024.
The report warns stakeholders—from exporters to processors—to expect a market recalibration in the second half of 2025.
🇺🇸🇨🇳 US-China Trade Pause: A Temporary Relief
A brief truce in the US-China trade war reduced tariffs on US dairy exports from 125% to 10%—but only for 90 days. While this has pressured Chinese prices, the uncertainty surrounding long-term trade policies continues to weigh heavily on global sourcing strategies.
For Indian exporters, this adds competitive unpredictability in the lactose and whey markets, where Chinese demand is significant.
🇪🇺 EU Outlook: Production Woes, Nitrate Rules, and Cheese-Led Valorization
Europe’s production recovery is faltering due to:
- Disease outbreaks like Bluetongue Virus (BTV)
- Herd shrinkage (EU cow numbers down 2.6%)
- Dry spring weather
- A possible loss of nitrates derogation in Ireland, which could slash milk production by up to 18%
Despite this, Rabobank projects a 0.4% growth in EU milk output for 2025—although GIRA forecasts a small decline of -0.1%. European producers have leaned into cream and cheese production, boosting demand for milk fats and whey.
🧈 SMP, Cheese & Fats: Mixed Signals
- Skimmed Milk Powder (SMP) prices remain flat due to low demand in the EU and US
- SE Asia demand is rising and could lift prices later in the year
- Cheese demand continues strong globally, pulling more milk into processing despite tight supply
India’s exporters of SMP and cheese ingredients must monitor oil-driven demand from Algeria, SE Asian procurement cycles, and EU processing trends.
🌏 The Global Scene: Big-7 Exporters See Modest Growth
Countries like Argentina, New Zealand, and the US are seeing modest production increases. Overall, the “Big 7” exporters are forecast to grow 1% in 2025—the strongest gain since 2020.
However, Rabobank warns this could reverse in 2026, with only 0.3% growth forecasted.
🔮 Outlook for Indian Stakeholders
For Indian dairy professionals, Rabobank’s insights present a dual reality:
- Short-term optimism for high-value exports amid EU shortfall
- Medium-term caution as prices could soften and global supply rebounds
With milk price volatility, trade friction, and processing competition intensifying, Indian producers, cooperatives, and exporters should diversify portfolios, strengthen risk management, and watch regulatory trends in key export markets.
