December 5, 2015

China's dairy heifer demand slows down -- report

China's imports of dairy heifers slowed down this year after several years of solid demand that peaked in 2014.

A Rabobank dairy report has attributed the decline in imports to several factors including a slackening in investments in large-scale farms and reduced culling rates to more normal levels on most farms, in the absence of any major disease outbreak in 2015.

The fourth-quarter report noted that the Chinese economy is slowing down and that in some consumer markets, dairy demand growth is reaching a level of natural maturity. Also, it added, many large-scale farms now have greater capacity and self-sufficiency to raise their own heifers.

"So far in 2015 -- to the end of September -- Oceania exports of dairy heifers to China have fallen to 26,000 head and accounted for just 41 percent of all trade", the report said, adding that as a result prices have fallen by close to 30%.

Nevertheless, Rabobank still thinks China will continue to offer trade opportunities. "Despite the current slowdown, several structural factors support permanent trade opportunities to China. Farm restructuring remains a priority in China with the new wave of investment in large-scale farm projects potentially triggering another boom period for dairy heifer demand".

For now, Rabobank sees Chinese heifer demand as volatile in nature. "Disease for example, remains a key risk for the Chinese dairy herd", it said.

Even as China remains a major market for export dairy heifers, exporters were advised to refocus and carefully weigh up the market opportunities.