European dairy commodity prices are expected to stabilize in early 2026, supported by balanced supply, steady demand, and improving market conditions.
Ornua has indicated that European dairy commodity prices are expected to find stability during the first quarter of 2026, according to its latest Global Dairy Market Report. While overall market sentiment remains subdued, the report notes that European price indices have begun to level off, supported by a recent uptick in Global Dairy Trade (GDT) activity.
The report explains that ongoing geopolitical uncertainties continue to weigh on demand, but there are early signs of renewed buyer interest. Some purchasers are gradually returning to the market, encouraged by what they see as attractive value at current price levels. This cautious re-engagement is reflected in recent GDT results and futures markets, both of which point toward a more balanced and stable trading environment.
From a supply perspective, Ornua highlights that global milk production expanded by approximately 2.5% in 2025, with the European Dairy Union contributing growth of more than 1.5%. Looking ahead to 2026, global milk supply growth is forecast to slow to around 1.0%. In contrast, EU milk output is expected to contract by about 1.0%, particularly in the latter half of the year, which could influence pricing trends as the year progresses.
The report also notes that buying activity is typically muted in January, and this seasonal pattern, combined with currently strong milk supply and geopolitical factors, may continue to shape market conditions in the early months of 2026. Despite these challenges, Ornua suggests that a tightening of supply alongside a gradual recovery in demand could support modest increases in dairy commodity prices during the second half of the year.
Additionally, the report draws attention to China’s announcement of new provisional tariffs on certain European Union dairy products. While this development introduces another variable into the global trade landscape, its full impact on market dynamics will become clearer over time.Overall, Ornua’s assessment points to a period of near-term price stability for European dairy commodities, with cautious optimism for gradual improvement later in 2026 as supply and demand fundamentals evolve.