China kicked off its Lunar New Year celebrations yesterday, welcoming the Year of the Rabbit. According to Chinese tradition, the Year of the Rabbit is likely to be calm and contemplative, in contrast to the energy and positivity associated with 2022’s Year of the Tiger. But as Covid lockdowns throttled economic activity, 2022 did not live up to expectations. The Chinese people hope to shake off that malaise, and many economists predict an economic rebound in 2023.
China’s milk production has been sharply higher, driven by better milk yields and a larger dairy herd. According to USDA’s Dairy: World Markets and Trade report, Chinese milk output grew 6.4% in 2022 and the agency expects 4.3% growth this year. Domestic production has crowded out imports of fresh products. Chinese imports of ultra-high temperature (UHT) fresh milk have trailed year-ago volumes for 15 straight months. China imported 27.5% less UHT milk in 2022 than in 2021.
Record-high milk output in China has also slowed demand for foreign milk powder. Last year, imports of whole milk powder (WMP) and skim milk powder (SMP) fell 17.1% and 21.2%, respectively, from 2021’s record-shattering volumes. But China’s milk powder imports perked up last month, with both categories outpacing December 2021 by wide margins. The dairy trade will be watching to see whether Chinese demand for milk powders will remain healthy in the months to come, but year-over-year comparisons for January and February will likely disappoint. In the past, Chinese importers rushed to get their share of tariff-free imports from New Zealand early in the year, when quota allotments reset. Beginning this year, all New Zealand milk powder will land in China tarifffree, so there is no incentive to buy yearly.
Chinese whey imports topped year-ago volumes by 45.3% in December, but the annual total was 17% smaller than 2021. China’s 2022 cheese imports were 17.4% below 2021’s. Butter was the bright spot. Chinese butter imports logged a record-high in 2022, up 4.1% from the year before.
January 23, 2023
dairlydairyreport.com
