Welcome to the October issue of Dairy Products China Monthly Report
The global macro backdrop in October 2026 remains defined by "sticky inflation and continued policy wait‑and‑see". The Fed is likely to hold rates at its October meeting, though December hike expectations are rising, keeping rates higher for longer. EU milk output growth remains constrained by drought and regulation, while El Niño risks in New Zealand have yet to clear. Global raw milk supply is not short in aggregate—what is scarce is high‑protein, functional dairy ingredients.
China's economy shows "external demand cushioning, domestic demand awaiting recovery". Q3 GDP grew 4.5% YoY; in September, exports rose 36.3% and industrial value‑added grew 5.5%, but retail sales rose only 1.1% and real estate investment fell 20.6% year‑to‑date. Policy support intensified in October, with first‑home mortgage interest subsidies implemented and the local government bond carryover quota activated.
In October, raw milk prices showed a weak recovery. Overcapacity pressure has eased at the margin but remains unresolved; structural tensions persist, with rising high‑protein ingredient costs continuing to push deep‑processing transformation. With relative raw milk oversupply coexisting alongside reliance on imported high‑protein ingredients, dairy firms' capacity, product, and channel deployment in the high‑protein segment is no longer optional—it is essential to secure position in the next round of competition.
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