Supply and demand
The drought had the most severe impact on Ireland’s dairy sector, where milk production fell by 3.4 per cent in June and by a further 2.2 per cent in July. A similar situation is being observed in the UK. However, Ornua has raised its forecast for milk supply growth in Europe in 2026 to 1.7 per cent, according to Agriland.
Actual demand for European milk has also exceeded forecasts. In particular, physical export volumes to external markets have risen by approximately 9 per cent since the start of the year. This is supporting market conditions in the short term, although high milk supplies from the US and New Zealand are limiting the potential for significant price rises until the end of the year.
The rate of growth in EU milk production is expected to slow gradually by the end of this year. Rabobank, for instance, expects EU milk production to fall by 1.6 per cent in the fourth quarter of 2026. Declining milk yields and stocks of dairy products are already supporting prices for certain dairy products: skimmed milk powder, cheese and butter. Furthermore, rising feed costs may further increase producers’ expenses, which will be reflected in the price of raw milk.
Price
The average price of raw milk in the EU in August 2026 stood at 42.22 eurocents per kilogram, which is 0.4 per cent higher than in July, according to preliminary data from the European Commission. However, on an annual basis, prices remained significantly lower than in the same period last year.
Price rises were recorded in nine EU countries. The largest increase was recorded in Belgium – up 12.3% to 42.50 eurocents per kilogram. Meanwhile, prices fell by 1.8% in France (to 43.38 eurocents per kilogram), and by 1.3% and 1.6% in Hungary and Slovakia respectively.
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