Chinese milk powder imports back to ‘normal levels’

In China, imports of Whole Milk Powder and Skimmed Milk Powder are back to normal levels, according to the European Commission’s latest outlook.

Though remaining substantially below 2014 high levels, down by 55% and 28% respectively in the first eight months of the year.

The Commission says it is to be kept in mind that the level of imports in 2014 was extremely high and disconnected from actual demand.

However, it also highlights that imports of whey, liquid milk and cheese are higher than last year.

In total milk solid equivalent, Chinese imports were 32% below 2014 between January and August, but 4% below only in August.

The 2015 average monthly imports are so far slightly above 2012 and below 2013 accounting for the January-August period.

In parallel, the Commission’s outlook also highlights that Chinese domestic dairy production increased as well as domestic consumption this year.

Reduced demand in oil producing countries

Also in its latest outlook, the Commission point to concerns regarding the ability of oil producing countries to continue buying increasing quantities of powders.

Furthermore, it says strong competition from New Zealand is taking place.

Purchases by Algeria are already significantly below last year but in this country year-on-year comparisons can be misleading given public purchases are managed via tenders taking place at different moments of the year.

By contrast, the Commission says in the US, despite the increase in domestic production, additional imports are required to satisfy the growing domestic demand for butter and cheese and exports are declining. Import demand is also growing in South East Asia, Mexico and Japan.

The Commission says there are contradicting signals indicating that many purchasers, especially for powders, might have already replenished their stocks and therefore their import demand could slow down, including in South East Asia.

But at the same time, it says purchases can be stimulated by seeing that SMP prices have now reached a price floor.

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