Chinese dairy imports to increase by 20% in 2017

Rising Chinese demand is expected to help balance the growth projected in global milk production this year.

This is because the country’s stocks are now thought to be low. As a result, Rabobank predicts Chinese dairy imports will increase by 20% this year, compared to 2016.

International dairy markets are expected to stay relatively level overall – until at least mid-2017.

But there is likely to be short-term volatility along the way, according to Rabobank. This is due to large SMP stocks, uncertain production volumes and currency fluctuations that are causing hesitation in the market.

The recent decline in global milk production has slowed and Rabobank expects volumes to strengthen as 2017 progresses.

It predicts EU milk deliveries will exceed last year’s by 1.5% during the second half of this year. Meanwhile, US growth is forecast to slow this year but still remain positive.

After being hit by two severe storms, milk production in New Zealand will undoubtedly be impacted, at least in the short term. Prior to the storms, better-than-average growing conditions had boosted milk production above expectations.

This led to predictions by the country’s Ministry of Primary Industries that milk production could rebound by around 3% in the 2017/18 season.

In the past week, however, the pasture growth index has dropped below the long-term average – as the soil moisture content is exceptionally high.

With grazing restricted, and farmers having to deal with higher feeding costs, production is expected to drop in the short term.

The overall impact should be limited, however, as April and May typically account for only 9-10% of New Zealand’s full season production.

It is less clear what the longer-term impacts will be. If soil moisture levels remain high, there will be a longer-lasting effect on both grazing and feed crops, which could then extend the problems into the peak production season.

According to Dairy New Zealand, next season’s recovery is now dependant on how the remainder of the winter plays out.