China’s powder market withdrawal impacts global market

China was a significant importer of milk powder, accounting for 20% of the total global trading volume in 2013, importing more than 850,000 tons. But the country has drastically cut its milk powder buying in 2014, leading to a decrease in the world price of milk.

The weakness in the Chinese economy may have caused the reduction in this demand.  But unfortunately a lack of transparency by the Chinese government means that the world will probably not understand what is happening with its economy. Perhaps the more important question is in regard to the future.

Despite the decline, it appears that demand for dairy in China is likely to increase. One question is whether it will increase at a rate that is faster than the ability of the country to produce milk, thereby, increasing imports. Milk production within China is currently increasing at an annual rate of three to six percent. Given the potential growth of the market for dairy products in the country, it appears that there will be future increases in dairy imports. To read more, click HERE.