LONDON, Sept. 14, 2016 /PRNewswire/ -- Vietnam sources have reported that the country is actively pushing negotiations with China about dairy exports. However, the recent instance of its yoghurts being smuggled into China will not help its case.
On 29 July, CCTV2 exposed certain well-known infant formulas purchased overseas online, which failed sampling tests to assess them against Chinese standards. Experts suggested that if consumers intend to buy foreign made infant formulas, they should do it through formal channels.
On 12 August, the CFDA released the draft implementation regulations for its infant formula registration policy, clarifying the requirements and procedures for applicants.
On 27 July, Ausnutria expected its H1 sales to rise by 37% YoY and net profit by 140-154%. Sales of its own infant formula brands increased by 50% YoY.
On 30 July, CAHG officially announced the approval by the New Zealand government for its investment in MVM to construct a new powders plant, likely linked to its recent cooperation with Nouriz.
On 8 August, Junlebao Dairy announced it is launching its platinum infant formula in Hong Kong, significantly undercutting its peers in the OPO segment.
Beijing Sanyuan announced that CAG intends to transfer its equities in Tangshan Sanyuan and Shandong Sanyuan to it. From this, the company is expected to obtain another infant formula production licence.
In August, milk prices in certain areas rose, mainly thanks to the coming peak sales in China's traditional festivals, and just as international prices strengthened. However, dairy farmers should not read too much into this upturn.
On 27 August, Uni-President launches "Westgold" UHT milk from Westland in New Zealand.
Yantang Dairy re-started its ice cream business by launching a new brand - "Silkvoury" - with its established "nutrition and health" image central to its marketing push.
Slight Milk Price Rises
According to China's Ministry of Agriculture, during 1-15 August, the average milk price was RMB3.39/kg, down by 0.15% MoM.
However on 19 August, price rises were reported in some areas. "We decided to raise the purchase prices for our direct milk suppliers (dairy farms) in Jiaodong Peninsula (covering Qingdao, Yantai and Weihai cities), based on domestic and international market factors," stated Nestle Qingdao Ltd. This price adjustment is on the basis of daily contracted volumes:
1-1.5 t/d: +RMB0.10/kg
1.5-2.0 t/d: +RMB0.12/kg
2-6 t/d: +RMB0.10/kg
6+ t/d: +RMB0.08/kg
Another example came in Ningxia Hui Autonomous Region, where Ningxia Northern Milk Industry Co., Ltd. took a similar course (Northern Milk: running 2 farms each with potential to accommodate 1,000 cows and a 50,000 t/a liquid milk plant; mainly producing UHT milk in pillow-shaped Tetra Fino Aseptic and in PrePak packaging, and fresh milk and yoghurt).
"In recent months, the purchase prices have risen suddenly, from RMB1.2/kg in March to RMB4.2/kg now," stated Yao Mengyong, Vice General Manager of Northern Milk, "Now dairy processors are buying - a supply shortage is coming...Since the Chinese traditional festivals – the Moon Festival and even the Spring Festival – are coming up, dairy processors are ramping up production to ensure the supply. Another factor is that the schools open in September, meaning demand for school milks."
"January-June saw the most sluggish milk market in the world. China saw its milk price get near to or even below cost, and Europe and Australia had prices approach cost level as well. It is impossible for the price to continue falling!" commented Li Shengli, Chief Scientist of the National Dairy Industry and Technology System and Professor of the College of Animal Science and Technology, China Agricultural University: "The heat stress this summer is impacting dairy farming severely, with milk output down by 10%+. Meanwhile the culling rate has increased from the normal 25% to 30%. Holidays including National Day (1 October), New Year Day (1 January) and Spring Festival (28 January) are coming, meaning demand will rebound. Later this year or early next year, domestic dairy farming businesses will have their 'spring'."
This is in line with the recovery in prices seen internationally, putting USD3,000/t back in the frame as a possibility for Q4 - GDT on 16 August saw SMP up by 3.21% to USD2,028/t and WMP by 18.98% to USD2,695/t.
"This offers a hope to domestic dairy farmers," stated Yuan Yunsheng, Secretary General of the Dairy Association of Hebei Province. Nonetheless, stocks in China are estimated at around 400,000 tonnes, and are expected to increase as drying continues in the market (the rate of drying is as much as 13% of the total milk output in some areas). Hence, such slight price rises are not strong indications of industry recovery, so cautious interpretation of this trend is advisable.
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