The figures were revealed to over 700 delegates at the World Dairy Summit in Bruges.
Cows milk output, which accounts for 84% of total milk supplies, is only rising by about 0.8%, while buffalo milk output is expected to be 3.5% higher this year, mainly in India and Pakistan. World sheep and goats milk is expected to show a small decline.
Butter and skim milk powder production is expected to show little change on 2002 levels and the extra milk is being converted into cheese and whole milk powder.
Last year world cheese production only grew by about 0.5% after record expansion of 3.4% in 2001. This year cheese output growth is likely to be back to around 1%.