Summary
- Global milk supply will grow modestly in 2026, driven by gains in Argentina, Australia and Brazil.
- Cheese emerges as the strongest export performer, with major increases expected from the US, New Zealand and Argentina.
- China and Brazil remain key dairy importers, with China driving whey and cheese demand and Brazil continuing to rely heavily on imported milk powders despite rising domestic production.
Based on annual USDA GAIN data, we analyze the fluid milk production forecasts for the seven major dairy exporters globally; which export categories are set to absorb the added volumes; and what all that could mean for the global dairy markets.
Units and conversions
MT = metric ton (1,000 kg)
Fluid milk data expressed in MT for consistency.
US production figures originally in pounds are converted to MT.
Argentina: Milk growth fuels stronger powder and cheese exports
Production is expected to rise by around 4% to 12.0 MMT (up from 11.49 MMT) due to five key reasons: favorable weather and pasture conditions; strong feed reserves; increased cow inventories, a stable exchange rate, and herd expansion.
The additional milk volumes are likely to support exports, particularly in powders and cheese.
Exports of WMP (up 15%), SMP, butter and AMF (up 9%), cheese (up 9.52%), and fluid milk (at 10,000 MT, slightly above 2025 levels) are all set to increase in 2026.
For context, Argentina’s fluid milk output rebounded in 2025 after a weak 2024 marred by economic and herd-related pressures, including tight milk to feed ratio, the peso’s devaluation, and declining cow inventories.
Argentina’s milk growth of ~4% in 2026 fuels broad export increases, especially in WMP, SMP, butter/AMF and cheese.
Australia: Cheese leads export growth
Australia’s milk production is forecast to rebound in 2026 by 1.8% to 8.65 million MT thanks to favorable weather conditions, steady farmgate milk prices, low feed costs and efficiency improvements.
Cheese will be Australia’s strongest export, with the USDA forecasting exports to reach 175,000 MT in 2026: the highest since 2008.
SMP exports will likely remain unchanged at 155,000 MT – with production to remain flat and Chinese demand weak.
WMP exports are forecast to slump by 13%, falling to 45,000 MT due to reduced production and more milk being diverted to produce cheese and butter.
Butter exports will be limited at 9,000 MT.
Australia rebounds in 2026 with higher milk output and its strongest cheese export performance since 2008, while powders weaken.
Brazil: Continued import dependence
Milk production is forecast increase 2.6% in 2026 to 26.16 million MT from the USDA’s revised 2025 estimate of 25.5 million MT. The forecast is supported by production efficiency, technological advancements and genetic improvements.
Despite the expanded production, exports are unlikely to grow significantly in 2026. The following categories are forecast to increase volumes slightly:
Cheese: forecast to grow to 4,000 MT from 3,000 MT, thanks to domestic production expansion.
Butter exports: stable at around 2,000 MT, thanks to strong domestic demand.
WMP: stable at 3,000 MT, with sector unlikely to increase production.
As with China below, Brazil is a key player in terms of imports.
In 2026, the country will continue to rely on milk powders, with significant imports of processed dairy:
- WMP, Brazil’s biggest dairy import, is forecast to decline to 138,000 MT vs 140,000 MT in 2025.
- SMP import volumes to remain flat, at 46,000 MT.
- Cheese will remain stable, at 52,000 MT, in line with 2025.
- Butter imports are forecast 2,000 MT, down from 3,000 MT last year.
Despite rising production, Brazil remains heavily import‑dependent, with only small gains in cheese, butter and WMP exports.
China: Whey demand surges
Consolidation and yield gains by large farms will be moderated by weak prices and exiting farmers in China. Milk production is forecast to remain in line with 2025 levels (41.51 million MT vs 41.50 million MT).
Cheese, butter and SMP exports are forecast to remain flat thanks to strong domestic demand, with slight upticks in fluid milk (40,000 MT from 35,000 MT) exports and WMP (55,000 MT from 50,000 MT) as a shift away from WMP and toward higher‑margin products continues.
China’s role in the global dairy markets will thus remain focused on imports.
The country’s glut for whey is set to remain strong, driven by feed and formula applications.
Cheese imports are set for modest increases thanks to foodservice expansion; and powder imports will remain stable with slight decline in fluid milk imports.
China's production is forecast to stay flat, keeping the country reliant on dairy imports, especially whey and cheese.
EU: Regulation and herd loss drive down exports
The European Union is forecast to record a 0.5% decline in milk production in 2026 (148.95 million MT, down from 149.7 million MT) due to a drop in cow inventories (-0.9%), disease outbreaks and regulatory hurdles.
Most export-oriented categories are facing declines.
- Cheese: -0.7% driven by higher prices and geopolitical tensions
- Butter: -15% as cheese production is forecast to take priority.
- Fluid milk: -7.2% due to lower production and weak demand from China.
- WMP: -11% over pricing and demand pressures.
- SMP:-1.4% due to lower production volumes.
The EU faces declining milk production and across‑the‑board drops in major dairy exports due to herd contraction and regulatory pressures.
New Zealand: Record cheese exports expected
In 2025, New Zealand recorded its highest milk production level (22.0 million MT) since 2018. In 2026, the country is forecast to produce 21.9 million MT of fluid milk, supporting export volumes.
Export focus is likely to remain on high-value commodities such as cheese, butter and AMF and specialty ingredients, with powders set to lose share.
WMP exports are forecast at around 1.395 million MT, broadly in line with recent capacity.
SMP exports, at around 445,000 MT, will remain steady, with China and Indonesia the top destinations.
Cheese exports are projected to reach a record circa 430,000 MT on strong global demand.
Butter + AMF exports are forecast at around 515,000 MT.
Fluid milk exports are projected to stabilize at around 255,000 MT, with about 75% going to China.
New Zealand maintains strong production and shifts further toward high‑value exports, with cheese exports forecast to hit record levels.
USA: Cheese exports to hit new highs
The US is forecast to produce 106.19 million MT (234.1 billion pounds) of fluid milk, slightly down on the USDA’s 2025 projection of 104.96 million MT (231.4 billion pounds). The revision is due to lower dairy cow inventories, despite higher milk yield per cow.
Cheese production is expected to rise 3% and drive higher consumption and exports in 2026.
Exports of cheese are predicted to rocket up to more than 620,000 MT in 2026, beating 2025 estimates (602,000 MT) thanks to competitive prices.
Below are the largest US dairy export categories in 2026, ranked by export volume:
- Cheese: 621,000 MT
- SMP: 668,000 MT
- Dried whey products: 597,000 MT
- Lactose: 435,000 MT
- Butter and milkfat: 89,000 MT
- Fluid dairy products: 195 million liters
The US is set to strengthen its position as a top global dairy exporter, led by record‑high cheese shipments and strong SMP (NFDM) and whey volumes.
Conclusion: Cheese a key export
With cheese exports increasing or flat in nearly every major region (and seeing only a modest decline in the EU), cheese is broadly shaping up to be the strongest export commodity in dairy in 2026.
Exports are forecast to be supported by record expansion in the US, New Zealand and Argentina, with markets such as China showing strong appetite for cheese, too.
The US in particular is increasingly positioning itself as the world’s largest cheese exporter.
This global expansion in cheese is supported by demand, suggesting that the added volume will be absorbed by the market, with headroom for further growth available.
