(Yicai Global) Feb. 8 -- The price of raw milk has dropped slightly ahead of the upcoming Lunar New Year holiday after reaching a seven-year high last month. However, the upward trend is likely to continue this year due to a big surge in the cost of animal feed, industry insiders told Yicai Global.

The price of unprocessed milk has been on the rise since last July due to growing demand. The average price in major production areas reached CNY4.26 per kilogram during the week Jan. 14 to Jan. 20, just shy of the all-time high of CNY4.27 on February 2014.

This has now dropped to under CNY4 per kilogram, around the same price this time last year. And the price of top-quality milk from ranches in northern Hebei and Shandong provinces has fallen back to CNY5 (USD0.77) per kg from an earlier peak of CNY6 per kg.

Raw milk prices have started to come down as dairy product makers have already put their orders in to prepare for the hike in demand over the holiday period, which will run from Feb. 11 to Feb. 17 this year, Xu Qiang, founder of Xinqiang Animal Husbandry in Hebei province, told Yicai Global.

The slide in prices, though, is not likely to persist as the cost of feed has gone up by between 20 and 30 percent, said Gao Lina, president of Modern Farming.

Fodder for the cows accounts for nearly half of dairy farming costs. The price of corn in China soared 44.6 percent on Jan. 22 from the year before to CNY2,920 (USD452) per ton. While the cost of soya bean meal has jumped 29.5 percent to CNY3,990 per ton and imported lucerne has risen 2.4 percent.

Editors: Tang Shihua, Kim Taylor