Is Chinese dairy demand cooling down?

Published 18 May 16

Following on from a 40% increase in dairy imports in Q1 of 2016, there are suggestions that China is entering a ‘cooling off period’. Reports of increased inventories held by processors, along with the low level of buying at a recent GDT auction point to a possible slowdown in import demand.

While stock data is difficult to obtain, according to Dairy Markets, dairy product inventory values in the first quarter of this year have rebounded after falling during the third quarter of 2015. Inventories at Yili Group and Bright Dairy (two of China’s largest processors) as of 31 March were 30% and 51% higher, respectively. It has been suggested the seasonally high milk production, arising from favourable weather conditions, has contributed to this growth. The high level of imports in the first quarter of 2016 will also have bolstered available supplies, potentially reducing the need for further imports, at least in the short term.