Dairy markets: Chinese dairy imports set for double-digit growth in 2019

Chinese dairy imports are forecast to grow by double-digit figures in 2019.

In its latest quarterly outlook on dairy markets, Rabobank has forecast Chinese dairy imports to grow by 11% in 2019. Weak import volumes in the second half of 2018 combined with seasonally lower milk production in China has left inventories of dairy products significantly depleted at the end of 2018.

As such, Chinese dairy buyers will need to step back into the international dairy market to replenish stocks.

For 2018, the growth in Chinese dairy imports finished the year up 8%. Demand for butter grew by 40% in 2018, while infant formula imports were up 14% in the year.

While the growth in infant formula imports by China was still very strong in 2018, it is a deceleration from previous years when infant formula imports were growing above 25% each year.

While Rabobank is forecasting 2019 to be a strong year for Chinese dairy imports, the Dutch lender is forecasting the growth in Chinese dairy imports to slow in 2020 to just 4% due to the escalating trade tensions along with the slowing economic growth in China.

Europe

Closer to home, dairy prices in Europe rounded out the year in a steady position. Butter prices are trading upwards between €4,250/t and €4,350/t. Fresh skimmed milk powder (SMP) is trading above €1,700/t, which is higher than intervention price threshold. Cheese markets in Europe are generally steady with cheddar prices at around the €2,900/t mark.