Raw milk cycle reversal signals emerge as dairy sector stocks surge

Industry
โดย 21世纪经济·Read original
Summary · why it matters

The dairy sector saw a broad rally on July 29, with Huanlejia hitting the 20 percent daily limit, Knight Dairy surging over 18 percent, Pinwo Food and Panda Dairy rising more than 10 percent, and JuneYao Health, Sanyuan Foods, and Liziyuan among multiple stocks hitting their daily limits. A research report from China Securities shows that the dairy cow herd stood at 5.772 million head in June, down 22,000 head month-on-month, maintaining a rapid pace of destocking. Recently, bulk milk prices have risen in many regions, and the interplay of beef and milk prices is driving a positive turn in the raw milk cycle. Kaiyuan Securities notes that from 2024 to 2025, the national dairy cow herd cumulatively destocked about 550,000 head, and by the end of the second quarter of 2026, the Holstein cow herd further declined to 5.794 million head, with the pace of capacity reduction accelerating. At the same time, yield per cow growth is slowing. In the first half of 2026, raw milk output rose 2.4 percent year-on-year, while dairy product output increased 6.0 percent. On the pricing front, bulk milk prices are leading the gains, with contract prices following. Bulk milk purchase prices in major producing areas have risen sharply, with current mainstream prices at 2.8 to 3.1 yuan per kilogram, and in tight supply areas reaching 3.2 to 3.5 yuan per kilogram. Contract milk prices have turned positive year-on-year. On July 24, the fresh milk price in major producing areas was 3.06 yuan per kilogram, up 0.3 percent month-on-month and 1.0 percent year-on-year, with clear bottoming signals. Aijian Securities points out that dairy products represent the clearest direction of improvement in fund holdings in the second quarter. Active equity funds' combined holdings of Yili Group, New Hope Dairy, Youran Dairy, and China Modern Dairy increased by 12.3 percent, 18.7 percent, 17.3 percent, and 17.8 percent quarter-on-quarter, respectively. Kaiyuan Securities believes that supply contraction, price stabilization, and initial profit verification are largely in place, and raw milk reversal signals are gradually emerging. The industry may be transitioning from a left-side bottoming phase to a right-side confirmation phase. The upstream segment will benefit first with significant earnings elasticity, with a focus on Youran Dairy. The downstream competitive environment is improving and leading companies are regaining market share, with attention on New Hope Dairy and Yili Group.

Impact on stocks 10

Consumer Staples▲ · 2 stocks
Others▲ · 8 stocks
New Hope Dairy Co Ltd
002946
▲ PositiveSupplyrelevance

Raw milk supply tightening and rising prices benefit dairy processors like New Hope Dairy.

Pinlive Foods Co Ltd
300892
▲ PositiveSupplyrelevance

Raw milk supply tightening and rising prices benefit dairy companies like Pinlive Foods.

Panda Dairy Corp
300898
▲ PositiveSupplyrelevance

Raw milk supply tightening and rising prices benefit dairy companies like Panda Dairy.

JuneYao Dairy Co Ltd
605388
▲ PositiveSupplyrelevance

Raw milk supply tightening (destocking, herd reduction) and rising bulk milk prices signal positive cycle reversal for dairy companies.

Off-coverage companies 1

内蒙古骑士乳业集团股份有限公司 (Inner Mongolia Knight Dairy Group Co., Ltd.)Private▲ Positive
Supplyrelevance

Dairy cow herd destocking and rising bulk milk prices signal a positive turn in the raw milk cycle, benefiting Knight Dairy as a dairy producer.

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