Raw milk rose 10% of listed milk companies to grab milk

Raw milk prices have continued to climb since the beginning of this year. A number of listed dairy companies have recently raised the price of their products, and at the same time they have increased their milk production base. The Securities Times reporter learned that in the Guangzhou, Shenzhen, Shenzhen, Shenzhen, Shenzhen, and other cities, a number of products including Yili and Mengniu have been raised in price. At the same time, there have been shortages of supply and shortage of products such as low-temperature pasteurized milk and high-end normal-temperature milk.

Chen Mengyao, an analyst of food and beverage industry of CITIC Securities, believes that the dairy industry is on the upswing, shifting from past price competition to high-value-added products. It is expected that some dairy companies will continue to raise prices for certain products in the second half of the year. Enterprises with high-end products and structural upgrade capabilities can transfer upstream costs to the downstream. At the same time, industry adjustment will also eliminate a group of small and medium-sized dairy companies.

Raw milk prices accelerated

The global milk supply this year has seen an overall supply shortage and a significant drop in raw milk production. Statistics show that the average price of raw milk in the main producing areas in China from January to August increased by more than 5% year-on-year, and accelerated growth in July and August. The average price rose by 10% compared with the same period of last year. Chen Mengyao said: "At present, China's main producing areas have a milk price of 3.5 yuan/kg, and the scale of ranch prices has reached 4.5 yuan/kg. Domestic high-end milk sources are still relatively scarce and may rise to 5 yuan/kg next year."

For the second half of the year, the price of raw milk has accelerated, and well-known dairy expert Wang Dingmian said: “This price increase is different from previous years. On the one hand, the Fonterra storm interrupted some raw materials imported from New Zealand; on the other hand, Milk sources are also quite tense.” According to another analysis, the milk and terminal prices also include the seasonal effects of high temperatures in the summer, and some milk companies’ production lines are experiencing reduced production.

The reporter noted that in recent days, Yili shares and Mengniu Dairy have raised the price of a number of products. In terms of liquid milk, the price of each box of Yili Classic Organic Milk and Mengniu Tailunsu is increased by about 5 yuan. In China Resources Vanguard Shenzhen, the local brand morning light pasteurized milk began to adjust prices in August, or about 10%.

In this regard, Mengniu said in an interview with reporters that the pressure of price increases comes from raw material costs, but for the time being there is no plan to raise prices, and only partial price adjustments will be made. The company mainly responds to rising costs by raising internal efficiency. Chenguang Dairy executives said that the recent price increase was mainly due to the increase in operating costs.

Milk battle is heating up

Yili Co., Ltd. disclosed yesterday that it invested 310 million yuan to participate in Huishan Dairy, and through the long-term milk supply contract with Huishan Dairy, it stabilized the raw milk supply in Northeast China. Yili’s move was interpreted by the industry as a strategic measure to enhance the control of upstream milk sources. Raw milk tension has become one of the most important issues faced by domestic dairy companies. The competition among leading enterprises has turned into competition for milk sources.

In order to ease the tight supply of raw milk and continue to increase the pressure on prices, listed milk enterprises have recently launched a competition for milk resources, and they have taken the opportunity to stabilize the supply of milk by joining together with colleagues at home and abroad. In addition to investing in Huishan Dairy, Yili announced that it will cooperate with DFA, the largest dairy company in the United States. In addition, other listed milk companies such as Synbiotics and Sanyuan International have also gone out to sea to staking their milk resources.

At present, the fluctuation of raw material prices has already made some listed companies feel the cost pressure. Sanyuan Group expects that the cumulative net profit from January to September may be significantly lower than that of the same period of last year, mainly due to the increase in prices of raw and auxiliary materials, and the increase in production costs as compared with the same period last year, which has a greater impact on the company’s operating profit; Impact, product sales growth slowed down. Huangshi Dairy also stated that the purchase price of raw materials rose in the first half of this year, and the company implemented cost-reduction measures to increase profits by adjusting the product structure and increasing the added value.

Chen Mengyao said that in the context of rising milk resources, Yili, Mengniu Dairy, and Bright Dairy have all improved their gross profit margins in the first half of the year, showing strong product structure upgrading capabilities and downstream conduction capabilities. China’s dairy industry has been in business for 15 years. However, compared with the developed countries, it still belongs to the sunrise industry. According to the estimate that the country's milk holdings have reached the average level in Asia, there is at least 10 years of gold development and the potential and space are huge.