By Alexandria Winning-Browne, NZX dairy analyst
Beijing Orient Agribusiness Consultant (BOABC) have released their latest China monthly report, highlighting a decline for milk price and production.
China’s raw milk price has been on a downward trend over the past year, with a peak in August 2021 nowhere near achieved since. February 2023 was no exception. The raw milk price settled at RMB4.07/kg MS, a further decline of 1.1% from the month prior and down 4.5% compared to the year prior, or RMB0.30/kg MS from that August 2021 peak. During the month of February, however, there was a clear decline as the month advanced with the first week of February milk priced at RMB4.10/kg MS before declining to RMB4.04/kg MS in the last week of the month. BOABC attributes the decline to declining milk and commodity prices offshore driving down domestic prices while the easing feed costs are also contributing to the loss.
Soymeal and corn prices have retreated for the first time in months, with the price of soy meal sitting at 4.97 yuan/kg, down 1.8% from the January figure, however still up 23.6% from a year prior. Corn has declined 0.5% from January’s price to 3.03 yuan kg while maintaining a 5.5% gain from the year prior.
As expected with lower milk prices and high margin costs, milk production has begun to ease over the past few months. Chinese milk production sat at 3.02 million tonnes in December, down 6 million tonnes from December’s figure. With the recent push towards increased production through funding of dairy infrastructure, this figure does sit up 220,000t from the year prior, or 45%.
Alongside the infrastructure developments, China has had a real push for breeding cattle imports, with the total figure up 62.7% year on year or the equivalent of 119,000 cows. This figure was made up of 41,554 from New Zealand, 49,542 from Australia, and 13,365 from Uruguay. While this feat is impressive, there will be concerns from China around their ability to source from these nations in the future with recent floods in NZ and Australia posing a threat to cattle supply while the same can be said for the drought in Argentina.
One of the more upbeat announcements from the report was the increase in ice-cream infrastructure in China, posing an opportunity for anhydrous milkfat exports around the globe.