South America Adds to Rising Milk Supply 📈
MARKET NEWS
South America Adds to Rising Milk Supply 📈
Daily Dairy Report | December 19, 2025
As has been the case in much of the rest of the world, milk production is also quickly expanding in South America. Favorable weather and margins have been driving volumes higher for most of 2025, pushing additional product onto an already well-supplied global market. Notably, virtually every country on the continent has reported stronger production this year, underscoring how pervasive the trend has become.
While the breadth of growth has been impressive, perhaps no country has experienced a more dramatic turnaround than Argentina. After production fell 6.7% in 2024, largely due to economic complications, output surged in 2025, with cumulative volumes up 10.4% in the first 11 months of the year.
Growth has been driven by a combination of rising productivity and an expanding national herd. In November, Argentina’s dairy herd numbered 1.499 million head, an increase of 33,130 cows compared to the beginning of the year.
While most of this year’s production increase has been absorbed by the domestic market, exports have grown in recent months. In October, Argentina shipped more than 21,000 metric tons of whole milk powder, the largest single-month export volume since 2013.
On the other side of the Rio de la Plata, production volumes have also risen. Uruguayan producers increased output by 5% between January and October. Moderate rainfall and seasonally typical temperatures have been especially beneficial in Uruguay, where pasture plays a central role in dairy operations.
Because of the country’s small domestic population, most of the additional milk was routed to export markets. Total 2025 exports from Uruguay were up 4.2% through November compared to the same period last year.
Although growth among South America’s exporters has drawn the most attention, gains recorded by the region’s importers have also been significant.
Brazil reported a 9.1% increase in milk production during the first nine months of 2025, with particularly strong growth in the southern states of Paraná and Rio Grande do Sul. Chile and Colombia—two other key importers—also increased production, with year-to-date volumes up 7.3% and 3.4%, respectively.
While 2025 brought strong milk production growth to South America, the trend is likely to slow—and could even reverse—in 2026. As production gains accelerated, additional supplies placed downward pressure on prices across the region.
Nearly every country has reported lower milk prices, with particularly sharp declines in recent weeks as global commodity prices weakened and the Southern Hemisphere moved through its seasonal peak. Declining prices will increasingly pressure producer margins, even as operating costs remain relatively moderate.
More challenging economics are expected to motivate producers to slow output growth, and in more severe cases, cut production altogether. In the near term, South America will likely continue contributing to the global surplus, but over the coming year, the region may become part of a broader global supply correction.
Spot markets were active heading into the holidays. Butter prices fell 6.5¢ to end Friday’s session at $1.415/lb., the lowest level since 2021, with 61 loads traded during the week—29 of them on Friday alone.
Whey prices also declined, falling 6¢ to 70.5¢ per pound. Cheese prices rose earlier in the week before slipping on Thursday and Friday. Spot Cheddar blocks ended the week at $1.36/lb., up a penny from the previous week, with 21 loads traded.
NMPF NEWS ALERT
Last week was a busy one before Congress adjourned for the Christmas break. On Monday, the House passed the Whole Milk for Healthy Kids Act, which would allow schools the option to serve whole and 2% milk to better support children’s nutrition.
Late Thursday, the Senate confirmed Dr. Julie Callahan as Chief Agricultural Negotiator for the Office of the U.S. Trade Representative. Her work to open new markets and opportunities for U.S. agricultural producers has been widely recognized.
NMPF wishes everyone a restful holiday season and a happy, healthy New Year. NMPF offices will be closed December 25 – January 1. The Dairy Industry News Alert will not be published December 24 – January 2 and will return January 5.
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