Annual global milk supplies are now forecast to increase by 2.2% in 2026 due to strong flows in most major regions, according to a new report from Ornua.

The Ornua Market Report for October 2026 shows that growth is being forecast to expand by 1% next year.

However, Ornua said the actual impact of the El Nino weather phenomenon is currently unknown.

The report shows that production across the EU rose by 1.1% in September, down from 2.5% in August.

Ornua noted that given the drought conditions experienced in recent months, flows were "better than expected", especially in France and Germany.

This has resulted in the annual EU milk production forecast being revised back to pre-drought levels to +1.9% for now.

"The drought's impact may not be felt until later, and growth should ease again next month versus a strong base," Ornua said.

The report also shows that output in Ireland fell by 2.2% in July and by about 4.3% in August due to the impact of drought.

Milk

Milk volumes in the US were up by 1.7% in July and August.

While the growth rate eased somewhat, the report outlines that milk solids are higher and the annual forecast continues to project a lift of 2.2% this year.

The main drivers of the expansion are stong beef prices and new cheese processing capacity.

Production is at record highs in New Zealand, helped by good pasture conditions and strong milk price.

Milk flows increased by 2.4% and solids rose by 3.4%.

Ornua said that if the recent growth rate continues, annual output could rise by 4% or more. However, it noted that El Nino "may become a factor as the season ramps up".

Favourable conditions have also boosted output in major South American producers, such as Argentina, Brazil, and Uruguay.

In Uruguay, output has been particularly strong and is up by 12% year-to-date.

Supplies

In its outlook, Ornua said that global milk flows are expected to continue expanding, but at a slower pace in the fourth quarter (Q4).

"The full impact of weather-related supply disruptions is unlikely to emerge until early next year," the report said.

Demand is reported to be solid on the back of "exceptionally strong" exports in the first half of the year, but there are indications the growth rate is slowing.

European market activity increased through September, in line with seasonal norms, with skim milk powder (SMP) and cheese prices recording the strongest gains.

"However, significant price growth in the fourth quarter appears unlikely, given solid milk supply and a modest demand outlook.

"Indeed, near-term demand growth is likely to be constrained by several factors, including a slowdown in export demand, inflation, and price sensitivity," Ornua said.