Serious Oversupply of Raw Milk, Price to Sustain Sluggishness

By CnAgri2016-08-05 14:35:16 Print Raw milk started to fall from the high level of 4.3 yuan/kg in March 2014, to 3.4 yuan/kg in February 2015, then it kept at a low level.
 
From the perspective of supply and demand, the domestic raw milk price shall remain sluggish.
 
On the one hand, although some farmers gave up dairy farming due to the poor margin, yet there is still oversupply of raw milk. There is still stock of raw material powder which was produced from 2014-2015, but there was resumption of raw material powder import, hence a longer time is needed for depletion of the stock than the previous forecast. There is global oversupply of raw milk, the international dairy price is at a low level, the cost performance advantage is obvious, hence it is unlikely to see a drop of raw material powder import.
  
On the other hand, although the domestic dairy consumption recovered somehow in 2016, yet the growth is not substantial. Meanwhile processing companies restructure their products and raise the proportion of top-end products of high gross margin. There is a shift from “quantity” to “quality”, which directly affects the total demand for raw milk. In view of the supply and demand, the domestic raw milk price shall keep sluggish.