China’s return to global market delayed by high stocks

Published 9 June 15

China’s imports of milk powders may stay restrained for longer than expected. According to the USDA’s Beijing bureau, the Chinese have 300,000 tonnes in carry-over stocks, almost twice as much as previously estimated. The adjustment comes from higher than expected domestic production combined with a small drop in consumption. The increase in powder production has been attributed to a requirement that processors honour prior contracts to purchase milk from farmers, which was subsequently turned into powders. As a result, forecasted imports for 2015 have been revised downwards by 33% to 400,000 tonnes. With the Chinese buying around one-third of the total WMP traded globally, any slowdown in their purchasing will keep global prices under pressure. 

Whole Milk Powder balance sheet (USDA forecasts)

 

2014 forecasts

2015 forecasts

 

old

revised

old

revised

Beginning stocks

126

130

154

300

Production

1,250

1,350

1,350

1,375

Imports

680

671

600

400

Total supply

2,056

2,151

2,104

2,075

Consumption*

1,900

1,845

2,009

1,980

Ending stocks

154

300

93

89

 *domestic consumption, exports & losses