Fonterra Sees Rebound in China Amid Milk Supply Pressure

McBride noted the downward pressure on China’s milk supply, compounded by aging inventories, particularly in whole milk powder (WMP). “We’re feeling a lot better about demand from China,” he said.

CEO Miles Hurrell emphasized that Fonterra has been actively working to strengthen its presence in China. He highlighted that Fonterra’s foodservice sector in China is thriving, despite the country’s broader economic challenges. “Our model in China has been successful, and I’m confident it will continue to be.”

Hurrell explained that an oversupply of domestically produced milk in China had driven down milk prices in recent years, reducing demand for dairy powder imports. However, he noted that these excess stocks are beginning to clear, both in the domestic market and through exports to other countries.

Fonterra believes that China’s milk production decline—due to local farmers receiving prices below their production costs and culling their herds—has reached its worst point. Hurrell pointed to the recovery in demand as reflected in recent Global Dairy Trade (GDT) auctions, signaling a potential market rebound.