The latest dairy monthly report from Beijing Orient Agricultural Business Consultants (BOABC) shows that the production of dairy products went down a little bit in September, but the price of raw milk has stopped going down.
China processed 2.758 million megatonnes (MT) of milk in September, which is 5.8% more than the same month last year (YoY). This brings the year-to-date total to 23.10m MT, which is 2.6% more than the same time last year. BOABC says that the control of the covid-19 pandemic across the country is the reason why milk production has been going up in recent months. BOABC also points out that, even though people haven’t been eating much dairy in recent months, this is likely to change as the pandemic continues to be stopped from spreading.
Also, BOABC says that there is a shift toward healthier products, with less pork being eaten and more milk, beef, lamb, and seafood being eaten, even though lamb prices in China are falling very quickly right now. Because of lockdowns and other worries, Chinese shoppers are also shopping closer to home. Sales at hypermarkets and supermarkets are down, but sales at convenience stores have gone up by a lot. E-commerce in China keeps growing, and this way of getting dairy is quickly becoming a key way to sell. Consumer research shows that these ways for Chinese people to buy things online help them understand their purchases better by giving them access to key information about each product, such as claims about the environment, health, and where the product came from. All of these things are important to Chinese people when they buy things.
Along with an increase in milk production, the price of raw milk in China has stopped going down. From the end of September through October, the price stayed the same at 4.14 yuan/kg MS. Prices at stores for liquid milk and yoghurt have also gone down a little bit in October. Prices at stores are still changing, as we’ve seen over the past 10 months. In September, imports of liquid milk went down 18.2% year over year. The price of imported liquid milk did go up 19.3% from one year to the next, though. NZ liquid milk and cream made up 33% of all imports in September, which was up 6.2% year over year. The price of these exports was also up 12.4% year over year.
Prices for Chinese soy meal have also kept going up, going up another 12.3% from September and 33.5% from the same time last year. Corn prices are also going up. They went up 0.9% from September to October, which is a 5.4% increase from the same time last year. This continues the trend of rising costs over the past few months, which has been caused by covid-19 lockdown effects on forage, labour, and transportation costs.
Imports of butter are going along pretty steadily. So far this year, imports are only 1.1% behind the same time last year, but they have gone up a lot in the three months leading up to September. Butter imports in September were 60.9% higher year over year.
Both skim milk powder (SMP) and whole milk powder (WMP) imports are still behind. SMP imports are down 24.3% year-over-year, and WMP imports are down 16.2% year-over-year, with the same deficit for WMP imports in September.
China’s total dairy imports were 20.3% lower at the end of September than they were at the same time last year. However, the value of China’s dairy imports for the whole year was only 2.4% lower. Some people think that Chinese imports will continue to lag during the first half of 2023. It is expected that Chinese imports will end the year around this 20% lower point.
The USDA, meanwhile, has said that it will spend almost $1 billion to “buy food for emergency food providers like food banks.” It looks like the announcement will be about “protein items” to help fund activities for kids and families. At this point, it’s not clear how much of this investment will go to Dairy, but most people expect that Cheese and Liquid milk will be part of it.
The last time the US government announced large programmes to buy food, like the “Farmers for Families” food box programmes in the early stages of the covid-19 pandemic, cheese prices in the US market went from very high to very low in just a few days.
Because this programme takes cheese out of the US market on purpose, it will definitely mess up the US cheese market. However, it could help the cheese market around the world.
