Leading dairy farm operators advanced in morning trading, with YOURAN DAIRY (09858) climbing 5.98% to HK$4.43 and CH MODERN D (01117) gaining 5.38% to HK$1.665.

Market sentiment was buoyed by data showing raw milk prices in major production areas turned positive year-on-year in July despite the traditional off-season, while continued herd liquidation across the sector has fueled expectations that the industry's cyclical trough may arrive earlier than anticipated.

According to analysts, the magnitude of earnings responsiveness will be determined by how quickly rising milk prices translate into financial statements, with ranch operators expected to benefit directly and see the strongest upside leverage.

Both CH MODERN D and YOURAN DAIRY reported a return to profitability in their interim results for the first half of the year, turning around from losses in the prior period.

Industry observers note that with sustained reduction in livestock inventories and gradually recovering raw milk demand, the dairy farming sector is poised for a cyclical reversal, positioning these companies to unlock significant earnings potential.