The latest figures from Rural Bank’s Australian Dairy Update forecast milk powder exports by volume could increase as much as 43% year on year as China’s appetite for milk powder continues to grow.

The report also shows China’s import pattern has changed dramatically in the last few months with a 53% surge in Australian milk powder imports having been recorded for the January to August 2017 period. 

Demand for Australian milk powder products has gone from strength to strength in recent years with the prevalence of daigou or shoppers for Chinese retail customers leading to many Australian supermarket chains enforcing local customer limits due to shortages of milk powder based baby formulas.

Rural Bank for general manager agribusiness, Andrew Smith, said the increase in Chinese demand for Australian milk powder was encouraging for Australian dairy farmers and could allow processors and producers to capitalise on any future increases in global dairy prices. 

“The out of cycle rise in Chinese demand for Australian milk powder, combined with year-on-year increases in the value of dairy exports to Singapore and Malaysia, means that three of the five main Australian export markets are performing well despite lower global prices,” Mr Smith said

“This is good news for dairy farmers and highlights once again the strong appetite and demand for Australian dairy products throughout Asia,” he said.

According to the Australian Dairy Update, national milk production is also tracking slightly above this time last year, with South Australia and Victoria leading the way with 12.7% and 0.9% increases respectively. 

Following an extremely dry September, welcome rains fell across most dairy regions of Australia in October. Weather conditions are expected to improve further in the coming months according to the Bureau of Meteorology. 

The agribusiness general manager said milk production increases will become more feasible as October rains support good pasture growth. 

“There is also now a good chance of above average rainfall occurring across many dairy regions this summer,” Mr Smith said.