Chinese buyers begin to return but prices have not responded

Published 5 May 15

The lack of Chinese interest in dairy commodity markets was one of the main reasons for the sharp decline in commodity prices seen throughout 2014. Many in the industry looked forward to the time when Chinese buyers returned in the hope that this would be a signal for prices to rise again.

Over the first quarter of 2015 Chinese buyers have begun to return to the market with imported volumes at similar levels to 2013. Despite this, global prices are yet to respond.

Chinese powder imports

 

This suggests that the global oversupply of milk is now the main reason prices remain low. Data from four of the world’s main exporting regions, Australia, New Zealand, the USA and the EU show that milk production in the first two months of the year remains above the 3 year average. How global milk supplies develop over the coming months will be key to any recovery in global commodity market prices.