First Signs That China Is Back on the Market

Imports of all dairy products into China have shot up in January 2016, an overall increase of 51% in volume over the same month last year, IFA National Dairy Committee Chairman Sean O’Leary revealed today (Thurs).

“While surplus supplies are undoubtedly part of what is maintaining low dairy prices currently, coinciding sluggish demand is also an issue. China’s absence was one of the main factors depressing demand, and the latest set of figures released today by CLAL based on GTIS data suggests that Chinese buyers are active again,” Mr O’Leary said.

“The massive import increase affected all products, with butter up a whopping 83%, albeit on relatively low volume, but WMP up 52.3% to over 120,000t. Even infant formula imports, which had held up very well in the last two year are up 38.9% to 17,000t; SMP up a very impressive 43.2% to 33,500t; and, whey powder a massive 53.2% 44,000t. From low levels, cheese imports are up almost 66% to nearly 10,000t – see table below.

“It is not unreasonable to think we may be seeing the first signs that the most important global buyer is back on the market. After all, they must by now have worked their way through much of the stocks acquired in the buying spree of 2013-14, and their domestic production, while increased from that period, still lags behind domestic demand,” he said.

“I don’t want to overstate the case; January is always the month in which the greatest volumes are traded with China, and this is linked to the New Zealand trade deal quotas. Apart from UHT milk, the bulk of the other products are bought from New Zealand, and it is understood that their entire 2016 reduced tariff quota for all dairy products imported into China has now been filled,” he added.

“While this may dampen down further imports, it may actually be that buying will continue from New Zealand and others at full tariff rates as the needs of domestic demand grow greater,” he concluded.

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