China Dairy Sector: Signs of a raw milk recovery; consumption rebound adds upside

Research evidence excerpt

China Dairy Sector: Signs of a raw milk recovery; consumption rebound adds upside

Global Research

29 July 2026ab

First Read

EquitiesChina Dairy Sector

Signs of a raw milk recovery; consumption China

rebound adds upside Consumer, Non-Cyclical

Nina Jiang

Analyst

nina.jiang@ubs.com

Youran's earnings beat signals industry stabilization +852-2971 5681

Youran Dairy reported better-than-expected results yesterday, returning to profitability Christine Peng, CFA

and delivering one of the strongest signals that the upstream dairy cycle may be nearing Analyst

a turning point. The earnings recovery was primarily driven by a significant reduction in christine-y.peng@ubs.com

fair value losses on biological assets, reflecting the stabilization of raw milk prices, +852-2971 7571

continued strength in cull cow prices, and ongoing cost reduction initiatives. The Steven Dang

company also benefited from improved dairy cow productivity and lower feed costs. Associate Analyst

Overall, the results suggest that operating conditions for dairy farmers are stabilizing steven.dang@ubs.com

after an extended downturn. +852-3-712 2195

Milk price recovery looks increasingly likely

Raw milk prices have shown early signs of recovery since May, reaching Rmb3.06/kg in

the third week of July (+1% MoM and YoY). Meanwhile, spot raw milk prices have

continued to strengthen and are gradually converging with contracted milk prices,

pointing to improving supply-demand fundamentals. On the supply side, industry

capacity rationalization remains underway, with continued herd reductions (the milkable

cow herd has declined by c.11% from its peak to 5.77mn heads in June), elevated

culling activity, and limited new farm investments. Following two years of sector-wide