Welcome to the May issue of China Dairy News
The Russia-Ukraine conflict continues to escalate, with Ukraine, a significant global dairy exporter, facing disruptions in dairy exports due to the blockade of its Black Sea ports. The attack on the Odessa port transport ship by Russia on 23 May further increased the uncertainty of Black Sea shipping. Meanwhile, the U.S. core PCE price index rose by 3.2% YoY in May, and under inflationary pressure, the marginal demand for dairy consumption contracted, with retail prices of liquid milk rising by 8% YoY and yogurt prices increasing by 12%.
In response, China is stabilizing the dairy industry's foundation through a dual drive of "policy + market". After the China-U.S. Geneva trade talks, both sides canceled some additional tariffs, significantly reducing the cost of dairy imports and exports. The export of U.S. products such as whey powder and cheese to China is expected to resume growth, while the export space for Chinese infant formula and plant-based beverages is further opened up. On the monetary policy front, the May LPR quote was reduced by 10 basis points (1-year period 3.0%, 5-year period 3.5%), lowering the financing costs for dairy companies and releasing consumer potential.
The dairy industry in May 2025 is undergoing a double baptism of policy dividend release and market deep adjustment. The subsidy policy in Inner Mongolia injects a "booster shot" into the breeding end, the new national standard for fermented milk loosens the shackles on product innovation, and the admission of Ecuadorian dairy products marks a new stage in market competition. Companies need to focus on high-end, functional, and international aspects, building a moat with technological breakthroughs and supply chain resilience in the game between overcapacity and consumption upgrading.
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