milk production declined 5.8% YOY in June according to the latest China Dairy Monthly Report. This was the sixth consecutive monthly decrease, with milk production estimated at 34.02bn kg over the last year. Liquid milk consumption was +4.0% YOY for the month, implying a 26% decrease in “manufacturing milk” availability.

With lower milk availability, local WMP manufacturing declined over the past few months, and inventories at the end of June fell to 264,000t, while stocks-to-use were 88% above the 5-year average. Meanwhile, SMP stocks-to-use at the end of June were 17% below the 5-year average considering higher exports. Domestic SMP production increased by 81% YOY to 66,300t during the last 12 months.