China's Dairy Import Shift: Decline in Milk Powder, Surge in Cheese Demand

China, a key destination for Southern Cone dairy exports, is undergoing a substantial transformation in its dairy consumption habits. According to the latest report from the National Milk Institute, based on China's Customs data, total dairy imports amounted to USD 1.989 billion in the first two months of 2026, marking a 3% decrease in value. Notably, whole milk powder imports declined sharply by 26%, dropping from 103,959 tonnes in 2025 to just 76,927 tonnes this year, the lowest level in four years.

This downturn in whole milk powder, a flagship export product for countries like Uruguay and Argentina, contrasts with the robust growth of higher value-added products. Cheese imports experienced a 31% increase in volume, reaching 38,651 tonnes, a record for the January-February period over the past four years. New Zealand and Australia dominate this segment, with South American presence remaining marginal, highlighting the urgent need for diversification to maintain relevance in the Asian market.

Infant formulas remain the most economically significant category, accounting for 36% of total imports in dollar terms, with a 5% volume growth led by the Netherlands, New Zealand, and France. Conversely, whey, once a dynamic segment for animal feed, continues its decline since 2022 with a 24% year-on-year drop, affected by decreased industrial demand in China.

Major industry players, such as Conaprole in Uruguay and large Argentine exporters, are closely monitoring this transition. The reduction in demand for basic commodities in China appears to be a shift towards finished products with higher nutritional complexity. For the regional dairy industry, investing in cheese processing facilities and high-value derivatives is now seen as a strategic necessity to mitigate downward pressure on milk powder prices and ensure long-term competitiveness.