According to analysis from Caitong Securities, the policy reinforces the "meat and dairy synergy" thesis, favoring a reversal in the raw milk cycle. Rising cattle prices are expected to improve cash flow for dairy farms from culling and external sales, and coupled with signs that raw milk prices are bottoming out in major production regions, the bank believes the logic for an inflection point in the raw milk cycle by 2026 is strengthened. Furthermore, the ongoing construction of deep-processing capacity for dairy products is poised to absorb excess raw milk at higher multiples. This, aligned with the persistent downward trend in herd inventory, is projected to drive a recovery in milk prices by 2026, benefiting the profit elasticity of the animal husbandry sector. Key companies to watch include Youran Dairy (09858), CH MODERN D (01117), and CHINA SHENGMU (01432). Caitong Securities' primary views are outlined below.
On December 31, 2025, the Ministry of Commerce announced its ruling on implementing safeguard measures for imported beef, formally known as the "Safeguard Measures Regulations." These measures, effective from January 1, 2026, to December 31, 2028, adopt a "country-specific quota plus an additional 55% tariff on volumes exceeding the quota" model. The annual quotas are non-transferable and primarily target major suppliers like Brazil, Australia, and the United States, covering fresh, chilled, and frozen beef (both bone-in and boneless). The quota will be gradually increased at fixed intervals throughout the three-year implementation period.
Domestic beef cattle and beef prices have strengthened from low levels since 2025, supported in the short term by tightened import investigations and, over the medium to long term, by a continued tight supply situation due to domestic herd reduction and the culling of replacement cattle. According to the import policy, the import quotas for 2026 to 2028 are set at 2.688 million, 2.742 million, and 2.797 million tons, respectively. Notably, the 2026 quota represents a 6% contraction compared to the 2024 import volume of 2.87 million tons. For reference, imports for the first 11 months of 2025 totaled 2.59 million tons, a slight decrease of 0.3% year-on-year. Given that China's beef import dependency exceeds 30%, the import tightening is expected to have a significant impact on supply.
The combination of quotas and tariffs imposes constraints on both the volume and price of imports, which is anticipated to directly support an upward trend in domestic beef cattle prices. Risks include weak demand, food safety issues, and intensifying industry competition.
