Due to the epidemic and weather and other reasons, Milk production in Europe and New Zealand has fallen sharply, global milk production has unexpectedly been shortfall, and milk powder has attracted international buyers to compete for milk powder because of its large export volume, according to Bloomberg data, the futures price of skimmed milk powder has reached 135 cents per 100 pounds, a new high since August 2014.
The image comes from the Internet
In addition, in the pre-market analysis of GDT (global dairy auction website) on November 2 this year, the auction price of skimmed milk powder was 3627 US dollars / ton, and the price index rose by 6.6%; the price index of whole milk powder was 3921 US dollars / ton, up 2.7%.
Since the beginning of this year, the author has observed an overall upward trend in global raw milk prices, will this affect the price of infant formula?
China's dairy products imports mainly come from Europe and New Zealand
As we all know, China's dairy imports mainly come from Europe and New Zealand. According to the statistics of China Trade Monthly, from January to September 2021, China imported a total of 3.1186 million tons of various dairy products, +27.5% year-on-year. From the perspective of import value, the average price of imported large bags of powder was 3519 US dollars / ton, year-on-year +5.2%; the average price of infant powder was 16616 US dollars / ton, year-on-year + 10.2%; the average price of whey was 1376 US dollars / ton, +4.6% year-on-year. It can be seen that the average price of large bags of powder, baby powder and whey is rising.
Among them, the import of large bags of powder was 1.0617 million tons, +39% year-on-year, New Zealand accounted for 72.2%, the European Union accounted for 10.8%; infant formula imports were 188,100 tons, -25.5% year-on-year, the European Union accounted for 68.3%, New Zealand accounted for 23.6%; whey imports were 583,400 tons, +29.6% year-on-year, the United States accounted for 38.8%, and the European Union accounted for 37.6%. It can be seen that China's imports of large bags of powder, baby powder, whey, etc. mainly rely on New Zealand and the European Union.
As mentioned at the beginning of the article, there was an unexpected shortage of milk production worldwide due to a sharp decline in milk production in Europe and New Zealand. Will this affect the price of baby powder in China? In fact, the price of milk powder in China is not only closely related to the international milk price, but also the amount of milk produced and the price of milk in China are also important factors, so what is the current amount of milk and milk prices produced in China?
Rising prices of fresh milk in China?
Declining milk powder production?
From the perspective of milk production, according to the data of the National Bureau of Statistics, the national liquid milk production from January to August 2021 was 18.7321 million tons, an increase of 12.40% year-on-year; the output of dry dairy products was 1.2119 million tons, an increase of 2.58% year-on-year; the national milk powder output was 600,700 tons, down 6.64% year-on-year, in addition to the decline in milk powder production, liquid milk and dry dairy products production are rising.
From the average price of fresh milk in the past year, the overall trend is on the rise, compared with 3.87 yuan / kg in September 2020, the average price of fresh milk in September this year rose by 12.14% year-on-year to 4.37 yuan / kg. It is worth noting that according to the monitoring data of the Ministry of Agriculture and Rural Affairs, in the peak season of dairy consumption, the price of fresh milk in September ushered in a decline, which is also a relatively rare phenomenon. For the future trend of the entire price of fresh milk, Song Liang believes: "Combined with the recent performance, we believe that it may fluctuate at a high level within this year, and then the price of fresh milk will gradually fall next year." ”
At the 27th annual meeting of the China Dairy Industry Association held not long ago, Song Kungang, honorary chairman of the China Committee of the International Dairy Federation, said frankly: "China has entered the ranks of the world's high milk prices, and in recent years, milk prices have risen steadily, which has become one of the main factors restricting the development of China's dairy industry."
In addition, Zhu Danpeng, an analyst in the Chinese food industry, said: "As early as the beginning of last year, we have seen that China's dairy giants are accelerating the layout of the industrial chain and seizing high-quality milk sources. The core competitiveness of dairy products in the future lies in the integrity of the industrial chain, which has become a killer tool for winning the market and winning competitors in the future. With the continuous improvement of the consumption dividend of the entire dairy industry, the scarcity of high-quality milk sources will become higher and higher, which will also trigger price fluctuations in the entire milk powder industry. ”
Production costs are rising
Will milk powder usher in a wave of price increases?
For dairy enterprises, we often say that "the source of milk gets the world", the upstream is always the key to the development of dairy enterprises, the integrity and stability of the upstream industrial chain, the higher the cost and profitability of the enterprise. In addition to the rise in raw material prices brought about by the overall price increase of commodities, from the current point of view, the national implementation of the power rationing and production policy and the impact of the epidemic on logistics and production, the operating costs of dairy enterprises are indeed rising, will milk powder usher in a wave of price increases?
In the view of independent dairy analyst Song Liang, the possibility of milk powder rising is unlikely, the upward price of skimmed milk powder has a certain relationship with the auction volume and the depreciation of the US dollar, although the international milk price is rising rapidly, it is also facing problems such as insufficient power in the later period, because the recent global consumption power is declining, the entire price of commodities such as grain, soybeans, and fresh milk is pulling back, but the global commodity price inflation caused by the depreciation of the US dollar has indeed played an important role in the overall milk powder price support.
Over the years, the end of the year is a peak period for consumers to hoard goods, and it is also a stage for dairy companies to sprint sales. At the same time, in the past two months, we have learned that some milk powder under dairy companies such as a2 and Newfield have increased in price, and under the combination of multiple factors, more and more brands may increase their retail prices. However, from the market side, affected by the chaotic price of channeling goods, as well as the intensification of competition to reduce the amount, under the melee, the transaction price of terminal milk powder has remained at a low level, and consumers can stockpile goods in an appropriate amount.
Combined with the above, there are many uncertainties facing the current market, which also poses greater challenges to the layout and development of dairy enterprises, the core is to grasp more certainty in uncertainty, do a good job upstream, and stabilize the downstream!