China imports during the first half of 2013 increased by 46% year-on-year. New Zealand totally dominates the supply of whole milk powder into China who is the world's largest buyer of dairy products. China typically buys more dairy products in the first six months of the year, compared with the later part of the year. This is partially due to China's domestic milk production being lower during the winter months. But the buying patterns are also skewed towards the start of the calendar year due to the Free Trade Agreement (FTA) between NZ and China. The FTA allows a limited amount of product to be imported at a preferential tariff rate. Buyers typically import more product at the start of the calendar year in order to take advantage of the lower import taxes. These quota volumes are typically used up within the first couple of months of the year.
In June this year China's imports of WMP were down. This is most likely a reflection of the lack of available supply rather than a reduction in demand. WMP supplies out of NZ were extremely tight at this time due to the reduction in milk supply caused by the drought earlier this year. More recently demand from China has picked up as in-market supplies are now limited. The strength of demand from China is reflected in the prices being achieved at the latest GlobalDairyTrade auction. At the most recent auction WMP traded above US$5,000 per ton for September deliveries and also for January deliveries.
Source: Dairy Trader