China's dairy imports jump 26% in June year

European milk production growth is at its slowest since early 2015.

China's imports of dairy products jumped 26% in the year ended June, while growth in European Union milk production slowed for a third month, signs the global dairy market may be starting to turn.

Fonterra’s global dairy update says European milk production growth is at its slowest since early 2015 and rose just 1% in May from the same month last year, for a 12-month gain of 4%.

Milk output fell 2% in both Australia and New Zealand in the year to June and US production gained 1%.

Global dairy exports, which lag behind production data as milk is processed and brought to market, remain strong based on Fonterra’s data.

New Zealand dairy exports rose 7% and were up 33 % from the June month last year. Australian exports were up 8% in the year ended May and up 35% in the month compared to May 2015. EU exports climbed 12%, while US exports fell 8%.

The US "continues to see increased domestic demand and less competitive export prices", Fonterra says.

China led growth among dairy importers, with strong gains for whole milk powder, fluid and fresh dairy and infant formula. Imports in Latin American countries climbed 10% while imports into Asia ex-China gained 3%. Middle East and Africa imports fell 5%.

The update comes after the latest GlobalDairyTrade auction this week when dairy prices soared more than expected as signs that a worldwide supply glut. It has bolstered optimism about the outlook.

The GDT price index gained 12.7% to $US2731 and whole milk powder surged 18.9% to $US2695 a tonne, adding to a 10% gain two weeks ago.

Fonterra has confirmed the final 10c per share payment of its previously announced dividend for the year of 40c.

The company has projected 2017 earnings per share of 50-60c, reflecting "performance improvements across the business.”

"The returns from the ingredients, consumer and foodservice businesses continue to grow in line with our strategy to convert more milk into higher returning products, particularly in important markets such as China, Malaysia, Indonesia, Sri Lanka, Oceania and Latin America," Fonterra says.