FAS/Tokyo expects Japan’s raw milk production to rise slightly in 2027 as the dairy herd becomes younger. Drinking milk demand, however, will remain weak. Processors will continue to direct surplus milk to butter, cheese, and non-fat dry milk (NFDM), causing butter and NFDM stocks to continue growing. Lower-priced imports will still compete with domestic products, but tariff-rate quotas will hold butter imports flat and push NFDM imports down in 2027.