Weekly global protein digest: Peru, China to discuss beef exports, Wholesale beef continues to strengthen

Livestock analyst Jim Wyckoff reports on global protein news
calendar icon 17 May 2024
clock icon 10 minute read

Weekly global protein digest—5-16-24

Weekly USDA US beef, pork export sales

Beef: Net sales of 15,100 MT for 2024 were up 23 percent from the previous week, but down 11 percent from the prior 4-week average. Increases were primarily for Japan (6,600 MT, including decreases of 300 MT), China (1,900 MT, including decreases of 200 MT), Taiwan (1,700 MT, including decreases of 200 MT), Mexico (1,700 MT, including decreases of 100 MT), and South Korea (1,300 MT, including decreases of 400 MT). Exports of 15,600 MT were down 4 percent from the previous week, but up 2 percent from the prior 4-week average. The destinations were primarily to Japan (4,100 MT), South Korea (3,500 MT), China (2,600 MT), Mexico (1,600 MT), and Taiwan (1,300 MT).

Pork: Net sales of 21,100 MT for 2024--a marketing-year low--were down 14 percent from the previous week and 22 percent from the prior 4-week average. Increases were primarily for Japan (4,900 MT, including decreases of 100 MT), Mexico (4,500 MT, including decreases of 300 MT), South Korea (3,200 MT, including decreases of 1,100 MT), Colombia (1,700 MT, including decreases of 100 MT), and Canada (1,400 MT, including decreases of 700 MT). Exports of 33,200 MT were down 5 percent from the previous week and 13 percent from the prior 4-week average. The destinations were primarily to Mexico (12,700 MT), Japan (5,000 MT), South Korea (4,300 MT), China (2,800 MT), and Colombia (2,400 MT).

Peru, China to discuss beef exports

Peru’s President Dina Boluarte will travel to China in June to meet with her counterpart Xi Jinping, with beef exports to China among the topics likely to be discussed. Peru’s ag minister says beef shipments to China could provide a $3 billion to $4 billion boost to its economy.

Wholesale beef continues to strengthen

Choice boxed beef prices firmed another $2.38 to $306.77 on Wednesday, while Select rose 49 cents. Wholesale beef prices have surged, led by a $10.10 jump in Choice values over the past week, significantly improving packer margins, though they remain slightly negative. Surging wholesale prices may encourage packers to raise cash cattle bids for a fourth straight week.

Chinese exports of processed animal and vegetable fats and oils to the U.S. have surged

Exports of the fats to China reached $201 million in the first three months of this year, compared to $770 million for all of 2023. Soy oil values have fluctuated as traders await tariff news, with Biden this morning announcing increased levies soon, though it is unclear if used cooking oil is included — it is not mentioned at all in the fact sheet. Nor is it mentioned in an accompanying statement issued by the Office of the U.S. Trade Representative outlining the tariff increases.

The move aligns with Biden's broader strategy to differentiate himself from former President Donald Trump by cracking down on China ahead of the 2024 presidential race. This includes quadrupling tariffs on Chinese electric vehicles and increasing levies on other industries, amid tensions over various geopolitical issues.

U.S. soybean processors are concerned that increased imports of used cooking oil are eroding their profits and jeopardizing plans to expand U.S. crushing capacity for biofuels. NOPA plans to discuss the tariff issue with its members and explore other options. But some biofuel producers are making money importing used cooking oil from China. U.S. imports of used cooking oil more than tripled in 2023 from a year earlier, with more than half coming from China, according to the U.S. International Trade Commission. The surge is eroding profits for processors who crush whole soybeans to extract the oil, forcing some plants to slow down.

US government announces new initiatives to tackle issue of highly pathogenic avian influenza (HPAI) in dairy cattle

The measures include providing personal protective equipment (PPE) for workers, with financial support for affected sites that participate in a study by the USDA and the Centers for Disease Control and Prevention (CDC). Financial assistance includes up to $2,000 per month for sites providing PPE, $1,500 for developing biosecurity plans, and $100 for producers using an in-line sampler in their milk systems. Additionally, up to $2,000 per month will be available for safe milk disposal, and up to $10,000 will cover increased veterinarian costs.

USDA will cover the cost of shipping samples for testing to the National Veterinary Services Laboratories (NVSL), with a cap of $50 per shipment for two shipments per month. In total, support could amount to $28,000 per location over the next 120 days. There is also up to $98 million in funds from the Animal and Plant Health Inspection Service (APHIS) earmarked to compensate for lost milk production and to manage the movement of lactating cattle.

On the health services side, HHS will invest an additional $101 million through the CDC and the Food and Drug Administration (FDA) to mitigate the risks of the H5N1 virus and support testing, prevention, and treatment initiatives.

U.S. District Court Judge Robert Shelby rules Pilgrim's Pride must face class action claims

The court accusing the firm of conspiring with other poultry companies to fix prices. This alleged price-fixing resulted in lower payments to chicken growers, affecting their earnings significantly. The case, now certified as a class action by the Eastern District federal court of Oklahoma, involves 24,350 growers. These growers are collectively seeking damages ranging from $761 million to $924 million, according to Judge Shelby's order. This ruling allows the growers to pursue their claims together, potentially impacting how Pilgrim's Pride and other companies in the poultry industry manage their pricing strategies.

China’s meat imports drop in April

China imported 544,000 MT of meat in April, down 5.9% from the previous month and 8.5% less than last year. Through the first four months of this year, China imported 2.22 MMT of meat, down 12.6% from the same period last year.

Weekly USDA dairy report

CME GROUP CASH MARKETS (5/10) BUTTER: Grade AA closed at $2.9900. The weekly average for Grade AA is $3.0215 (+0.0080). CHEESE: Barrels closed at $1.9125 and 40# blocks at $1.9800. The weekly average for barrels is $1.8975 (+0.0490) and blocks $1.9180 (+0.1495). NONFAT DRY MILK: Grade A closed at $1.1525. The weekly average for Grade A is $1.1315 (+0.0110). DRY WHEY: Extra grade dry whey closed at $0.3850. The weekly average for dry whey is $0.3835 (+0.0015).

BUTTER HIGHLIGHTS: Retail butter demand varies from steady to stronger. However, food service demands have less convergence across the nation. In the East, food service demand remains light. In the Midwest, food service demand pushes are noted. In the West, stakeholders say annual mid-May celebrations are contributing to stronger food service demand. Industry participants note cream volumes as comfortable and readily available for butter manufacturers. Butter production schedules are steady. Some butter manufacturers report tight availability of unsalted bulk butter loads for spot buyers. Bulk butter overages range from 2 to 10 cents above market, across all regions.

CHEESE HIGHLIGHTS: Cheesemakers relay steady to stronger production schedules throughout the U.S. Monday's Dairy Products report revealed total U.S. cheese production in March 2024 was 1.23 billion pounds, 7.6 percent above February 2024 and 0.1 percent above March 2023. In the Northeast, contacts share milk production remains strong and cheese plant managers report seasonally steady production schedules. Some contacts have shared they are not seeing as sharp of an increase in demand as current CME pricing could imply. In the Central region, contacts share demand has been stronger from both local and Eastern customers. Contacts indicate spot milk availability is beginning to tighten, as prices were reported at $1.50-under Class III to $0.50 over. Cheese inventories are noted to be comfortable at the moment, but cheesemakers are being cautious so as to not oversell inventory. In the West, cheese manufacturers are anticipating tightening milk volumes, but production schedules are robust for the time being. Cheese stocks are available to accommodate both contractual obligations and spot interests.

FLUID MILK: Milk production is largely steady to stronger across much of the nation. However, in California and Arizona, handlers say the peak of spring flush has passed, and heat levels are negatively impacting milk production. Contacts report demand from Class II, and some Class III, processors is increasing, while demand from the other Classes is steady. Schools in the southern states are reaching the end of their school terms. Milk handlers expect fluid milk may move from Class I processing into the other Classes as more schools close for the year. Farm milk is generally available for most processing needs; however, contacts expect that may shift as summer heat builds. In the Midwest, spot milk prices were reported as high as $.50-over Class III, and as low as $1.50-under Class III. Cream is available for Class II end users across the country as seasonal interest begins. Cream multiples for all Classes are 1.05 – 1.27 in the East, 1.05 – 1.25 in the Midwest, and 1.05 – 1.23 in the West.

DRY PRODUCTS: Low/medium heat nonfat dry milk (NDM) prices are mixed across the nation. Although domestic and export demand is moderate, some handlers suggest demand is starting to pick up. A few contacts expect more NDM to move toward cheese vats as cheese makers report tighter milk supplies. High heat NDM prices are steady to lower as the market stays quiet. Dry buttermilk prices are steady to lower across the country. Manufacturers’ production schedules are mostly focused on meeting contractual obligations which have tightened spot load availability. Dry whole milk prices inched higher as processors report tight inventories to fulfill contracts. Domestic demand for dry whole milk is steady, but contacts share that international prices remain more competitive than U.S. prices. Central and East dry whey prices are unchanged, but prices moved lower in the West. Demand is lackluster. Whey protein concentrate prices are steady to lower, and demand remains light. Lactose prices and production are steady. Domestic demand is present, but interest is stronger within the international market. Prices for both acid and rennet casein are steady this week.

INTERNATIONAL DAIRY MARKET NEWS: WESTERN EUROPE: Western European milk production is nearing the seasonal peak. In some cases, weekly milk volumes have plateaued, signaling the top of the milk production curve is at hand. Last week, a large European dairy cooperative announced the guaranteed price for May will increase by 0.50 euros to 47.25 euros per 100kg. Spot farm milk prices have largely stayed close to the low/mid 40 euros per 100kg. Although slightly below the monthly average pay price, they have increased slightly in the last week. EASTERN EUROPE: Eastern European milk production continues to increase seasonally. Through the month of March, the Baltic States, Czech Republic, Slovakia, Hungary, Romania, and Poland, have all posted increases in milk production compared to the first three months of 2023. AUSTRALIA: According to Dairy Australia, March 2024 milk production, 596.4 million liters, was up 2.8 percent from March 2023. From the start of the season in July 2023 through March 2024 the cumulative volume of milk produced was higher in every state compared to the prior season. NEW ZEALAND: Export data for March 2024 was recently released for New Zealand. This data showed a 3.6 percent increase in value for milk powder, butter, and cheese exported in March 2024 compared to March 2023. Fresh milk and cream export values were 16 percent lower in March 2024, when compared to a year earlier. A financial firm in New Zealand recently commented on global demand for dairy products, stating demand was at or below five year averages through March of 2024 for all products, except butter. SOUTH AMERICA: Dairy Market News contacts from the South America region, and beyond, have shared concerns about the catastrophic flooding in the Brazilian state of Rio Grande do Sul. Rio Grande do Sul is a notable state for dairy production in the country/ region, which has already been on the tighter end of the milk availability spectrum. Processors are likely to be running under capacity in a number of dairy manufacturing sectors near- to mid-term.

NATIONAL RETAIL REPORT: Total conventional dairy advertisements decreased by 2 percent, and total organic dairy ads decreased by 14 percent. Conventional shredded cheese in 6-8 ounce packages was the most advertised dairy product, with a weighted average advertised price of $2.75, up from $2.47 the week prior. Half gallon containers of conventional milk had a weighted average advertised price of $1.60, down from $2.10 last week. Organic half gallons of milk were the most advertised organic dairy item and had a weighted average advertised price of $4.17, up from $3.93 last week.

DAIRY PRODUCTS HIGHLIGHTS (NASS): Butter production was 209 million pounds, 1.4 percent above March 2024, and 5.5 percent above February 2024. American type cheese production totaled 491 million pounds, 2.9 percent below March 2023, but 10.0 percent above February 2024. Total cheese output (excluding cottage cheese) was 1.23 billion pounds, 0.1 percent above March 2023, and 7.6 percent above February 2024. Nonfat dry milk production, for human food, totaled 184 million pounds, 7.9 percent below March 2023, but 24.9 percent above February 2024. Dry whey production, for human food, was 74.5 million pounds, 2.4 percent above March 2023, and 12.4 percent above February 2024. Ice cream, regular hard production, totaled 66.1 million gallons, 1.4 percent above March 2023, and 15.4 percent above February 2024.

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