Chinese dairy imports to remain sluggish according to USDA

editorial image

China’s imports of milk and dairy powders may stay restrained for longer than expected, according to the United States Department of Agriculture’s Beijing bureau.

The latest indicators point to China having 300,000t in carry-over stocks, almost twice as much as previously estimated.

The adjustment comes from higher than expected domestic production combined with a small drop in consumption. The increase in powder production has been attributed to a Chinese government requirement that processors honour prior contracts to purchase milk from farmers, which was subsequently turned into powders. As a result, forecasted imports for 2015 have been revised downwards by 33% to 400,000 tonnes. With the Chinese buying around one-third of the total whole milk powder traded globally, DairyCo analysts believe any slowdown in their purchasing will keep global prices under pressure. 

Meanwhile, AHDB Dairy, formerly DairyCo, is also reporting that international milk markets largely remained under pressure in May as global supply continued to be strong.