China’s dairy sector continues to adjust under ample domestic milk supply, with production expected to remain broadly stable in 2026 as processors shift milk toward higher-value products such as butter and cheese. Weak retail demand and reduced use of reconstituted milk weigh on whole milk powder consumption, while foodservice and bakery expansion support steady growth in butter and cheese use.
Post forecasts imports of WMP and SMP to decline due to weaker demand, while butter imports remain broadly stable and cheese imports increase to meet demand for higher-quality products. Whey demand remains firm, supported by feed and food applications, with China continuing to rely on imports despite short-term fluctuations.
FAS China provides this reporting and analysis as a service to U.S. farmers, ranchers, rural communities, and agribusinesses in support of a worldwide agricultural information system and a level playing field for U.S. agriculture.
The forecasts and revised estimates provided in this report are issued by FAS China and are not official USDA data.
Fluid Milk
Post forecasts production to remain broadly stable in 2026 with imports remaining low. Domestic supply continues to meet demand, while shifting consumption patterns and weak demand limit import growth.
Whole Milk Powder (WMP)
Post forecasts WMP production to decline slightly in 2026 as less surplus milk and a shift toward higher-value products limit output. Post expects consumption to decline modestly due to weaker downstream demand and reduced use in reconstituted milk. Post forecasts imports to decline further as demand weakens and lower-cost domestic products continue to substitute for imports.
Skim Milk Powder (SMP)
Post forecasts SMP production to increase in 2026 as higher butter output generates additional skim milk powder as a byproduct. Post expects consumption to remain broadly stable, as declining infant formula demand offsets growth in bakery and processed food use. Post forecasts imports to decline due to weaker early-year import volumes
and increased domestic supply from expanded butter processing.
Cheese
Post forecasts production to increase in 2026 as processors expand output in response to rising foodservice demand and improved returns. Post expects consumption to grow steadily, supported by foodservice expansion and broader use in bakery and prepared foods. Post forecasts imports to increase, driven by strong demand for products that domestic supply cannot fully replace.
Butter
Post forecasts production to increase in 2026 as processors expand milkfat utilization to capture higher returns. Post expects consumption to grow steadily, supported by rising demand from bakery and foodservice sectors and continued product upgrading. Post forecasts imports to remain broadly stable, as increased domestic production meets a larger share of demand growth while imports continue to serve premium segments.
Whey and Whey Products
Post expects whey demand to remain strong in 2026, supported by both food and feed applications. Post notes that feed use, particularly in piglet diets, continues to provide a stable base for consumption.
Read the full semi-annual report on the Chinese dairy industry here. — Story by USDA Foreign Ag Service China Staff and Victoria Dokken
