After a bullish start in the first quarter of 2016, Chinese dairy imports dropped off somewhat in April this year and fears were growing in the market that the resurgence in demand from the world’s largest importer of dairy commodities was short-lived.

In April, the volume of skimmed milk powder (SMP) imported by China fell by more than 30% compared with 2015 levels, while imported volumes of whole milk powder (WMP), whey, cheese and butter were also back.

However, the latest figures show that demand in May was vibrant, with strong import volume growth. Demand for infant formula in particular continues to surge, with May shipments up by a third to almost 17,000t. Import volumes of WMP were also strong, increasing by almost 20% year-on-year to nearly 33,000t.

Chinese imports

In the year to end of May, Chinese butter imports have grown by more than a third in volume terms, close to 37,500t. Interestingly, the EU accounts for more than 11,000t of this product, making China the largest buyer of EU butter so far this year.

Chinese imports of EU butter from January to May have grown almost 350% year-on-year.

Since the beginning of May, butter quotes from the Dutch dairy board have risen almost 30% or $660/t and prices lifted a further 3% this week to more than $3,000/t. Coupled with recent improvements in cheese prices, these are the first green shoots of a sustained recovery in dairy commodity prices.