March 5, 2012

China's milk powder imports surge in January

China's whole milk powder imports soared on-month in January, but demand growth may slow as buyers become cautious amid abundant stocks worldwide, an Australian analyst said Friday (Mar 2).

Chinese whole milk powder imports of 36,674 tonnes in January was up 82% from December although imports were down 11% from January last year, according to figures supplied by Global Trade Information Services Inc. to marketing concern Dairy Australia Ltd.

China likely overstocked with whole milk powder, which is widely used in manufacturing food products, in the first few months of last year, helped by a lower tariff on imports from New Zealand, and then imports fell as inventories were run down through the year, she said.

"At this stage, there doesn't seem to be too much cause for alarm on the demand side," Joanne Bills, Dairy Australia's manager for strategy and knowledge, said by phone.

But China is one of the world's biggest importers of dairy product and demand is trending steadily higher, Bills said.

New Zealand accounts for about 35% of globally traded dairy products while Australia accounts for 10% of global trade.

Global dairy markets will be well supplied in the coming months with favourable seasons in New Zealand and Australia boosting milk output, dairy production and export availability, she said.

As "we're heading into the Northern Hemisphere flush (with supply, Chinese buyers) might be a bit more measured in their buying perhaps over the next couple of months," she said.

Chinese dairy demand is unlikely to maintain the double-digit annual growth seen in the recent year, she noted. Dairy Australia now expects the market to grow at a steadier rate, but "it's still a pretty positive story out of China in terms of demand."