Dairy sector boosted by Chinese imports

USDA released its expectations for the year in its annual report. Strong performance is forecast for the global dairy sector due to growing Chinese imports.

China imported significantly more dairy products from January to May than last year. In total, imports grew by almost 17% to approximately $6,4 billion. Imports in the first 5 months of the year were no less than 50% above last year's level. USDA expects Chinese imports of skimmed milk powder to reach a record 480.000 tons this year.

European milk supply
European milk supplies were below last year's levels due to the cold weather conditions in the first months of the year. Weather conditions improved due to rainfall in mid-spring, which was positive for grass development. Over the first 5 months, the total decrease in milk production was limited and milk supply was only 0,3% below last year's level. USDA estimates total European milk production for 2021 at 158,5 million tons, which is an increase of approximately 1% compared to last year. Higher milk production per cow is expected to compensate for the smaller herd.

Australia and New Zealand
The forecast for Australian livestock and milk production has been revised downwards. Initially it was expected that the number of cows would grow by 1%, but the unexpected departure of dairy farmers switching to beef cattle has resulted in a forecast of a 1% decline in the dairy herd. Milk production for 2021 will therefore be adjusted downwards by 2% to 9,2 million tons.

New Zealand milk production is expected to grow by 1% this year to 22,4 million tonnes. A higher yield per cow is expected to compensate for the decline in the dairy herd. Milk production increased by 6% year-on-year from January to May. The main production period (from August to December) is yet to come, when approximately 60% of the total annual supply will be produced.