Coronavirus impacting powder prices
Recent analysis from Rabobank finds as China’s dairy industry struggles with supply chain backups after the coronavirus it could cause global price pressure from increasing inventories of powder milk.
North American Dairy Analyst Ben Laine tells Brownfield a 30-day disruption in China’s supply change could reduce fluid milk consumption by nearly four percent for the year and cheese imports by at least five percent.
“As you see a lot of these other products slow down, milk is moving into powder and they’re tending to dry more powder just because you’re having less activity, you’re needing to put milk away in a longer term storage.”
Last year, China imported record amounts of skim milk powder and near-record levels of whole milk powder, but Laine says even a one percent decline in dairy demand could lead to more than a ten percent reduction in imports for the year.
“Over the past few years we worked through some pretty heavy inventories of European intervention stocks of powder so if we can keep that momentum going, the strong demand for powder that we’ve seen in the last year or so, then I think we move through this pretty quickly.”
He says foodservice and supply chain logistics have been the most disrupted by the virus but that’s starting to improve.