How to forecast dairy prices?

The calendar in China, the top dairy importer, provides a clue. The Year of the Dragon is prompting a baby boom in the world's most populous country which is spurring demand for milk powders.

People born in the Year of the Dragon tend, according to communities which follow the Chinese zodiac, to be blessed with luck, nobility, strength and wisdom.

Many consider that families with three Dragon members are blessed with extremely good fortune.

The belief has prompted a 5% rise in China's birth rate, equivalent to some 800,000 babies over the course of the year, which is in turn spurring imports of dairy products for powdered baby milk increasingly popular with the country's mothers.

The baby boom is "firing Chinese trade" in dairy products, analysts at the UK's DairyCo bureau said, flagging the rise of 20% to 414,000 tonnes in China's milk powder imports in the first eight months of 2012.

Import upgrades

The strength of demand, and continuing mistrust by Chinese consumers over domestic milk following a series of tainting scandals, has prompted US Department of Agriculture staff in Beijing to lift estimates for imports of milk powders.

Imports of skim milk powders were seen reaching 252,000 tonnes this year, 15,000 tonnes higher than previous expected, and a rise of 35% year on year.

Whole milk powder imports were pegged at 420,000 tonnes, an upgrade of 88,000 tonnes, and a rise of 31% on the 2011 total.

The increases come despite expectations of a 5.8% increase to 33.85m tonnes in domestic milk production, boosted by growth in the dairy herd and improved feed.

At National Australia Bank, agribusiness economist Michael Creed said: "Chinese demand for wholemilk powder over the past month or so has been exceptional, with imports in September more than double what they were last year."

Chinese dairy imports, thanks to their size, are closely watched by markets, as the New Zealand supplies which Agrimoney.com featured on Monday.

Other countries too

The Dragon effect on dairy consumption is being seen in some neighbouring countries too, such as Vietnam, where one hospital in Ho Chi Minh has reported daily average birth rates increasing from 126 at the start of the calendar year, rising to 200 last month.

Meanwhile, 2013 will see a return to the more prosaic Year of the Snake, associated with acuteness of mind and awareness, but also pride and vanity.