News

Analyst: China woes continue, global dairy demand slows

A dairy market economist says China’s latest increase to retaliatory tariffs on U.S. dairy products should have a marginal impact.

Nate Donnay with INTL-FCStone tells Brownfield additional tariffs have been placed on lactose, infant formula, and casein.

“With our exports of those products already down from year-ago levels and the relatively small increase on the tariffs on those products, the marginal impact of these new Chinese retaliatory tariffs is going to be pretty small.”  

He says retaliatory tariffs on dairy products for the past nine months by China and Mexico have declined those exports by almost half since last year but increased exports in other regions have helped markets.

“Only about 20 percent of U.S. exports were being hit with retaliatory tariffs.  The other 80 percent of U.S. exports were actually growing by about 10 percent here until recently, and that was more than offsetting the decline.”         

Donnay says it could be several months before increased cheese exports to Mexico are calculated after those duties were removed last week.

And, he says with prices down for the first time in six months at the latest Global Dairy Trade Auction, negative European price movement, and weak U.S. dairy prices indicate global demand is slowing.