HK Stock Market Move | Dairy stocks lead gains as domestic raw milk prices may be nearing an inflection point; rising overseas prices could raise the height of the cyclical reversal.

Dairy stocks lead gains. As of press time, MENGNIU DAIRY (02319) rose 9.48% to HK$19.87; YOURAN DAIRY (09858) rose 4.61% to HK$3.405; CH MODERN D (01117) rose 2.43% to HK$1.265; CHINA FEIHE (06186) rose 2.20% to HK$2.56. On the news front, according to statistics from the Ministry of Agriculture and Rural Affairs, as of October 15, the average price of raw milk in major domestic producing areas was RMB3.10/kg, flat week-on-week and up 1.97% year-on-year. Guosen noted that at current raw milk prices, the industry is generally in a cash-loss state. With rising meat prices subsequently stimulating culling, capacity is expected to accelerate its reduction, and the subsequent capacity reduction will involve large-scale capacity. Raw milk prices are expected to usher in an upward inflection point. The bank noted that in New Zealand, the world's major exporter of whole milk powder, dairy cow inventories in 2024 are down more than 6% compared with 2019, and global whole milk powder prices have continued to rise since 2024. Currently, domestic import prices for whole milk powder have remained consistently higher than domestic raw milk prices. Considering that the dairy cow breeding cycle is also relatively long, the continued rise in overseas prices will help raise the height of the cyclical reversal in domestic raw milk prices in 2027.