Boston, MA 02/12/2014 (wallstreetpr) – Dean Foods Co (NYSE:DF), the largest dairy processor in the U.S., notified a first quarter loss citing the surge in demand in the Chinese market for imported milk products which led to a sudden hike in the prices of raw milk.
Contrary to the company’s expectations, the prices of raw milk rose suddenly instead of falling in 2014. This was on account of an increase in demand for dairy products all over the world. Imports of dairy products by Asia have increased because of increased consumption of dairy based protein in the region as also due to a decline in milk production in China.
Distrust among Chinese
In 2008, in China, local milk products were known to cause the death of six infants and thousands were diseased. Reportedly, the reason behind the distressing event was contamination of milk with an industrial chemical called melamine. Since then, the country has increased consumption of milk powder from other countries. In 2013 also, China witnessed a similar event when tighter food safety regulations and the spread of a disease among Chinese cattle spread the distrust even more among locals. This resulted in surged up import in the period of January to October and the import volumes were almost tripled.
More losses
Dean Foods Co (NYSE:DF)’ Chief Executive Officer expects global raw milk prices to remain on the higher side while he foresees China to continue to act as a heavy importer of dairy commodity products through the year. The Dallas based company further expects prices to rise in the first half of 2014, after which they would continue to be stable. Later, the company expects, the prices might fall by the second half of the year.
After Dean Foods Co (NYSE:DF) lost a deal with Wal-Mart Stores Inc (NYSE:WMT) in 2013, its milk sales volumes have gone down. The company has also been shuttering factories to check expenses.
