Will corona regain a grip on China's dairy market?

China has been importing more and more dairy products in recent years, but for now the peak seems to have been in 2021. Figures from the Chinese customs authorities show that the import of dairy products has taken a significant hit in the first quarter. In total, 1.010.000 tons of dairy products crossed the border between January and March. That was about 14% less than in the same period last year. On a monthly basis, the contraction in March even amounted to almost 30%. The import volume decreased from 380.000 tons in 2021 to about 270.000 tons this year.

Corona has a major impact on logistics
The strict corona policy in China is currently causing large-scale lockdowns, including in a number of ports. It complicates logistics processes and sometimes causes long waiting times for imports from other countries. In addition, logistics within China also seem to have become more difficult. Analysts report that local dairies are being offered more milk that cannot be transported over longer distances. These factories often process the milk into powders, which in particular has reduced the Chinese demand for milk powder on the world market.

In addition to the problems surrounding corona, the rising Chinese dairy production probably also plays a role. The milk pool in China increased by almost 7% last year and the volume reached the highest level in years.

Price effect palpable
The decline in Chinese demand is making itself felt at the latest Global Dairy Trade auction. Milk powders in particular had to give up due to the lack of buyers from Asia. Whole milk powder lost 4,4% in value and skimmed milk powder 4,2%. The quotations for both products came in at $4.207 and $4.408 per tonne respectively.