Liudmila Chernetska
- A glass of milk could soon cost a lot less due to China's economic slump.
- Whole milk powder prices slumped to a three-year low as Chinese demand for dairy products slides.
- China plays a pivotal role in setting prices in the global dairy market.
A glass of milk or feasting on baked goods could soon cost a lot less – all because of China's economic slowdown.
With demand struggling to recover after the pandemic, whole milk powder prices have been sliding, Bloomberg reported.
The average price for a ton of milk powder has tumbled to $2,864 – the lowest level since June 2020, per the GlobalDairyTrade.
Per Bloomberg, the slide could mean Fonterra, the world's biggest dairy exporter based in New Zealand, will slash payments to its suppliers this year.
Chinese appetite for dairy products, which plays a key role in setting the price of dairy markets globally, has been slipping this year as the world's second-biggest economy falters.
Data shows that Chinese factories are producing less, while retail sales have slowed dramatically. Economic growth for the three months to June 30 also badly missed economists' expectations of 7.3%, rising just 6.3%.
It's clear that Beijing's hopes for a smooth post-pandemic recovery have missed the mark.
Emma Higgins, Rabobank's senior agricultural analyst, said it remained cautious about the outlook for the Chinese dairy market: "Import demand from other emerging markets is unlikely to fill the void, loosening the global market somewhat."
With prices of whole milk powder plunging nearly 40% since their March 2022 peak, shoppers may be able to breathe a sigh of relief at a time when the cost of other foodstuffs such as orange juice and cocoa surge to new highs.