US farm officials offered exporters some consolation over a downgrade to estimates for China's whole milk powder imports – forecasting a switch to skim milk powder, and a fillip for hay shippers too.

US Department of Agriculture staff in Beijing sliced by 33,000 tonnes, to 342,000 tonnes, their forecast for whole milk powder purchases this year by China, by far the world's biggest importer.

The downgrade - which appears a further blow to global whole milk powder prices already at their lowest since August 2009, according to globalDairyTrade – was in part down to food safety concerns.

Domestic whole milk powder was the subject of "a string of melamine scandals" during the second of last year, involving contaminated product left over from 2008, when the tainting killed some infants, and left thousands ill.

This year, demand for yoghurt, of which whole milk powder is typically a major ingredient, "is expected to fall" after the discovery of rogue manufacturers using an ingredient industrial-grade gelatin derived from leather obtained from shoe factories.

Whole vs skim 

However, China's imports of skim, or non-fat dairy, milk powder will reach 180,000 tonnes this year, up 40,000 tonnes from the last forecast, and up 50,000 tonnes year on year.

"Part of the demand for whole milk powder is reportedly being filled by non-fat dairy milk powder," the USDA staff said.

They also cited the relative pricing of the products, and faster-than-expected growth in demand for infant formula, a major use for non-fat dairy milk powder, which only a few of China's own dairy processing plants are able to produce.

Meanwhile, China's own, increasing, milk powder production is focused on whole milk powder.

"Non-fat dairy milk powder's share of total milk powder production continues to fall, and now stands at 5% of total milk powder."

Alfalfa boom 

The rise in overall powder production reflects an increase in China's domestic milk production, which the USDA bureau estimated at 33.7m tonnes this year, 205,000 tonnes above the previous forecast.

"Factors contributing to the increase include a slight upturn in per cow production, partly drive by improved feed," the bureau said.

Indeed, imports of US alfalfa bought to improve the diet of the cow herd had near-doubled, year on year, to more than 91,000 tonnes in the January-to-March quarter.

"Future import levels will be partly dependent on the success of the central government in encouraging domestic alfalfa production," in which the state plans to invest $1.2bn yuan ($333m), according to its 2011-15 five-year plan.

Domestic production of ruminant feed was 16% higher in the first two months of 2012 than a year before, according to the China Feed Industry Association.