China’s imports play catch-up

Published 5 June 19

Lower than normal growth in China’s dairy imports in 2018 may be contributing to the strong increases seen so far this year. In 2018, dairy imports reached a total of 2.3m tonnes, only 6% more than in 2017. Meanwhile, China’s imports so far this year are up by 18%, or 145k tonnes.

Rising incomes have been important in increasing demand for dairy products. Previously, we have shown the close link between income and import demand. While incomes grew by 6.6% in 2018, in line with expectations, imports were lower than this relationship would have suggested.

China Import growth

The lower import purchases have probably led to a drop in Chinese stocks, and prompted more buying. In the first four months of 2019, WMP and SMP imports were up by 34% and 31% respectively, while liquid milk imports were 33% higher year-on-year. Whey powder imports have dropped, a result of tariffs on US exports and the effects of African Swine Fever (ASF) on feed demand.

It is also possible that ASF could push up demand for dairy imports in the coming months as it creates a gap in Chinas’ domestic protein production. Further analysis on this will be available in the coming week.