Guangdong’s Dairy Import QTY Down & Price Up in QTR 1, 2017

According to China Customs statistics, in the first quarter of 2017, Guangdong Province import of dairy products totaled 86,000 tons, down 2% year-on-year (YOY), worth 2.83 billion China yuan, up 37.6% YOY; average import price at 33,000 yuan per ton, up 40.4% YOY.

Characteristics of dairy import to Guangdong:

(1) Average import price in March increased significantly. This March, Guangdong imported dairy products 28,000 tons, down 12.2% YOY and up 5.8% from February; average import price remained 34,000 yuan per ton, up 42.1% YOY, while down 0.9% from Feb.

(2) Ordinary-trade import made up more than 90%, Customs special controlled volume down sharply. In the first quarter, the import by ordinary trade reached 82,000 tons, up 10% YOY, accounting for 94.8% of the total import. In the same period, 4414.3 tons were imported by Customs special control, down 67.1% YOY, accounting for 5.1%.

(3) New Zealand was the largest source of import. In the first quarter, Guangdong imported 39,000 tons of dairy products from New Zealand, down 21.6% YOY, accounting for 45.5%; 27,000 tons from the EU, up 39.3% YOY, accounting for 31.8%; 9041.8 tons from Australia, up 25.3% YOY, accounting for 10.5%.

(4) Private enterprises dominated the import. Therein, Guangdong-based private enterprises imported 50,000 tons of dairy products, up 3.2% YOY, accounting for 57.6%; foreign-invested enterprises imported 34,000 tons, up 1.9% YOY, accounting for 39.2%.

(5) Top 3 imports were fat content>1.5%, unsweetened solid milk and cream, infant formula, whey and modified whey. In the first quarter, Guangdong imported 24,000 tons of fat>1.5%, unsweetened solid milk and cream, down 21.6% YOY, and up 1.2 times from last 4th quarter, accounting for 28.3%; imported infant formula powder 16,000 tons, up 76.4% YOY, accounting for 18.9%; imported whey and modified whey 9,568 tons, up 7.7% YOY, accounting for 11.1%.

Causes of the import quantity down and price up:

(1) Short supply stimulated the price upward. In recent months, due to the increasing cost of cow feeding and the downstream processing industrial expansion, raw milk has been in short supply, pushing dairy prices up. Reportedly, on April 4, 2017, Fonterra global dairy trading platform showed dairy prices up 1.6% and whole milk powder price up 2.2%.

(2) Raw-milk price difference shrank between China and overseas, causing the reduction in dairy import quantity. In the past for long, domestic raw-milk price was at a disadvantage (around CNY3.4/kg, with 117% price spread against international price), but now foreign dairy prices have reached the two-year high, almost leveling with the raw-milk price in China.