International raw milk low price pressure local milk was disgusted

In the second half of this year, the international raw milk prices fell and the domestic dairy industry began to have a chain reaction. Although they all started with the word “down”, the international milk price was significantly lower than that of the domestic market, thus further widening the gap between the international milk price and the domestic market. Recently, due to the price issue of domestic raw milk, large dairy companies have begun to consider switching to reduced milk. Recently, even Guangdong has started to reject local milk. This may be the beginning of a blow to domestic raw milk.

Fonterra drastically cuts milk prices

In the period from the end of last year to the beginning of this year, regardless of the international or domestic dairy industry, there was an overestimation of the future price and demand. There were insiders of Mengniu who revealed that “at the end of last year, due to the milk price experienced for a period of time. Soaring, both upstream and downstream producers believe that prices may remain high for a long period of time.Therefore, many upstream companies have increased the scale of cultivation and the output of raw milk, especially New Zealand, because there is no EU-like production limit, so the output The increase is particularly noticeable, while in downstream companies, some are further increasing the stock of raw material powder."

However, China, India, and the Middle East and other emerging countries/regions were affected by the macro economy this year. Demand for dairy products declined and market growth slowed. In addition, the demand for dairy products in Europe and the United States is still sluggish, so that the global supply of raw milk appears to be oversupply. International milk prices have fallen since March this year and have continued to this day. New Zealand and the European Union are the world’s leading suppliers of milk sources. To date, raw milk prices in these places have fallen by 30%-40%. On December 10, Fonterra New Zealand lowered its forecast for raw milk prices for the 2015 milk season, reducing the price of milk dry matter per kilogram from NZ$5.30 to NZ$4.70. This price was not only in May of this year. Half, but also set a new low after 2007. The Fonterra family accounts for one-third of the global dairy trade. This time the price adjustment is undoubtedly worse for the already depressed international dairy industry.

Some domestic dairy giants launch "Overseas Edition"

In China, following last year's milk shortage, many domestic ranches also expanded rapidly, and raw milk supply increased. However, with the declining market demand and the large import of imported milk powder, domestic milk sources that once appeared high prices last year are now also “dive”. The Ministry of Agriculture's monitoring data showed that in the second week of December, the national average price of raw milk production areas was 3.81 yuan/kg, which was 9% lower than the average price in January, the lowest level in 14 months. Statistics from the Shandong Dairy Association found that even in some regions, the purchase price of 1.5 yuan/kg even appears to be lower than the price of some high-quality mineral water or mountain spring water.

"The price of imported powdered milk dropped sharply, and the cost of one ton of milk powder for domestic milk powder production enterprises was 10,000 to 20,000 yuan higher than that of imported milk powder. Some domestic dairy enterprises suffered serious losses, and the production of medium and small industrial milk powder production enterprises basically stopped production and stopped milk collection. "Song Liang, a dairy analyst, disclosed that, "The domestic dairy companies that bought and did not buy, had previously stored a large amount of milk powder, and now they are basically digesting the stocks, and they are unable to digest the new raw milk."

Overall, the decline in the prices of international dairy products is more severe than in the domestic market. According to insiders of several dairy companies, including Mengniu, "Even before the price of milk fell, the international price of milk would be lower than that of the domestic market. Now it is so low, the price difference is even more severe, and the price is so expensive. There is no guarantee of quality. If it is not a last resort, I really do not want to use domestic milk sources.” Terunsu has been using domestic milk sources, but Mengniu also launched the special selection of the global series in November this year. The main selling point of this "Overseas Edition" is liquid milk from New Zealand and Denmark. According to insiders from Mengniu, "Global Select is the marketing focus next year, and domestic milk sources have no comparative advantage this year."

At present, domestic milk enterprises have accelerated the deployment of milk sources overseas. Yili announced the start-up of the plant in New Zealand at the end of November, while Mengniu’s bright overseas layout is also accelerating. In addition, there is a large amount of foreign milk into the Chinese market. The data show that the import volume of liquid milk has reached 200,000 tons during the period from January to October this year and is expected to reach 280,000 tons in the whole year. In previous years, it was 15,900 tons in 2010, 40,500 tons in 2011, 93,800 tons in 2012, and 184,500 tons in 2013. In other words, the import volume of liquid milk increased by more than 10 times in only 4 years.

According to Wang Dingmian, a dairy expert, “There are 27 countries that have entered the Chinese market at room temperature, including the United States, Germany, France, the United Kingdom, South Korea, Thailand, Japan, New Zealand, Australia, Denmark, Belgium, Italy, and Switzerland. Spain, Austria, Peru, etc. There are nearly 100 brands, of which there are more than 20 in Germany, 15 in Australia and 5 in New Zealand, while the Pakistani cryogenic milk enters the Chinese market, there are also Japan, Korea, Australia, and New Zealand. And wait for the brands of these countries."

Affected by this, in the first half of 2014, the total amount of dairy production and processing in the country has seen negative growth for the first time in more than a decade. The total production of milk powder has dropped by 10.87% year-on-year, and liquid milk has dropped by 1.42% year-on-year. From the time to the month of October, the country’s total dairy product production totaled 21,988,000 tons, a year-on-year increase of only 0.04%, of which total production of liquid milk was 11.931 million tons, a year-on-year increase of only 0.72%, and both were close to zero growth.

For the first time in Guangdong, milk companies refused to accept local milk

At this time of the year, Guangdong dairy companies will negotiate with the farms and sign the raw milk purchase price for the whole year. However, the low price of milk made milk enterprises reject local milk for the first time this year. Chen Sanyou, president of the Guangdong Dairy Association, said: “In the past, the first dairy and fish farm had just opened the first communication meeting. The farm actively offered to reduce the price of milk by 3%. The decline in Guangdong's milk price is rare but even more surprising. The fact is that there is no counter-offer on the spot. In other words, the dairy enterprises do not plan to collect milk. Some milk enterprises have even made it clear that the milk collection will be halved next year. This has never happened.

Chen Sanyou also disclosed that “the average price of raw milk purchased in Guangdong in 2013 was 5,391 yuan/ton. Due to the milk shortage last year, the average purchase price in 2014 suddenly rose to 6,044 yuan/ton, an increase of 12%. Dairy companies hope to restore milk prices to 2013 levels, but the farms think that it will be a loss. Guangdong dairy companies are reluctant to collect milk at the prices in early 2014, so negotiations have reached a stalemate. It is understood that in previous years, Guangdong When milk prices are too high, there have been cases where milk companies collect milk from inland areas. This situation has again occurred this year.