Global dairy markets are facing increasing pressure from geopolitical disruptions that are affecting key trade routes. The Strait of Hormuz has become a critical bottleneck, with the unstable situation driving up logistical complexity and transport costs. Although prices are supported by robust regional demand, these disruptions are leading to new inefficiencies in global milk flows. Risks in trade settlement are set to become a decisive factor in the functioning of milk markets in the near future.

Nate Donnay, Head of Dairy Market Insight at StoneX, explains how geopolitical shocks translate into concrete market outcomes:

Around 6% of global trade in dairy products passes through the Strait of Hormuz, making this trade vulnerable to geopolitical disruptions.

Higher logistics costs are leading to a decline in consumption in the Gulf states, although the flow of goods continues.

Iran’s suspension of milk powder exports is leading to a decline in supply, which is partially offsetting the fall in demand in the affected regions.

Global supply and demand for dairy products are being reshaped by export restrictions and rising energy costs. Donnay explains: “Iran was a major exporter of milk powder but has halted exports of agricultural products,” thereby reducing supply to the global market. At the same time, higher fuel and logistics costs are dampening demand in price-sensitive regions. As a result, dairy markets are currently undergoing a complex adjustment process in which both supply and demand are under pressure, making price trends less predictable.