Dairy imports to China remain low
Source: The DairyNews
Dairy imports to China remain low, and what happens in China has a big impact on global milk and dairy prices.
Maks Fasteyev
Dairy Project Partner at INFAGRO Ltd.
Dairy Project Partner at INFAGRO Ltd.
Ыarina Sharp, an analyst at the Daily Dairy Report, in comments for Dairy Herd Management, explains why China's economic problems are already affecting the import of milk and dairy products into the country.
"Despite a moderate slowdown in domestic milk production, China has sufficient whole milk powder to avoid importing the product, and this is holding back global milk powder prices," Sharp said.
China's post-pandemic economic recovery has not been as fast as some expected, but the outlook for the future looks even worse. The International Monetary Fund (IMF) estimates for 2023 suggest gross domestic product (GDP) growth of 5.4% per year, which is only moderate growth for the world's second largest economy. Looking ahead, the IMF expects a slowdown in economic growth in China. The continued weakness of China's real estate market and weak demand for Chinese exports could lead to GDP growth of just 4.6% in 2024, and growth in China should slow to about 3.5% by 2028 as the country's population ages, according to the IMF.
"Pork prices in China are falling as the industry struggles with an oversupply of supplies and sluggish demand for pork. Against the background of high youth unemployment and a debt—laden real estate sector, China's economy is expected to experience a recession, which indicates that pork prices in China may remain low even in 2024," Sharp recalls. "Optimization on pig farms may reduce China's demand for whey products for at least the next six months".
From the beginning of the year to October, imports of whole milk powder in China (CHM) lagged 38% behind the same period in 2022, and imports from January to October were the lowest since 2016. Last month, China purchased 32% less SNM than in October 2022, which is the lowest volume for any month in more than five years.
"This was enough to get total Chinese dairy imports well below 2022, despite a modest increase in imports of skimmed milk powder, UHT milk and cheese compared to last year," Sharp said.
"Despite a moderate slowdown in domestic milk production, China has sufficient whole milk powder to avoid importing the product, and this is holding back global milk powder prices," Sharp said.
China's post-pandemic economic recovery has not been as fast as some expected, but the outlook for the future looks even worse. The International Monetary Fund (IMF) estimates for 2023 suggest gross domestic product (GDP) growth of 5.4% per year, which is only moderate growth for the world's second largest economy. Looking ahead, the IMF expects a slowdown in economic growth in China. The continued weakness of China's real estate market and weak demand for Chinese exports could lead to GDP growth of just 4.6% in 2024, and growth in China should slow to about 3.5% by 2028 as the country's population ages, according to the IMF.
"Pork prices in China are falling as the industry struggles with an oversupply of supplies and sluggish demand for pork. Against the background of high youth unemployment and a debt—laden real estate sector, China's economy is expected to experience a recession, which indicates that pork prices in China may remain low even in 2024," Sharp recalls. "Optimization on pig farms may reduce China's demand for whey products for at least the next six months".
From the beginning of the year to October, imports of whole milk powder in China (CHM) lagged 38% behind the same period in 2022, and imports from January to October were the lowest since 2016. Last month, China purchased 32% less SNM than in October 2022, which is the lowest volume for any month in more than five years.
"This was enough to get total Chinese dairy imports well below 2022, despite a modest increase in imports of skimmed milk powder, UHT milk and cheese compared to last year," Sharp said.
Key News of the Week
