Explore why China’s raw milk sector battles with oversupply despite falling imports and rising global prices. Can local production balance the dairy market? Find out more.
As an observer of China’s raw milk industry, you’d be well aware of the ongoing struggle it faces with oversupply, no thanks to global dairy product prices which are soaring and thus bolstering demand for domestically-made milk. An interesting development is the price of whole milk powder – a dehydrated derivative of fresh milk widely used in several dairy products. Its price leaped by 2.4 percent to cap at $3,350 per ton during the GlobalDairyTrade auction held on May 7.
Fonterra, a dairy Goliath hailing from New Zealand and known for hosting these auctions bi-monthly, reports that this hike is not a one-off occurrence. Instead, it signifies four consecutive increases, remarkably rejuvenating from its lowest ebb of $2,548 per ton in August of the previous year.
China’s Decline in Milk Powder Imports Despite Rising Global Prices
In a fascinating trend, given the increasing global prices, China’s import of milk powder is actually showing a sharp decline. This decrease is far from minimal, with recorded data from the Dairy Association of China revealing a considerable drop of 9.3 percent to 223,000 tons during this year’s first quarter, compared to the same period last year. As a result of the slip in prices by 16.9 percent, coming in at $3,293 per ton, the overall value of imports took a major fall of 24.7 percent. This drastic drop took the total value down to CNY740 million, equivalent to $102.4 million.
A Shift in Tactics For Chinese Food Processors
As the world of dairy continues to spin, food processing firms in the southern regions of China have taken a new route. Given the soaring costs of imported milk powder, these firms have found an alternative in the locally produced variety. According to Song Liang, an independent analyst of the dairy industry, this strategic shift is already well underway. This move is not merely about price sensitivity, but also about pragmatism. By utilizing domestically sourced milk powder, these firms can help to diminish the surplus of Chinese dairy products.
However, while this tactical adjustment seems beneficial, it’s not all milk and honey. The direct effect on the raw milk sector is likely to be minimal. Although the local milk powder production will receive a slight boost, the glut in the raw milk market won’t be significantly alleviated. In short, it’s a solution with boundaries. So, the billion-dollar question remains – how to balance the scales in the oversaturated raw milk sector?
China’s Raw Milk Surplus Grows Despite Diminishing Imports
Contrary to what one might expect, the decrease in imports hasn’t slowed the profuse influx of raw milk in the market. The ceaseless supply surge remains an issue as the volume keeps mounting. Revealed by none other than the National Bureau of Statistics, China’s milk production witnessed a notable rise of 5.1 percent in this year’s first quarter.
In addition to this, larger dairy-producing territories like the Eastern Shandong province have logged an upswing of 10.7 percent in output during the first quarter, compared to the same timeframe last year. Regrettably, the resulting market conditions have not been in favor of the producers. This swell in raw milk production, clashing with the falling demand, eventually nudged the milk price downward by 4.8 percent, landing at CNY3.55 (USD0.49) per kilogram as of March 31st, down from the year’s initial price.
The Unpredictable Future of the Raw Milk Industry
As this economic tug-of-war continues to play out, dairy ranches with accommodations for over 10,000 cows, have begun to open. Having been commissioned during more lucrative times, these large scale operations are now in the final phases of completion in the northeast and northwest regions of China. This move occurs in stark contrast to the smaller, medium-sized ranches forced to close their doors because of ever-depreciating prices. Despite these closures, the oversupply of raw milk remains a troubling issue. Song Liang, an independent dairy industry analyst, speculates we might anticipate a potentially dramatic turn in the second half of the year. As more and more small dairies are cornered into obscurity, the supply and demand of raw milk could see an unexpected recalibration. As we see, the future of China’s dairy industry remains anything but predictable.
The Bottom Line
In light of these trends in China’s dairy industry, it’s clear that as smaller ranches succumb to softening prices, there could possibly be a recalibration in the supply-demand ecosystem for raw milk during the latter half of the year. The future of China’s raw milk industry remains uncertain and poses a significant challenge in adapting to the wave of changes. Thus, success might hinge on creativity; leveraging supportive governmental policies, enhancing total factor productivity, and advancing large-scale operations to usher dairy farming technology, improve efficiency, and potentially spur technological progress in raw milk production. Regardless of these hurdles, China’s dairy sector keeps exemplifying resilience, indicating a penchant for innovation and adaptability amid this evolving landscape.
- As prices soften, the demise of smaller ranches may alter the raw milk supply-demand dynamic later in the year.
- Adapting to rapid changes in the raw milk industry presents a significant challenge for China.
- Innovative approaches, along with supportive government policies, could become critical for success.
- Advancements in dairy farming technology may lead to improved efficiency and technological progress in raw milk production.
- Despite challenges, China’s dairy sector continues to demonstrate resilience and adaptability.
Stay informed and adapt to changes in the raw milk industry by subscribing to our newsletter. Get the latest updates, trends, and actionable insights directly in your inbox. Embrace the future of dairy farming with us. Subscribe now.
Explore why China’s raw milk sector battles with oversupply despite falling imports and rising global prices. Can local production balance the dairy market? Find out more.
As an observer of China’s raw milk industry, you’d be well aware of the ongoing struggle it faces with oversupply, no thanks to global dairy product prices which are soaring and thus bolstering demand for domestically-made milk. An interesting development is the price of whole milk powder – a dehydrated derivative of fresh milk widely used in several dairy products. Its price leaped by 2.4 percent to cap at $3,350 per ton during the GlobalDairyTrade auction held on May 7.
Fonterra, a dairy Goliath hailing from New Zealand and known for hosting these auctions bi-monthly, reports that this hike is not a one-off occurrence. Instead, it signifies four consecutive increases, remarkably rejuvenating from its lowest ebb of $2,548 per ton in August of the previous year.
China’s Decline in Milk Powder Imports Despite Rising Global Prices
In a fascinating trend, given the increasing global prices, China’s import of milk powder is actually showing a sharp decline. This decrease is far from minimal, with recorded data from the Dairy Association of China revealing a considerable drop of 9.3 percent to 223,000 tons during this year’s first quarter, compared to the same period last year. As a result of the slip in prices by 16.9 percent, coming in at $3,293 per ton, the overall value of imports took a major fall of 24.7 percent. This drastic drop took the total value down to CNY740 million, equivalent to $102.4 million.
A Shift in Tactics For Chinese Food Processors
As the world of dairy continues to spin, food processing firms in the southern regions of China have taken a new route. Given the soaring costs of imported milk powder, these firms have found an alternative in the locally produced variety. According to Song Liang, an independent analyst of the dairy industry, this strategic shift is already well underway. This move is not merely about price sensitivity, but also about pragmatism. By utilizing domestically sourced milk powder, these firms can help to diminish the surplus of Chinese dairy products.
However, while this tactical adjustment seems beneficial, it’s not all milk and honey. The direct effect on the raw milk sector is likely to be minimal. Although the local milk powder production will receive a slight boost, the glut in the raw milk market won’t be significantly alleviated. In short, it’s a solution with boundaries. So, the billion-dollar question remains – how to balance the scales in the oversaturated raw milk sector?
China’s Raw Milk Surplus Grows Despite Diminishing Imports
Contrary to what one might expect, the decrease in imports hasn’t slowed the profuse influx of raw milk in the market. The ceaseless supply surge remains an issue as the volume keeps mounting. Revealed by none other than the National Bureau of Statistics, China’s milk production witnessed a notable rise of 5.1 percent in this year’s first quarter.
In addition to this, larger dairy-producing territories like the Eastern Shandong province have logged an upswing of 10.7 percent in output during the first quarter, compared to the same timeframe last year. Regrettably, the resulting market conditions have not been in favor of the producers. This swell in raw milk production, clashing with the falling demand, eventually nudged the milk price downward by 4.8 percent, landing at CNY3.55 (USD0.49) per kilogram as of March 31st, down from the year’s initial price.
The Unpredictable Future of the Raw Milk Industry
As this economic tug-of-war continues to play out, dairy ranches with accommodations for over 10,000 cows, have begun to open. Having been commissioned during more lucrative times, these large scale operations are now in the final phases of completion in the northeast and northwest regions of China. This move occurs in stark contrast to the smaller, medium-sized ranches forced to close their doors because of ever-depreciating prices. Despite these closures, the oversupply of raw milk remains a troubling issue. Song Liang, an independent dairy industry analyst, speculates we might anticipate a potentially dramatic turn in the second half of the year. As more and more small dairies are cornered into obscurity, the supply and demand of raw milk could see an unexpected recalibration. As we see, the future of China’s dairy industry remains anything but predictable.
The Bottom Line
In light of these trends in China’s dairy industry, it’s clear that as smaller ranches succumb to softening prices, there could possibly be a recalibration in the supply-demand ecosystem for raw milk during the latter half of the year. The future of China’s raw milk industry remains uncertain and poses a significant challenge in adapting to the wave of changes. Thus, success might hinge on creativity; leveraging supportive governmental policies, enhancing total factor productivity, and advancing large-scale operations to usher dairy farming technology, improve efficiency, and potentially spur technological progress in raw milk production. Regardless of these hurdles, China’s dairy sector keeps exemplifying resilience, indicating a penchant for innovation and adaptability amid this evolving landscape.
- As prices soften, the demise of smaller ranches may alter the raw milk supply-demand dynamic later in the year.
- Adapting to rapid changes in the raw milk industry presents a significant challenge for China.
- Innovative approaches, along with supportive government policies, could become critical for success.
- Advancements in dairy farming technology may lead to improved efficiency and technological progress in raw milk production.
- Despite challenges, China’s dairy sector continues to demonstrate resilience and adaptability.
Stay informed and adapt to changes in the raw milk industry by subscribing to our newsletter. Get the latest updates, trends, and actionable insights directly in your inbox. Embrace the future of dairy farming with us. Subscribe now.
