Mixed July raw-material moves benefit dairy leaders but pressure Haitian
A Morgan Stanley report said raw-material prices across China’s consumer-goods industry showed a mixed pattern in July 2026.
A Morgan Stanley report said raw-material prices across China’s consumer-goods industry showed a mixed pattern in July 2026.
Hog prices rebounded month over month, but Morgan Stanley said the move was not a sustained turning point because supply-side destocking has been slower than expected. PET prices fell 0.9% month over month but remained above last year’s level. Soybean crushing margins declined 4.2% month over month, while the average auction price for whole milk powder fell 5.3% month over month.
Beverage and beer demand weakened noticeably during the summer peak because of unfavorable weather.
Morgan Stanley maintained positive rating ratings on Yili and Mengniu, citing more balanced supply and demand for raw milk and reduced inventory provisions, which it said should support profit margins. It also maintained an positive rating rating on Dongpeng Beverage: PET and sugar costs have been locked in below last year’s levels, although demand weakened in July.
Morgan Stanley maintained an equal-weight rating on Haitian Weiye. Rising soybean prices are expected to pressure its gross margin through the third quarter of 2026, with raw materials accounting for more than 80% of sales costs.
The report’s underlying logic is that more balanced raw-milk supply and demand benefits leading dairy companies, higher soybean prices pressure condiment makers’ profits, and near-term beverage demand depends more on a return to normal weather than on cost improvements.
In summary, July’s raw-material prices moved in opposite directions. Stabilizing raw-milk prices benefit dairy leaders Yili and Mengniu, while higher soybean prices pressure Haitian. Weather-related weakness in beverage demand is the key short-term risk, and the rebound in hog prices is not considered a sustained turning point.
Morgan Stanley identified Yili and Mengniu as beneficiaries because of positive rating ratings, stabilizing raw-milk prices and reduced inventory provisions. It also identified Dongpeng Beverage as a beneficiary because its costs are locked in below last year’s levels, and Muyuan Foods because of the potential sensitivity of longer-term hog-price recovery. It identified Haitian Weiye as pressured because higher soybean prices are weighing on gross margins through the third quarter of 2026, while Master Kong and Uni-President face pressure from PET prices that remain above last year’s levels and weaker demand.
The report listed four catalysts: the speed at which beverage and beer demand recovers after weather normalizes; whether the hog-price rebound develops from a seasonal recovery into a sustained uptrend; the actual path of raw-milk-price stabilization in 2026; and the effect of subsequent soybean-price movements on Haitian’s gross margin.
Hog prices rebounded month over month, but Morgan Stanley said the move was not a sustained turning point because supply-side destocking has been slower than expected. PET prices fell 0.9% month over month but remained above last year’s level. Soybean crushing margins declined 4.2% month over month, while the average auction price for whole milk powder fell 5.3% month over month.
Beverage and beer demand weakened noticeably during the summer peak because of unfavorable weather.
Morgan Stanley maintained positive rating ratings on Yili and Mengniu, citing more balanced supply and demand for raw milk and reduced inventory provisions, which it said should support profit margins. It also maintained an positive rating rating on Dongpeng Beverage: PET and sugar costs have been locked in below last year’s levels, although demand weakened in July.
Morgan Stanley maintained an equal-weight rating on Haitian Weiye. Rising soybean prices are expected to pressure its gross margin through the third quarter of 2026, with raw materials accounting for more than 80% of sales costs.
The report’s underlying logic is that more balanced raw-milk supply and demand benefits leading dairy companies, higher soybean prices pressure condiment makers’ profits, and near-term beverage demand depends more on a return to normal weather than on cost improvements.
In summary, July’s raw-material prices moved in opposite directions. Stabilizing raw-milk prices benefit dairy leaders Yili and Mengniu, while higher soybean prices pressure Haitian. Weather-related weakness in beverage demand is the key short-term risk, and the rebound in hog prices is not considered a sustained turning point.
Morgan Stanley identified Yili and Mengniu as beneficiaries because of positive rating ratings, stabilizing raw-milk prices and reduced inventory provisions. It also identified Dongpeng Beverage as a beneficiary because its costs are locked in below last year’s levels, and Muyuan Foods because of the potential sensitivity of longer-term hog-price recovery. It identified Haitian Weiye as pressured because higher soybean prices are weighing on gross margins through the third quarter of 2026, while Master Kong and Uni-President face pressure from PET prices that remain above last year’s levels and weaker demand.
The report listed four catalysts: the speed at which beverage and beer demand recovers after weather normalizes; whether the hog-price rebound develops from a seasonal recovery into a sustained uptrend; the actual path of raw-milk-price stabilization in 2026; and the effect of subsequent soybean-price movements on Haitian’s gross margin.