Milk Production Rises Across Oceania, South America and Europe

Summary

An analysis by Chile's National Federation of Milk Producers (Fedeleche), based on October 2026 USDA data, shows raw milk production generally improved across major dairy markets in Oceania, South America and Europe, according to a 2 November 2026 report by Chilean dairy outlet Diario Lechero. In Oceania, Australia's August 2026 raw milk production rose 2.12 percent year on year, with cumulative growth of 2.11 percent in the first two months of the 2026/2027 season; input prices rose in September for the first time since April, driven mainly by a 10 percent increase in grain prices. New Zealand's September 2026 production hit a new record, up 2.10 percent year on year and 3.0 percent for the full season, supported by an expanded herd and farm conversions to dairy; good milk prices continued to incentivise production, but rising feed and fertiliser costs are expected to squeeze margins.

In Europe, Ukraine's production has grown 15 percent since 2020, stemming from herd expansion and greater investment in specialised equipment; automation helps monitor cow health and manage milking and feeding to address labour shortages and rising feed costs. South American production showed seasonal growth: Argentina rose 4.1 percent from January to September and 1.5 percent in September alone, with growth expected to slow in the fourth quarter; Uruguay rose 8.8 percent from January to August; Chile's milk intake rose 4.7 percent from January to August; Brazil rose 2.6 percent from January to June. On prices, milk prices paid to producers fell 14.7 percent in Argentina from January to September, 6.7 percent in Uruguay from January to August and 2.1 percent in Brazil from January to July, while Chile rose 3.3 percent from January to August.

Commentary

The broad improvement in production across major global dairy regions presents both competitive pressure and a market signal for New Zealand's small and medium-sized business owners. New Zealand's record September production, with full-season growth of 3 percent, was driven by herd expansion and farm conversions, but rising feed and fertiliser costs will squeeze margins. For Fonterra, New Zealand's largest dairy company, increased global supply could affect international milk prices, while Australia's 2.5 percent production growth further intensifies competition within Oceania.

In South America, Argentina, Uruguay and Brazil posted production growth but falling milk prices, while Chile's milk price rose, indicating regional divergence. Ukraine's production has grown 15 percent since 2020, with automation investment addressing labour shortages; its low-cost advantage could challenge European markets in future. New Zealand SMEs should focus on cost control and differentiation, such as organic grass-fed or high-value-added products, while watching for penetration of South American low-priced milk powder into Asian markets.

China, as the largest importer, will determine price direction through changes in demand, and recent adjustments in China's import structure warrant close tracking.

Keywords: raw milk production, international milk prices, Oceania dairy, South American dairy, New Zealand record production, Australian production growth, Ukraine dairy, Fedeleche, USDA data

Photo by Myriams-Fotos on Pixabay

Source: Diario Lechero