China Turns to New Zealand for Dairy Products

Chinese imports of dairy products continue to fall below year-earlier levels, and U.S. product has been replaced by powders from New Zealand.

China has increasingly looked to Oceania for dairy products, as overall world dairy exports to China continue to trail last year’s much stronger import pace, according to recent numbers from Global Trade Information Service (GTIS).

In April, China imported 19,314 metric tons of skim milk powder, which was 13 percent less than a year ago, but 29 percent more than in March. Year-to-date, China’s SMP imports are running 33 percent behind a year ago.

“China’s month-to-month increase in dairy import activity from March to April is noteworthy, because it breaks with trend,” says Sara Dorland, analyst with the Daily Dairy Report and managing partner at Ceres Dairy Risk Management, Seattle. “Typically, Chinese imports of skim milk powder from March to April are flat to lower.”

That heartening news, however, does not mean U.S. exports to China are on the rebound. In fact, U.S. exports of dairy products to China have been tumbling. Looking at skim milk powder first, U.S. exports to China fell 71 percent in April. Exports to China from Germany and France were also lower, down 47 percent and 68 percent from the prior year, respectively.

“As New Zealand recovered from the 2013 drought, China increasingly returned to importing dairy products from that country,” notes Dorland. “However, milk production in New Zealand is now reaching its seasonal low, and milk prices there have fallen to levels that have encouraged producers to dry off cows early.” Even so, favorable weather in New Zealand has increased current milk production estimates to a 1.5-percent increase over last season.

In April China imported 11,458 metric tons of skim milk powder from New Zealand, accounting for 59 percent of China’s total imported volume and a whopping 41 percent more than a year ago.

Chinese demand for whole milk powder plunging

“China’s imports of whole milk powder in April continued to track seasonal patterns,” notes Dorland. China imported 31,289 metric tons of WMP in April, which was a sharp drop of 65 percent compared with the prior year and an 11-percent delcine from March imports.

“Supplies of both skim milk powder and whole milk powder remain more than ample in New Zealand to fill current international demand,” says Dorland. “Once again, New Zealand accounted for the majority of China’s whole milk powder imports—98 percent of the month’s total imports. However, China’s whole milk imports from New Zealand were sharply lower, down 63 percent from a year ago. Chinese whole milk powder imports are following seasonal trends, suggesting we could see even lower import volumes in the next few months.”

While China has cut way back on milk powder imports, milk and cream imports were stronger than a year ago. China imported 33,147 metric tons of milk and cream in April, which was 6 percent more than a year ago and 2 percent more than in March.

The United States, however is not a large exporter of either milk or cream to China.

“At 34 percent share, Germany accounts for the largest share of China’s ultra-high-temperature (UHT) milk imports,” notes Dorland. “However, year-over-year import volumes from Germany fell 20 percent in April, while Australia, New Zealand, and Italy filled the gap.”

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