China Dairy Sector: September: tight supply supports continued milk price recovery

UBS China Dairy Sector September tracking report. Supply: China's cow herd increased 0.2% MoM (-3.2% YoY) in September, driven by a seasonal increase in newborn calves during the peak breeding season and slower culling of milkable cows amid improving raw milk prices. Raw milk production rose 5.5% YoY, supported by a low base last year and higher milk yields. The share of loss-making farms declined further to 57% from 62% in August. Industry supply-demand conditions remained relatively tight, with whole milk powder inventories remaining low. Raw milk prices have stabilized since May and recovered by c.3% from trough levels. Demand: consumption recovery moderated ahead of holidays, with diverging performance across categories. Channel checks suggest Mengniu's liquid milk sales grew at a mid-single-digit rate in 3Q26, with September sales broadly flat YoY;