A primary source of market unease stems from significant trade volatility, particularly influenced by shifting US trade policies under Mr. Trump. The report notes a temporary easing in the US/China dairy trade dispute, with reduced tariffs on US dairy exports, which, while beneficial for American exporters, introduces uncertainty and could displace opportunities for the European Union. With total EU to US dairy exports valued at 2.2 billion euros, the looming July 9 deadline for returning to baseline tariffs without a new deal adds considerable pressure and complexity for international dairy trade.

Rabobank’s detailed analysis also highlights a potential imbalance between rising supply levels and potentially wavering demand, which could disrupt the recent boom in dairy commodity prices. While British milk supplies have shown robust performance, mainland Europe has contended with production challenges, including the impact of BTV and depleted cow numbers. Despite these hurdles, Rabobank still forecasts modest growth for the EU in milk production for 2025, contributing to the global supply picture.

The outlook suggests that dairy prices may begin to align more closely with traditional benchmarks, necessitating increased agility among traders in a rapidly evolving market. For all dairy stakeholders, the core message from Rabobank is clear: close monitoring of global trade policies is paramount. The report advises maintaining robust risk management strategies and actively preparing for a potential cooling of market prices, even as British farmers may experience a more gradual easing rather than a sharp decline in the medium term.