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Escalating geopolitical tensions in the Middle East are driving short-term volatility across global dairy markets, raising concerns over supply disruptions and trade flows through critical maritime routes, even as the overall market structure remains resilient.
Despite an initial spike in commodity prices, strong global milk production, improved inventories of storable dairy products, and limited direct exposure to the most affected Gulf markets suggest that the current crisis is unlikely to cause a structural supply shock, with impacts expected to remain temporary.
A key regional factor is the growing role of Iran in dairy trade, where exports of skimmed milk powder and butter have expanded steadily since 2021, making it the fourth-largest SMP exporter globally after the European Union, the United States, and New Zealand. (Dairy Business Middle East & Africa)
However, Iranian dairy exports remain largely regional, with markets such as Afghanistan and Pakistan driving SMP demand, while Russia has emerged as a significant destination for butter—limiting broader global exposure.
Additionally, prior stock-building by importers during the second half of last year has cushioned immediate supply risks, as buyers anticipated potential disruptions and increased precautionary inventories ahead of the crisis.
Overall, the situation is expected to reshape trade flows and logistics patterns in the near term rather than disrupt global dairy supply fundamentals, highlighting the sector’s improved resilience to geopolitical shocks.
Source: Dairynews7x7 6 May, 2026 Read full story here
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