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Global Dairy Markets Brace for Supply and Disease Challenges in 2025
By: Nate Donnay, Director of Dairy Market Insight
Global Dairy Markets Brace for Supply and Disease Challenges in 2025
Key Takeaways:
- California's Bird Flu Impact: Milk production per cow down 9.2% in November 2024, with a slow recovery forecast
- European Disease Threats: Foot-and-mouth disease outbreak in Germany introduces uncertainty, while bluetongue vaccinations begin to curb impact
- China's Declining Demand: Weak domestic consumption despite reduced production signals demand struggles in 2025
The global dairy industry is navigating a complex landscape as 2025 approaches, and StoneX’s dairy team weighed in on the landscape in their quarterly forecast. Overall, supply across major exporting regions looks strong, yet diseases and shifting demand trends pose significant challenges.
US Dairy: Resilience Amidst Bird Flu Woes
In the United States, bird flu has heavily impacted California, the largest milk-producing state. Milk production per cow plummeted by 9.2% in November 2024. While recovery is underway, production remains 5–7% below previous levels, which could suppress overall US output.
Despite these challenges, strong profits and an expanding herd support optimism for broader growth. "Margins remain solid for most US farmers," says StoneX dairy expert Nate Donnay. "We expect continued production growth if profitability holds."
Europe: Foot-and-Mouth Uncertainty Looms
Europe faces challenges, with foot-and-mouth disease recently detected in Germany. The outbreak is localized for now, but its potential spread raises alarm. "Historically, we've seen rapid escalation if not contained swiftly," warns John Lancaster, head of European Dairy at StoneX.
Bluetongue disease, another concern, is gradually being controlled through vaccinations. Despite these challenges, margins remain strong, enabling moderate milk production growth across Europe.
China: Weak Demand Overshadows Supply Cuts
China presents a puzzling scenario. Milk production dropped 5–7%, yet domestic prices have not surged. This disconnect suggests weak consumption, which could dampen global demand. "China’s consumer confidence remains fragile," explains Lou Xi, market intelligence analyst at StoneX. "We expect only modest increases in Chinese imports for 2025."
Price Divergences and Regional Dynamics
While supply growth appears steady across major regions, regional dynamics create pricing disparities. European butter prices climbed to record highs due to low stocks, while US butter prices softened amid declining demand. Market watchers anticipate adjustments as supply and demand pressures shift. For buyers and sellers, understanding these regional nuances will be critical. "Markets are pricing in these changes, but the real story is in the details," Donnay notes.
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----Written by: Gareth Thomas, Copywriter
----Experts: Nate Donnay, Director of Dairy Market Insights and John Lancaster, Head of European Dairy
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