International dairy trade figures up as China eases out of lockdown

As one of China’s biggest cities exits lockdown, dairy demand on international markets starts to rebound after a weak few months.

International dairy prices are rebounding after a sluggish three-month period hampered by China’s continued coronavirus lockdowns.

The latest Global Dairy Trade session lifted overall by 2 per cent, led by a 3.7 per cent gain in the whole milk powder index, which averaged $US3733 ($A5581) per megatonne.

Anhydrous milk fat – which leapt 13.9 per cent at the previous event – gained a further 4 per cent, with an average of $US5901 ($A8822) per megatonne.

Millions of people in the Chinese city of Chengdu emerged this week from a coronavirus lockdown that forced residents to stay home for more than a fortnight.

Chengdu was the largest Chinese metropolitan area to endure a lockdown since Shanghai imposed a two-month stay-at-home order in April.

Shrinking or static milk pools internationally, such as the British dairy market, have also contributed to strengthening market in recent weeks, analysts say.

Supermarket shelves in Shanghai were stripped of groceries when Chinese authorities imposed a lockdown back in April to curb coronavirus numbers. Picture: Kevin Frayer

Westpac agri-economist Nathan Penny said this week’s lift in whole milk powder prices by about four per cent was expected given strengthening trade conditions.

“This (rise) follows a 5.1 per cent price jump at the previous auction,” he said.

“We expect global dairy prices to firm over this and coming auctions on the back of very weak global dairy supply and recovering Chinese demand.”

Despite strengthening international conditions, the Australian milk pool is expected to be static this financial year due to factors beyond the farmgate.

The latest outlook from Dairy Australia has pointed to labour challenges, excessively wet conditions in some regions and high input costs as offsetting high milk prices.