U.S. Dairy Exports Face Uncertainty as China Emerges as Key Variable
Source: The DairyNews
The U.S. Dairy Export Council (USDEC) has highlighted China as the pivotal factor influencing the trajectory of U.S. dairy exports and global markets. Despite experiencing contraction in 2022 and stagnation in 2023, China maintains its status as the world's largest dairy importer, poised to retain this position for the foreseeable future.
However, the country's economic outlook raises concerns, with dampened consumer and investor confidence, a deflationary housing market, and anticipated GDP slowdown in 2024.
The weakened economic performance is expected to impact China's dairy consumption growth, especially in foodservice, as other segments like bakery face uncertainties. Notably, despite relative success in pizza sales, sustained growth remains uncertain, given economic challenges and changing consumer patterns. Furthermore, the slowdown in economic growth has negatively affected pork consumption, impacting whey-for-feed demand.
The balance between local milk supplies and import needs becomes crucial, given China's significant investments in boosting domestic milk production. Despite potential hindrances from lackluster consumer demand, low milk prices, and high input costs, the Chinese dairy industry's vertical integration and government self-sufficiency goals could defy traditional economic fundamentals. The uncertainty surrounding consumer demand and local milk supply leaves China's 2024 dairy imports outcomes unpredictable.
Amidst this uncertainty, it is anticipated that China may experience another year of mostly flat imports, particularly in the first half, with fluid milk and whole milk powder showing weakness. The evolving import mix in China, shifting away from fresh milk and whole milk powder towards cheese, dairy fats, and specialty ingredients, could present future opportunities for U.S. dairy. Nevertheless, the outlook for China's dairy imports in 2024 remains uncertain, potentially leading to a challenging year.
Full report
The weakened economic performance is expected to impact China's dairy consumption growth, especially in foodservice, as other segments like bakery face uncertainties. Notably, despite relative success in pizza sales, sustained growth remains uncertain, given economic challenges and changing consumer patterns. Furthermore, the slowdown in economic growth has negatively affected pork consumption, impacting whey-for-feed demand.
The balance between local milk supplies and import needs becomes crucial, given China's significant investments in boosting domestic milk production. Despite potential hindrances from lackluster consumer demand, low milk prices, and high input costs, the Chinese dairy industry's vertical integration and government self-sufficiency goals could defy traditional economic fundamentals. The uncertainty surrounding consumer demand and local milk supply leaves China's 2024 dairy imports outcomes unpredictable.
Amidst this uncertainty, it is anticipated that China may experience another year of mostly flat imports, particularly in the first half, with fluid milk and whole milk powder showing weakness. The evolving import mix in China, shifting away from fresh milk and whole milk powder towards cheese, dairy fats, and specialty ingredients, could present future opportunities for U.S. dairy. Nevertheless, the outlook for China's dairy imports in 2024 remains uncertain, potentially leading to a challenging year.
Full report
