UK closes 2025 with strong milk production, amid further price cuts

UK milk production closed in 2025 on a strong note, with December volumes rising sharply and confirming a year of sustained supply expansion. At the same time, nutrient-rich milk solids continued to build, increasing availability for processors and adding to the market’s growing surplus. Farmgate prices came under increasing pressure, with major buyers signaling further cuts into early 2026. While herd dynamics and supportive feed costs have helped maintain output so far, the balance between profitability and production incentives is shifting.Milk deliveries in the United Kingdom (UK) remained strong at the end of 2025, with milk output reaching 1.34 billion liters in December. This represents an increase of 4.3% from November and 5.2% from the previous year.The expansion observed throughout the whole year persisted into the winter period, consolidating an overall growth in milk output for the UK. The UK's annual milk production increased by 5% over the previous year, to 15.78 billion liters in 2025, supporting a good milk supply for dairy processors.While the nutritional composition of milk declined slightly over the month, year-on-year trends remained positive. Milk fat content declined to 4.45% in December, while protein fell to 3.55%.That said, fat and protein observed an annual increase of 0.4% and 3.3%, respectively. With a higher concentration of nutrients in the milk, the actual production of milk solids increased by 6.2% year-over-year in 2025, surpassing the liquid milk production.This increase in solids availability aligns with reports of strong milk volumes, which have supported the expansion of dairy output, particularly cheese, while butter markets have shown modest tightening.Milk output was supported by an expanding, yet fragile, dairy herdThe growth in UK milk output was partly supported by an expanding number of animals in production. Defra reports that the breeding dairy herd expanded by 0.7% compared to the previous year, totaling 1.85 million heads.Meanwhile, other herd categories declined, resulting in a 0.4% annual contraction in the overall size of the dairy herd. Most notably, young stock (1-2 years) numbers fell by 1.1% compared with the previous year, which may contribute to a gradual ageing of the herd over time. This could affect the longer-term efficiency of milk production, as older cows usually require higher feed to sustain comparable milk yields in younger cows.Milk pricing weakens furtherWhile production remained elevated, pricing conditions weakened sharply toward the end of the year. UK farmgate milk prices averaged 40.3 pence per liter (ppl) in December, declining by 6.1% over the previous month and 13.3% over the previous year. Prices were relatively stable through much of 2025, but a pronounced correction emerged between October and December, with a decline of 5 ppl, in line with developments in international dairy markets.Sentiment points to the rising milk availability, which has increasingly weighed on pricing. Arla and Müller, major dairy processors, announced further farmgate price cuts extending into January and February due to the elevated supply conditions, flat retail demand, and continued market imbalance. While Muller confirmed a price of 35.5 ppl (-3 ppl), Arla’s price was set at 35.73 ppl (-3.51 ppl) for standard manufacturing milk. As such, supply remains a key driver of price pressure at the beginning of 2026.Feed pricing offers supportThat said, the feed market developments have remained supportive of production incentives, even as milk prices weakened. In Great Britain, cattle feed prices averaged £294 per ton in October, according to Kingshay and Promar Milkminder. This represents a decline of 0.4% month-over-month and 3.5% year-over-year. While feed prices showed limited movement across 2025, the annual decrease was influenced by the high baseline levels observed in 2024. Lower feed costs have therefore continued to provide some marginal relief for farmers, partly offsetting the deterioration in milk pricing at the end of the year.