China: Oversupply of raw milk continues, lowest prices expected

Can u make this the caption: Due to oversupply, the milk price in China is nearing its lowest level in a decade. photo: Misset

China continues to face an oversupply of domestic raw milk, says the country’s largest milk producer China Modern Dairy Holding, in which dairy giant Mengniu holds a majority stake. With the oversupply the milk price in China is nearing its lowest level in a decade. The company discusses its expected loss.

China Modern Dairy Holding projected a loss of between €96 million and €120 million for the 6 months ended 30 June 2025. The same period a year earlier, the loss was €25 million.

Rabobank recently reported that due to oversupply, the milk price in China is nearing its lowest level in a decade. During the first half of this year, China Modern Dairy Holding said there was no clear improvement in the market.

230,000 cows

China Modern Dairy Holding has nearly 230,000 dairy cows spread across 26 farms. Average production per cow is above 9,000 kgs of milk, the company reports on its website. Meanwhile, this production has been increased further, to above 13,000 kgs, according to a stock market report. Substantial cuts have been made to the lower end of the herd. Total herd size is expected to decrease slightly from the end of 2024, while the number of cows in milk increases to 53%. The volume of milk is expected to increase by 10%.

The company took more measures to reduce costs, including in the strategic purchase of bulk products and in a ration adjustment. As a result, China Modern Dairy Holding says it was able to reduce its cost price per kg of milk by more than 2.5 cents. The operating result – the cash EBITDA taking into account the actual cash flows related to operating activities – is expected to remain the same compared to the same period last year.

Loss of around €100 million

Nevertheless, for the period to 30 June, China Modern Dairy Holding expects a significant net loss of between €96 million and €120 million. The revaluation of the fair value of dairy cows, due to the increase in the number of cows disposed of and the drop in the milk price, is also damaging. This represents a loss of between €197 million and €221 million. According to the company, this is a non-cash item and will not have a material negative impact on the group’s cash flows, working capital and continuity.