Dairy markets outperformed expectations in the first quarter (Q1) of 2026, according to a new report.

However, the latest Ornua market report warns the potential for price growth in the second half of the year seems more constrained due to "strong supply and demand concerns".

The forecast for global dairy supply growth has been revised up to 1.5% for 2026.

"While growth is expected to slow in the latter half of the year, unexpectedly high commodity prices may limit the decline," the report said.

Ornua

Global dairy shipments were up 9% compared to the 3-year average in Q4 2025 and increased by a further 6% in January. The report said this may impact shipments later in the year.

Ornua noted that the second quarter of the year is "typically a strong buying period, and protein demand has been positive".

"However, robust supply, coupled with concerns about futuredemand, means caution remains regarding the scope for pricegrowth in the second half of the year," it added.

Ornua said the Middle East conflict has driven dairy prices even higher.

"There is a positive short-term link between energy and dairy commodity prices. However, if energy prices remain at currentlevels, demand will be affected," the report said.

The Gulf regions account for 7% of EU dairy exports. Due to the war, shipments to and from the region are "effectively halted, leading to reduced demand".

Milk collections

Ornua said that growth in global milk supplies has "probably peaked", but will remain for longer than expected.

The report shows that global milk collections grew by 4.4% in February.

Across the 27 EU member states collections increased by +4.8% in January and are expected to rise by the similar level in February.

February collections were up 6.9% in Germany, by 6% in France, 5.5% in the Netherlands and 2.5% in Poland.

Milk supply remains strong in the US, rising by a further 2.9% in February.

In New Zealand, production continues to grow, due to favourable pasture conditions and strong milk prices.

Milk production in China is projected to increase in 2026, but the growth rate is expected to be modest.