Global Milk Powder Supply in 2026: What Oversupply, Price Swings and Structural Import Demand Mean for West Africa Buyers

Global dairy markets entered 2026 in a state of clear oversupply, yet the picture is far from static. Price swings of historic magnitude, a divergence between protein and fat markets, and a structural shift in where buyers are sourcing product have combined to create both opportunity and complexity for importers across the UAE and West Africa. Understanding these dynamics is essential for making well-timed procurement decisions in the months ahead.

A Well-Supplied World — With Important Exceptions

Milk production growth across the major exporting regions — the EU, New Zealand, Argentina and the United States — has kept global supply elevated, supported by relatively low feed prices encouraging output. The EU stands out for the scale of its surplus: France, Germany and Poland are producing at high levels, while China's ongoing anti-subsidy investigation into EU dairy has limited export flows to Asia, leaving surplus powders on the internal European market and pressing prices lower. EU milk production is forecast to increase 2.6% in 2026 to 26.16 million MT.

Argentina is adding further supply pressure, with milk production forecast around 4% higher in 2026 on the back of good pasture conditions and low feed costs. Its whole milk powder (WMP) exports are set to rise 15%, and skimmed milk powder (SMP), butter and AMF exports up 9%. Australia is the one notable exception to this growth story, recording a production contraction of −1.2% this season due to weather and elevated culling rates, though a modest rebound of 1.8% is forecast for 2026.

Global milk production overall is forecast to end 2026 at just 0.2% year-over-year growth — a meaningful slowdown from the 2.6% expansion recorded in 2025 — signalling a gradual deceleration, not a reversal.

Prices Fell Sharply, Then Partially Recovered

The oversupply environment drove significant price corrections between September 2025 and February 2026. Fat markets were hit hardest, with prices falling more than 40% over that period. WMP followed a similar trajectory, declining approximately 30%. Protein markets — SMP, cheese and whey — proved more resilient, recording declines of roughly 15%.

A partial recovery emerged at GDT Event 397 on 3 February 2026, when the overall index rose 6.7%. SMP surged 10.6% to US$2,874/MT; WMP rose 5.3% to US$3,614/MT; and butter gained 8.8% to US$5,773/MT — the third consecutive GDT gain. The rebound was driven primarily by Chinese buyers returning to market and absorbing approximately 35% of total volume offered, alongside seasonal demand from MENA buyers — notably Algeria — ahead of Ramadan and Easter.

Rabobank cautions, however, that current supply data does not yet indicate this upward move is structurally sustainable, with production across the EU, US, South America and New Zealand remaining well above prior-year levels. That said, EU milk production is expected to decline through Q3 and Q4 2026, which could gradually tighten powder availability and support further price recovery in the second half of the year. Separately, US non-fat dry milk production is at multi-year lows, redirecting international buyers toward European and New Zealand origins — a dynamic that could place additional upward pressure on EU SMP availability.

West Africa: Structurally Import-Dependent and Growing

For buyers serving West Africa, the demand side of the equation is structurally robust. The region spends between US$1.6 billion and US$1.9 billion annually on dairy imports, with Nigeria, Senegal, Ivory Coast, Mali, Ghana and Mauritania leading volumes. Across the continent, approximately 80% of Africa's dairy consumption growth is met by imported dairy products and reconstituted powders rather than expanded local production — a structural dependency that underpins long-term import demand.

Nigeria alone imports around 60% of its dairy needs, with the majority entering as powdered milk and cream. The market is highly price-sensitive, and fat-filled milk powder — which blends vegetable fats with dairy solids — accounts for approximately two-thirds of dairy imports across the region and close to 70% of dairy consumption in most capitals. Algeria represents 22% of African dairy imports and ranks as the world's second-largest milk powder importer after China. Africa as a whole imports US$7.5 billion in dairy products annually, with projections pointing toward US$15 billion by 2035.

Takeaway for Importers and Distributors

The current environment presents a clear window. Input costs for milk powder remain meaningfully below year-ago levels despite the partial GDT recovery, and supply from the EU, New Zealand and Argentina is plentiful. At the same time, the factors that could tighten EU availability — seasonal production declines in H2, US buyer redirection and potential Chinese demand momentum — are building. For importers serving price-sensitive, import-dependent markets across West Africa, securing forward volumes while procurement conditions remain favourable is a prudent strategy before the second-half supply picture shifts.