Background African swine fever
Why China needs much less whey powder
In recent years, whey powder was the largest import commodity for China (with regard to dairy), but this year suddenly considerably less product is needed. Cause? China is struggling with African swine fever.
Whey powder is an important raw material in Chinese animal feed. However, the outbreaks of African swine fever have significantly decimated the number of pigs. In June, China had about 25% fewer pigs than the same month in 2018, according to Chinese statistics. These are unprecedented numbers for a pig population of approximately 500 million animals. Rabobank also expects that the shrinkage rises to 40%.
Dutch exports hit
This decrease has major consequences for the Chinese import of whey powder. Over the past month, China imported 40% less whey powder than the same month in 2018. In the first half of 2019, the country imported 208.000 tons, which is almost 30% less than in the same period last year.
Whey powder has traditionally been one of the largest import flows (in the field of dairy) in China. After the United States and France, the Netherlands is the largest supplier of whey powder in China. In 2018, almost 50.000 tons of Dutch whey powder were sold in China. However, in the first 6 months of this year, sales were 10% behind the same period in 2018. US exports of whey powder have been hit hardest, but that is probably also due to the trade war.
Price whey powder down
The prices of Dutch whey powder are being hit hard by the drop in demand in China. ZuivelNL's quotation has now fallen to €600 per tonne, while the quotation at the beginning of this year was still €860 per tonne. At the presentation of the half-year figures, Hein Schumacher, the CEO of FrieslandCampina, emphasized that the sales in China is suffering from the effects of African swine fever.
More milk powder and cheese
Incidentally, the low Chinese import of whey powder is an exception to the rule. In the first half of 2019, for example, China imported considerably more full-fat and skimmed milk powder, although Europe is a relatively modest supplier in this product. The bulk of this is supplied by New Zealand and Australia.
China also imported more cheese, butter and liquid dairy. The European dairy exporters are reaping the benefits of this. Moreover, expectations for the second half of this year are positive, despite the milk production in China shows growth figures for the first time in 4 years.
baby milk powder
For the Netherlands, baby milk powder is the largest sales product to China. Chinese imports of this rose in the first 6 months of this year by almost 15% to 170.000 tons. The share of Dutch product amounted to 52.618 tons. This makes the Netherlands by far the largest supplier, although the Dutch sales volume remained virtually the same as last year.
Wouter Job
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