Chinese dairy imports to improve in 2025 – Rabobank

Chinese dairy imports could improve by “2% year on year” in 2025, according to a new Rabobank report.

This would reverse the sharp decline in China’s net dairy product import volumes in the first eight months of this year which slumped year on year by 17%.

According to the latest Rabobank analysis Chinese Skim Milk Powder (SMP) imports plunged by 36.8% year on year to 178,000  metric tonne.

Imports of whole milk powder (WMP) also declined by 12.6%.

The latest RaboResearch also identified that liquid milk and cream imports by China fell by 15.6% while infant milk formula imports dropped back by 14.8%.

Rabobank

However Michael Harvey, senior dairy analyst at RaboResearch, said it expects China’s three-year run of declining net import volumes “to end in 2025, with imports improving by 2% year-on-year”.

“This is lead by lower supply and optimism for a recovery in consumer demand,” he added.

In China farmgate milk prices are near 10-year lows which has resulted in herd reductions and farm exits.

Rabobank pointed to the country’s National Bureau of Statistics which suggest that China’s milk output fell by 0.1% year on year during the first three quarters of 2024.

“According to our sources most large dairy farm operations experienced much slower but not negative production growth rates in quarter three “This implies that capacity reduction is much faster at smaller to medium sized dairy farms and that this round of the dairy downcycle has increased the rate of farm-level consolidation,” the report detailed.

Chinese dairy market

The latest research indicates that while demand remains sluggish, “there is some optimism that the bottom of the cycle is near”.

Rabobank believes that one of the key challenges in relation to the Chinese dairy market is “dairy consumption growth”.

It has highlighted that the biggest challenges for the recovery of consumption are “low consumer confidence and weak income expectations”.

But Rabobank is also forecasting that there will be a growth in dairy consumption in the Chinese market in 2024 that a milk production decline in China will boost import prospects.