China’s economic slump may lead to a decrease in the price of milk.

China's economic slump may lead to a decrease in the price of milk.

China’s Economic Slump: A Glass of Milk at a Bargain Price

A glass of milk or feasting on baked goods could soon cost a lot less – all because of China’s economic slowdown. As China’s demand struggles to recover after the pandemic, whole milk powder prices have been sliding. This is significant as China plays a pivotal role in setting prices in the global dairy market.

The average price for a ton of milk powder has tumbled to $2,864, the lowest level since June 2020, according to the GlobalDairyTrade. Fonterra, the world’s biggest dairy exporter based in New Zealand, may be forced to slash payments to its suppliers this year due to this downward trend.

What’s causing this decline? Chinese appetite for dairy products, a key factor in influencing global dairy market prices, has been slipping this year as China’s economy falters. Chinese factories are producing less, while retail sales have slowed dramatically. In fact, economic growth for the three months to June 30 only rose by 6.3%, far below expectations.

Beijing’s hopes for a smooth post-pandemic recovery have clearly missed the mark. Emma Higgins, Rabobank’s senior agricultural analyst, remains cautious about the outlook for the Chinese dairy market, noting that “import demand from other emerging markets is unlikely to fill the void, loosening the global market somewhat.”

The significance of China’s economic slump in the dairy market is evident, with prices of whole milk powder plunging nearly 40% since their peak in March 2022. This downturn in milk prices comes as a relief for consumers, who have been facing rising costs for other foodstuffs such as orange juice and cocoa, which have surged to new highs.

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With China’s economic slump affecting the global dairy market, it’s expected that milk prices will continue to decrease in the near future. This could lead to reduced costs for consumers and businesses alike, providing some much-needed respite in a time of economic uncertainty. Whether it’s a glass of milk or baking your favorite treats, the affordability of dairy products in the face of China’s economic downturn is certainly something to toast to.

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• Milk