Market report: Global dairy demand set to soar

Demand for dairy commodities is set to soar next year, raising the importance of global dairy trade, according to DairyCo.

Drought in Russia caused milk output to fall by 2% this year, with a further drop forecast in 2011, its latest report said. “As a result, cheese imports are already up by 25% to 210,000t (January-September), and even higher imports of cheese, whole milk powder and skimmed milk powder are forecast for next year.”

China was also likely to import heavily. “Following the melamine scandal, which severely impacted the demand for Chinese dairy products, the country has increased its imports substantially.”

Imports of whole milk powder increased five-fold between 2008 and 2010, and could reach 400,000t in 2011. Analyst Rabobank predicted that both China and India would be reliant on imports in the medium term.

“This rising demand from the importing countries occurs at a time when milk production is increasing in most of the largest exporting countries,” DairyCo said. “The speed of import growth relative to milk production will be key in determining world prices.”