Chinese Milk Market

The Wall Street Journal has a good article on how changes in demand and supply have been impacting the import prices of milk over the last few years.  As you can see in the article increases in demand lead to higher milk import prices and then lead to an increase in the supply of milk by domestic and foreign producers - such as in New Zealand.  As supply increased the amount of milk imported into China fell dramatically - as did milk import prices.  With Russia banning European food products prices decreased again.  As a result domestic milk producers are culling dairy cows in order to reduce losses from the lower prices.  Additionally, notice that domestic producers are also trying to diversify their cattle for meat as opposed to only for milk.