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The UK dairy sector entered 2026 under significant pressure as rising milk production across domestic and global markets created an oversupply situation, weighing heavily on prices and farmer margins, according to the latest Q1 2026 dairy market review by the Agriculture and Horticulture Development Board.
GB milk deliveries have remained consistently above prior-year levels, with January 2026 production reaching 1,080 million litres—up 3.3% year-on-year—and total milk output for the season forecast to hit a record 13.49 billion litres, around 4.9% higher than the previous year.
The surge in supply has outpaced demand, leading to falling wholesale and farmgate milk prices, with some contracts seeing reductions of up to 15 pence per litre. Global milk flows are also rising sharply, with output across key regions increasing by 4.4% year-on-year, further intensifying market pressure and limiting price recovery in the first half of 2026.
Despite lower herd numbers—down 0.9% year-on-year for the milking herd—improved yields, favorable feed conditions, and earlier high milk prices have sustained strong production levels. Organic milk volumes have also surged, with January deliveries up 10.7% year-on-year, reflecting continued growth in premium segments even amid broader market challenges. (AHDB)
Looking ahead, production growth is expected to stabilize, with only marginal increases forecast for 2026, but elevated supply levels are likely to keep processing capacity under strain and prices subdued until at least mid-year.
Analysts suggest that any meaningful recovery will depend on a slowdown in global production and improved demand absorption, signaling a cautious outlook for the dairy sector in the near term.
Source: Dairynews7x7 17 April, 2026 Read full article here
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