Weekly global protein digest: China resumes Brazilian imports, lab-grown chicken, USDA dairy report

Analyst Jim Wyckoff shares an update on global protein news
calendar icon 24 March 2023
clock icon 9 minute read

Weekly USDA export sales

Beef: Net US sales of 18,600 MT for 2023 were up 5 percent from the previous week and 59 percent from the prior 4-week average. Increases primarily for South Korea (10,800 MT, including decreases of 1,700 MT), Japan (3,600 MT, including decreases of 900 MT), China (1,500 MT, including decreases of 300 MT), Taiwan (800 MT, including decreases of 300 MT), and Hong Kong (800 MT, including decreases of 100 MT), were offset by reductions for the United Kingdom (100 MT). Exports of 13,500 MT were down 15 percent from the previous week and 13 percent from the prior 4-week average. The destinations were primarily to Japan (3,500 MT), South Korea (3,200 MT), China (2,300 MT), Mexico (1,300 MT), and Taiwan (900 MT).

Pork: Net US sales of 38,000 MT for 2023 were up 7 percent from the previous week and 8 percent from the prior 4-week average. Increases were primarily for Mexico (18,400 MT, including decreases of 600 MT), Canada (4,800 MT, including decreases of 500 MT), Japan (4,400 MT, including decreases of 200 MT), South Korea (3,400 MT, including decreases of 300 MT), and Australia (1,800 MT). Exports of 30,500 MT were up 3 percent from the previous week and 2 percent from the prior 4-week average. The destinations were primarily to Mexico (13,200 MT), China (4,400 MT), Japan (3,900 MT), South Korea (2,600 MT), and Canada (1,500 MT).

China to resume some Brazilian beef imports

China resumed imports of Brazilian boneless beef aged under 30 months starting today, China’s customs authority announced. Sales of Brazilian beef to China were voluntarily halted by Brazilian authorities on Feb. 23, following the discovery of an atypical case of bovine spongiform encephalopathy.

Lab-grown chicken

GOOD Meat, a division of Eat Just foods, is the second alternative-foods startup after Upside Foods to win an initial FDA approval to sell chicken grown in bioreactors to the American public. But other hurdles remain: The company needs more USDA approvals and must continue to meet additional regulatory requirements before it can start mass commercial sales.

China’s pork imports stay strong to start 2023

China imported 380,000 MT of pork in January and February combined, up 35.8% from the same period in 2022. China’s pork imports increased late last year and are expected to climb this year, especially with the country reportedly fighting a new outbreak of African swine fever.

Why farmers and others should be watching the impact of some failing banks

Smaller banks are likely to respond to recent turmoil in the sector by tightening standards and slowing lending to raise capital ratios. That could make it harder for American families and businesses to get a loan.

China is fighting a resurgence of African swine fever

The deadly disease that previously wiped out almost half of China’s hogs is surging again, potentially raising prices of the nation’s favorite meat. Official data on the virus are hard to come by in China, so traders and analysts use their own surveys to assess the damage. The outbreak was pretty severe in January and February and the latest wave should cut production capacity and push up pork prices in the second quarter, Rabobank said.

Weekly USDA dairy report

CME GROUP CASH MARKETS (3/17) BUTTER: Grade AA closed at $2.4000. The weekly average for Grade AA is $2.3880 (+0.0510). CHEESE: Barrels closed at $1.9600 and 40# blocks at $1.9975. The weekly average for barrels is $1.8740 (+0.1725) and blocks, $1.9290 (+0.0965). NONFAT DRY MILK: Grade A closed at $1.1875. The weekly average for Grade A is $1.1805 (+0.0090). DRY WHEY: Extra grade dry whey closed at $0.4675. The weekly average for dry whey is $0.4510 (+0.0100).

BUTTER HIGHLIGHTS: Cream volumes have begun to tighten in the East and Central regions amid strengthening demand from cream cheese and ice cream makers. Cream is available in the West, while demand remains steady to light in the region. Some butter makers in the East say they are operating seven-day production schedules, despite tightening regional cream availability. In the West, some butter makers say production is steady to strong, while others say downtime for plant maintenance is negatively affecting butter output. Demand for butter varies from region to region: in the Central region, contacts note strengthening demand ahead of spring holidays, particularly to retail customers. In the East, food service demand is steady, though current retail prices are contributing to lighter purchases from consumers. Western contacts report light retail sales and steady to lighter bulk butter demand. Bulk butter overages range from 0 to 10 cents above the market, across all regions.

CHEESE HIGHLIGHTS: Milk supplies are readily available across the country, and contacts in the Midwest continue to report spot loads of milk being traded for $10 or more under Class III. Cheese makers in the West say they are using available milk supplies to operate strong production schedules. Some plant managers in the Northeast say they have been manufacturing more cheese than expected due to strong regional milk output. In the Midwest, some cheesemakers who process cheddar and Italian style cheese are, reportedly, concerned their production capacity is not enough to build inventories for summer and fall. Cheese sales are hearty in the Midwest, and stakeholders in the Northeast note steady demand for cheese from retail and food service customers. In the West, cheese barrel sales are active, though block demand is lighter. Contacts in the West relay mixed demand from export purchasers. Spot cheese inventories are available in the West and growing in the Northeast.

FLUID MILK: Fluid milk production levels appear steady across the country, as milk producers in some regions continue to see favorable weather conditions. Mild spring conditions in parts of the Midwest and Mid-Atlantic are advancing early-stage spring flush-like output. An exception to the favorable conditions is the Northeast/New England area, where a nor’easter has produced a winter storm with as much as three feet of snowfall, initiating milk pickup delays due to poor road conditions. Class I demand is steady to lighter in the West region, although the processing capacity tightened with regional flooding in Northern California that led to downtime at some bottling facilities. Class I demand is at seasonal projected levels in the Midwest region, while steady in the East region. On another note, cream supplies are tightening across the East as soft serve, ice cream, and cream cheese production ramps up. Midwest end users report a 10 percent downtick in cream availability. Cream volumes are plentiful in the West and are keeping production schedules strong. Cream multiples for All Classes in the regions range 1.24 to 1.30 in the Northeast; 1.18 to 1.26 in the Midwest; and 1.00 to 1.25 in the Western region. Condensed skim availability is adequate, on mixed demand.

DRY PRODUCTS: Low/medium heat nonfat dry milk prices are unchanged in the Central and East region’s price range. Spot interest is light as production heats up. Markets in the West saw the price range move down on less demand from purchasers anticipating lower prices. Dry buttermilk prices adjusted lower at the bottom of the range in the Central and East region. Demand is quiet in a somewhat bearish market. Available inventories outpace current demand in the West dry buttermilk market. As such, prices adjusted lower this week. Dry whole milk prices are steady to lower on light trading and light production. Dry whey prices in the Northeast and West are higher throughout the price range. Prices are mixed in the Central whey market. Inventories vary from adequate in the Northeast region, comfortable in the Central region, and higher to balanced inventories in the West region. Whey protein concentrate 34% prices moved lower. Inventories are growing, and production is steady on weak demand. Lactose prices are steady to lower. Contracts and spot sales of lactose have slowed on light demand. Rennet casein prices were unchanged on limited trading outside of contracts, while acid casein prices moved lower on the bottom of the range.


WESTERN EUROPEAN OVERVIEW: Seasonal milk production continues to grow across much of western Europe. While adverse weather periodically inhibits weekly milk collection growth, the general trend has been toward higher milk outputs in much of northern Europe to start the year. However, in parts of France and southern Europe, drier conditions have prevented a strong start to the milk production year. Farmers in Belgium and the Netherlands drove tractors to their nations' capitals in protest over proposed nitrogen emission regulations. The new rules would curtail the efficacy of animal agriculture in parts of the two countries. A European dairy trade association released its report on 2022 dairy trade. The report suggests global dairy exports finished the year, 2.2 percent lower than 2021, the first decline in global trade in the last two decades.

EASTERN EUROPEAN OVERVIEW: Milk production in 2022 exhibited strong growth in such eastern European countries as Poland and the Czech Republic. Seasonally, milk deliveries are growing in eastern Europe. And while milk output growth is anticipated in parts of the region, the war between Ukraine and Russia will weigh heavily on other parts of the region. The deal to keep Black Sea ports open to grain shipments is set to end March 18th, unless Ukraine and Russia agree to an extension.

OCEANIA OVERVIEW: NEW ZEALAND: New Zealand milk production is set to slow down seasonally, ahead of approaching colder conditions. Sources point to a recent ease in the NZ milk price, $8.56/ kgMS, with a range of $8.50 - $8.65/kgMS. Key dairy industry co-ops, to optimize their farmgate milk prices, are moving more milk into skim milk powder and cream products. As such, New Zealand processors are focused on inventory management, aligned with the seasonal peak period that runs through March.

AUSTRALIA: In Australia, recent reports show that the volumes of January's exports for many dairy commodities moved lower as the country continues to struggle with pasture conditions, from early season flooding, in some key milk production areas. For some farmers it could take another six months before milk production returns to typical output levels.

SOUTH AMERICA DAIRY MARKET OVERVIEW: Farmers in the South American sphere are facing a number of climactic challenges, still, but those challenges vary widely from one area to another. Due to a number of factors, the dairy commodity importing pipeline into Brazil, namely of skim milk powder, has slowed down in early 2023 after a busy second half of 2022. Marketers say there are expectations they will look at other global partners if Brazilian importers continue to ebb purchasing. Milk availability may become a concern, though. Feed cost increases, due in part to the inclement weather mentioned above, are expected to keep a bearish pressure for the near-term on milk output.

US NATIONAL RETAIL REPORT: Total conventional dairy ads decreased by 6 percent this week, but the total number of organic ads increased by 33 percent. Shredded cheese in 6-8 ounce packages was the most advertised conventional dairy item, with a weighted average advertised price of $2.68, up 4 cents from last week. Conventional milk ads declined 40 percent this week, while organic milk ads increased by 100 percent. Conventional milk in gallon containers had a weighted average advertised price of $3.48, down 43 cents. Organic milk in gallon containers had a weighted average advertised price of $5.29, down 54 cents. This represents an organic premium of $1.81.

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