Photo: Adam Simpson
Exporters could face much quieter demand from China if live exports resume.
A new Rabobank report shows demand for dairy in China is down and the country has grown it's own dairy herd - so its need to import live dairy cattle has dropped significantly.
Our cattle exports to China peaked at nearly 135,000 head in 2021.
Labour banned the trade last year but the government is working to reinstate it.
Rabobank senior analyst Michael Harvey said the market in China has changed considerably and Australian exporters have seen a huge drop in demand.
"Oceania live dairy cattle trade volumes peaked at 233,000 head in 2022, with a combined total of 815,000 dairy cows exported from Australia and New Zealand between 2018-2023."
"However, by mid-2024, the flow of dairy heifers from Australia and New Zealand to China has slowed to barely a trickle due to a combination of New Zealand's ban on exports along with a slowdown in Chinese demand, resulting in an annual decline of 83 per cent."
Should New Zealands trade of live animal exports be reinstated at some stage in the future Kiwi exporters would likely encounter a markedly slower market, Harvey said.
He said live exports used to be lucrative for New Zealand and Australian exporters but the drop in demand has impacted prices.
Australian farmers were getting $3,000 US per dairy cow in 2022 but that halved last year.
Harvey said prices and demand could always recover - but he doesn't expect to see that anytime soon.
"Moving forward, a recovery in Chinese heifer demand is possible, however, it will require a combination of improved milk prices, increased farm profitability, and further government policy to support farm expansion and herd rebuilding.
"Bearish farm sector fundamentals in China, a market that is irreplaceable, point to slower live export trade for the foreseeable future."
The Rabobank report said there other markets in South East Asia which could take cattle exports should demand in China remain soft - but nothing to the same scale.