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Raw Milk Price Turned to Fall

By CnAgri 2020-03-30 20:33:30 Print Tel:861064402118-822 Email: chen.wang@boabc.com

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As MOA monitored, raw milk price changed the coursed and dropped in China in February
2020. The monthly average was 3. 82 yuan/kg, down 0.03 yuan/kg MoM. The price fell to
around 3.75 yuan/kg by the end of February.
An internal survey reflects that the COVID-19 has a big impact on the production, sales and
price of raw milk. The recovering process of dairy farming since the latter half of 2018
encountered a pause.
(1) Raw milk sales and transportation were hindered and the insufficient powder spraying
capability led to milk dumping in many provinces since late January.
(2) Poor retailing of dairy products, mounting pressure of dairy warehousing and decline of
demand for raw milk. Processing companies sprayed partial raw milk into powder starting
from late January, or requested farms to spray into powder before delivery, hence the
mounting stock of bulk powder shall weaken the demand for raw milk in the future.
(3) Large and medium processing companies adhere to contract and still collect milk from
contracted farms, it was rare to see refusal or price reduction for the collection within the
contracts. Processing companies have a big fund pressure to spray milk into powder for
storage. It shall be very difficult for contracted farms to deliver more milk, and they have to
find their own resolution for the surplus milk.
(4) Some processing companies halted collection or reduced the amount of collection, they
turned to non-contracted farms for raw milk at lower price.
(5) Numerous medium/small farms face dwindling demand for raw milk, falling price and
growth of feed cost.
From the perspective of the historical trend of raw milk price, milk price usually slide after the
Spring Holiday holiday, adding the virus outbreak, more places should see price drop, at a
larger rate and for a longer period.
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