China`s Whole Milk Powder Imports Plunge In October‎

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Publish time: 1st December, 2011      Source: NASDAQ
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China''s imports of whole milk powder fell sharply last month, according to the latest data from Global Trade Information Services.

Imports of whole milk powder were down more than half to 9,218 metric tons in October, compared with a year earlier. The drop mirrored a similar fall year-on- year in the previous two months, the figures show.

"We''ll be watching demand closely in the next six months," Joanne Bills, manager of strategy and knowledge at Dairy Australia Ltd., said by phone. "We''re alert but not alarmed for the moment on Chinese demand."

Overall Chinese dairy imports fell 6.5% to 69,188 tons in October on a month- on-month basis but rose 6.6% on year.

It''s unclear why China''s imports have dropped, though they follow a spike in whole milk powder imports in April to 55,613 tons, the largest level in at least two years. It also follows a similar pattern last year, when a summer surge was followed by a drop in September and October before rising again in the last two months of 2010, though this year''s pattern has been more extreme.

In dairy, China is the primary driver for the global whole milk powder market, according to industry funded Dairy Australia.

To be sure, Chinese imports of whole milk powder in the 10 months ended Oct. 31 this year of 280,187 tons showed a 7.7% rise on the year-earlier period so " it''s not all doom and gloom," according to Dairy Australia''s Bills.

Bills says that the drop in demand may be explained by Chinese importers expecting to benefit from a lower import tariff agreed under a trade deal with New Zealand, the major supplier starting in January. In this case the slowdown in imports may suggest that importers are holding off and de-stocking by just buying hand-to-mouth before the new year, said Bills.

Still, if imports don''t pick up early in 2012 after the import tariff changes kick in that will send a strong signal "and we should be alarmed," said Bills.