In W39 in the dairy landscape, the Association of Milk Producers reports that raw milk prices in Ukraine rose by an average of USD 0.013 per kilogram (kg) in Sep-23. This price surge is primarily due to reduced milk production over the past two months attributed to hot weather, increased energy costs, and heightened domestic demand for dairy products. For instance, extra-grade milk averaged USD 0.33/kg without value-added tax (VAT) as of September 19, a USD 0.014 month-on-month (MoM) increase. This price surge was seen across different milk grades, with premium and first-grade milk hiking by USD 0.013 MoM.
Milk consumption in Ukraine has increased by 12% year-on-year (YoY) so far in 2023, possibly due to reduced vegetable prices, allowing consumers to spend more on dairy products. This demand uptick, coupled with high energy costs, contributed to rising raw milk prices. Future price changes will depend on market dynamics, which could include potential price escalations for dairy products, which could in turn lead to reduced consumption.
Soaring raw material prices may increase dairy imports in Ukraine, particularly from Poland, which is becoming more competitive in the Ukrainian market. Ukrainian processors might need to cut costs and adjust purchase prices in response. The Association of Milk Producers advocates for a change in tax law to reduce VAT rates for milk producers and processors aimed at addressing the milk price surge issue. This move will potentially benefit Ukrainian consumers by reducing prices for domestically produced dairy products.
The Russian Ministry of Agriculture reports that daily milk sales from agricultural organizations reached 54.3 thousand metric tons (mt) as of September 18, a 4.7% YoY increase. Maximum sales volumes of 2 thousand mt were achieved in the Republic of Tatarstan, the Udmurt Republic, the Krasnodar Territory, and the Voronezh and Kirov regions. The average milk yield per cow per day was 21 kgs, an increase of 0.9 kg YoY. The city of St. Petersburg and the Leningrad, Kursk, and Kaliningrad regions led in this indicator, each obtaining more than 26 kgs of milk per cow per day.
China’s dairy product imports amounted to 2.02 million metric tons (mmt), valued at USD 8.81 billion from Jan-23 to Aug-23, an 11.8% YoY drop in volume and an 8.3% YoY decrease in value. The primary contributors were dry dairy products at 1.48 mmt, down 7.8% YoY, and liquid milk at 541.5 thousand mt, a drop of 21.1% YoY. Large package powder, condensed milk, and liquid milk registered over 20% YoY declines, while whey powder and cheese increased by nearly 20% YoY. China’s dairy imports were primarily sourced from New Zealand, accounting for a substantial portion in several categories, including large package powder (70.7%), cheese (63.1%), and cream (87%). The European Union (EU), Australia, and the United States (US) also contributed to China's dairy imports.
Lastly, while China's dairy imports were experiencing fluctuations, the country's dairy exports were relatively small. China’s dairy product exports reached 33.8 thousand mt, valued at USD 162 million, a notable 13.2% YoY increase in volume and a substantial 23.4% YoY surge in value. Chinese dairy shipments primarily consisted of large-package powder (40.4%), infant formula powder (28.8%), and condensed milk (14.4%). China's dairy exports were predominantly destined for Hong Kong.