December 21, 2011


Hopes falter for growth in Chinese milk imports from US



US officials have lowered expectations for purchases of whole milk powder by China, by far the biggest importer, warning that higher prices have made the product unaffordable for many buyers.


China will this year import 350,000 tonnes of whole milk powder, used largely in making chocolates, ice cream and yoghurt, nearly 50,000 tonnes fewer than previously expected, USDA officials in Beijing said.


For 2012, the import estimate was cut by 75,000 tonnes to 375,000 tonnes.


The figures, while still enough to leave China as by far the top buyer of the product, ahead of Algeria, follow trade data showing imports tailing off in the second half of 2011, coming in in October at half the levels of the same month last year.


The slowdown reflected dairy prices which have begun to tick higher again in recent weeks, following a dip from April highs.


Higher costs have "put imported whole milk powder out of the reach of many smaller domestic processors", the USDA officials said, putting the rise in the first 10 months of the year at 9%.


"As a result... smaller processors are turning increasingly to domestic whole milk powder," even though China's own supplies continue to attract safety concerns, following the melamine contamination scandal in 2008 and some findings of tainted milk since.


State media on Friday (Dec 16) said that a Chinese dairy farmer had been sentenced to death for lacing a competitor's milk supply with melamine in revenge over business disputes.


The contamination caused the deaths of three children, with 36 people hospitalised.


"A factor that will continue to drive imports in the future is the ongoing consumer concern regarding the safety of domestic dairy products," the USDA officials said.


The downgrade appears to contrast with an observation last week from Fonterra, the world's top milk exporter, of "strong" import demand for milk from emerging market countries including China.


Theo Spierings, Fonterra's new chief executive, also cited Brazil, Mexico and the Asean trading bloc, whose members include Indonesia, Malaysia and Thailand.

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