Japan’s dairy herd and raw milk production are expected to remain stable in 2026. Although higher prices are reducing household milk consumption, tourism is supporting food service demand. Surplus milk is boosting butter production and stocks, while butter imports and consumption remain steady. Cheese production will be flat, with continued reliance on imports. Non-fat dried milk (NFDM) output remains high, but domestic demand for food products is softening. However, imports for animal feed are rising because they are more competitively priced than domestic NFDM for feed. The sector faces stable supply, shifting demand, and ongoing inflationary pressure.