China’s dairy imports may, to judge by a strong New Zealand export pace, show for September their first growth in seven months, pulling out of a slide attributed to Covid lockdowns and economic slowdown.
Customs data this week showed China’s dairy imports for August falling by 18.6% year on year to 1.50m tonnes, on a milk equivalent basis, a sixth successive month of decline.
Indeed, for the first eight months of 2022, buy-ins are down 18.0% from the same period of 2021, to 13.11m tonnes, in a dip blamed by investors largely on the dent to demand from China’s strategy of strict local lockdowns – some of which remain live – in a bid to stem the spread of Covid.
The fall in orders from the top dairy importing country has in turn been seen a big driver of the market weakness which saw prices tumble by 29% between March and August at GlobalDairyTrade, before staging some recovery this month.
However, separate data showing dairy shipments from leading exporter New Zealand last month up by 51% year on year, to 1.12m tonnes milk equivalent, hint that China will report stronger import data for September, StoneX said.
New Zealand’s exports to China itself last month reached 363,377 tonnes, up by 33% year on year, albeit reflecting in part comparison with a weak figure for August 2021.
“Given how strong New Zealand exports to China were in August, official Chinese imports for September should be flat year on year or up single digits,” said Nate Donnay, StoneX director dairy market insight.
New Zealand’s exports to China remain lower by 17.5%, at 8.27m tonnes, for the 12 months to August.
However, China’s import slowdown has not come all at New Zealand’s expense, with many other origins in the firing line, and indeed suffering even bigger declines of late.
“The share of product China is importing from smaller exporting countries – Turkey, Uruguay, Belarus, Ukraine – has been falling,” Mr Donnay said.