Milk prices and China's import behavior

Demand China's milk products, allowing to falling milk prices-For the time being, high milk prices to 40 ct / kg in the marketing year 2013/14 belong to the past.  The high price level came with annual growth rates of between 35 and 50% due to rising import demand from China. The world's leading production areas couldn't keep up with the production.

Latest in this country clearly give the prices paid since the middle of the year 2014 .  First however gave the milk product prices on international level. The price decline with delay arrived in the EU.

Increasing milk production in all leading production areas is mentioned as a reason for the decline. This is true though, but only one side of the coin is.

However, it is important absence of Chinese imports of dairy products increase in previous years. Still in the spring months the import parity with China was 35% to 55% above the previous year. No later than mid-2014 it became clear that the demand from the Middle Kingdom slowly subsides. In the months of July/August 2014 fell imports on previous year's level. On the demand side, thus missing previously driving for high milk prices despite increasing milk production.

The Chinese milk powder imports are of great importance. They make up more than 50% of the total imports. In the first half of 2014 the import volumes of 120,000 under 20,000 t per month have fallen. The monthly decline of 35,000 tons to 15,000 tons is in the case of skimmed-milk powder imports. And finally fell initially rising butter imports of 35,000 on 4,000 in September 2014.

These demand losses met the main suppliers New Zealandfirst. But storage and portable dairy products can be sold anywhere in the world. The result is a world's increasing supply in all markets, so that also the European exports have come under competitive pressure.  

Beginning August 2014 the Russian import lock was for the EU to compounding. Since that time, it went for the milk payment prices in Europe significantly downhill.

The decline in demand come in a period in which the milk production was extended due to continuously advance high prices. High range with low demand ensures high price pressure, which pushes down the courses with great weight. However, falling prices signal that the previous increase in production should be reduced.For the demand, low prices are an incentive to increase in consumption. The effects are in emerging markets with a larger price and income elasticity more out than in the saturated developed countries.

The backlash is already discernible in the beginnings. The milk price cycle with his three-year duration will exert its effect in this case.

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