Weekly global protein digest: US approves lab-grown chicken, Smithfield Europe acquisition

Analyst Jim Wyckoff shares an update on the USDA reports and global protein news
calendar icon 25 November 2022
clock icon 8 minute read

China’s pork imports remain far below a year ago

China imported 160,000 MT of pork in October, which was up 6.7% from September but down 20.6% from last year. Through the first 10 months of this year, China imported 1.38 MMT of pork, down 58.8% from the same period last year.

FDA approves lab-grown chicken for the first time

The move approves lab-grown products from startup Upside Foods for human consumption. If Upside gets USDA approval next, the company said it could start pumping out 50,000 pounds of “no-kill” meat products every year. Upside has garnered over $600 million in funding from names like Bill Gates and meat company Tyson. Meanwhile, Beyond Meat announced it would lay off 19% of staff last month, and retail sales in the plant-based meat industry overall have dropped 10% in the past year.

Smithfield Europe announces packaged meats acquisition

Smithfield Europe, a subsidiary of U.S.-based Smithfield Foods, has reached an agreement to acquire Goodies Meat Production SRL, a Romanian producer of private-label packaged meat products for the retail channel.

The company operates a production facility in Ceptura de Jos, Prahova, and employs 320 people. The portfolio of products includes salami, ham, bacon, baloney and other meat specialties.

“The acquisition of Goodies Meat Production is part of Smithfield Europe’s strategic growth plan and complements and strengthens our existing business,” said Luis Cerdan, executive vice president of Smithfield Foods’ European business. “Goodies brings a team of outstanding employees, high-quality products, excellent operating standards, and a platform for growth through expanded production capacity. The combined business will benefit from vertical integration opportunities within our group of companies in Europe.

“We are proud that our culture, the technologies we use and the products we make are valued by an industry leader,” said Gabriel Cîmpeanu and Adrian Neniţă, the Directors of Goodies Meat Production. “We are excited to be part of a group where innovation, responsibility, and operational excellence underpin every product.”

The purchase agreement is subject to approval by the appropriate regulatory authorities in Romania, including the Competition Council.

US lawmakers seek extension of USDA proposed rule on livestock, poultry marketing

A bipartisan group of US senators is asking USDA to extend the comment period on their proposed rule for “Inclusive Competition and Market Integrity Under the Packers and Stockyards Act.” The comment period is set to end Dec. 2 and Sens. Chris Coons (D-Del.) and Roger Wicker (R-Miss.) along with 17 others called on USDA to extend the comment period for 180 days as the rule has “novel regulatory concepts, which would have wide-ranging impacts on the contracting of poultry, cattle and hogs.” An extension would allow for the agency to receive the “most substantive comments possible” from stakeholders and constituents. The lawmakers said the proposed rule is in effect linked to a proposed rule on poultry grower contracting and tournaments and a yet-to-be released plan to clarify the scope of the Packers and Stockyards Act. Given the linkage of all three regulatory actions, the lawmakers said the lengthy comment period extension is needed so that those affected can “consider USDA’s competition agenda in its entirety.”

Bullish US cattle on feed report

Last Friday’s USDA cattle on feed report data is supportive for cattle futures as the Nov. 1 feedlot inventory declined 2.0% and placements fell 6.1%, both greater than expected. October marketings rose 0.6% from year-ago, which was slightly less than expected but definitely not bearish.

Weekly USDA dairy report

CME GROUP CASH MARKETS (11/18) BUTTER: Grade AA closed at $2.8100. The weekly average for Grade AA is $2.9145 (+0.0380). CHEESE: Barrels closed at $1.9275 and 40# blocks at $2.2325. The weekly average for barrels is $2.0090 (-0.0075) and blocks, $2.2260 (+0.1350). NONFAT DRY MILK: Grade A closed at $1.4275. The weekly average for Grade A is $1.4405 (+0.0435). DRY WHEY: Extra grade dry whey closed at $0.4400. The weekly average for dry whey is $0.4400 (+0.0010).

BUTTER HIGHLIGHTS: In the Central and West regions, cream is becoming more available and butter makers are running busier production schedules. Contacts in these regions say cream multiples are edging lower, though some in the Central region suggest cream availability may tighten following next week’s holiday. In the East, butter makers are utilizing volumes of cream to make more butter than they have in previous years. Demand for butter is steady in the Central region. Demand for retail butter is strong in the Northeast, while food service demand is unchanged. Some contacts in the West say retail sales are trending higher as grocers are purchasing for end of year holidays. Butter inventories are down compared to previous years and some Northeast stakeholders report they are purchasing loads from other regions to meet current market needs. In the West, butter is available, but spot purchasers report inventories are tightening. Central region butter makers say butter is available but loads for sale are all newer production. Bulk butter overages range from 5 to 18 cents above market, across all regions.

CHEESE HIGHLIGHTS: In the Northeast and West, increasing milk production is enabling cheesemakers to run busy production schedules, though some cite labor shortages and supply chain delays as limiting their ability to operate full production schedules. Contacts in the Midwest say they are running nearly full or full production schedules, amid steady milk production. Some contacts in the region say they expect milk availability and pricing will remain somewhat stable throughout Thanksgiving week. Demand for cheese is generally steady in the Midwest. Food service demand is strengthening in the Northeast and West, though this is contrasted by softening retail demand in these regions. In the Northeast and West, export sales of cheese are strong. Some Western contacts say favorable prices for domestically produced cheese are contributing to current demand. Contacts in the Northeast and West say spot cheese inventories are tightening. Meanwhile in the Midwest, loads of process cheese have become available in recent weeks.

FLUID MILK: With a few exceptions, milk production is steady to higher across the country. In the East, last week’s tropical storm did not hit land as strongly as anticipated, and dairy processing was not interrupted. Class I demand from retailers is strong ahead of Thanksgiving, with eggnog and flavored milk bolstering demand. However, school milk bottling orders have declined in anticipation of school holidays. Despite wintry weather in the Midwest, producers and processors have reported an increase in milk and milkfat. Some cheesemaking contacts noted a 7-day work schedule due to slight discounts reported for spot milk loads. Prices for spot milk loads range from 50 cents below to a dollar above Class III. Condensed skim sales are steady in the West, with tight spot availability. Cream is accessible for end users. Some butter makers are churning as much as possible ahead of end-of-year holidays. Demand from ice cream processors is down for the season. Cream multiples for all classes are 1.32-1.40 in the East, 1.19-1.32 in the Midwest, and 1.05-1.30 in the West.

DRY PRODUCTS: Low/medium heat nonfat dry milk (NDM) spot prices in the East and Central regions are steady to weaker in the range pricing series, while displaying weakness throughout the range in the West region. Trading in the West is fairly active, while buyers’ purchases in the East/Central are based solely on immediate needs. High heat prices in the East and Central are unchanged, but prices firmed in the West. This week, dry buttermilk prices adjusted lower throughout all regions. Spot loads of dry buttermilk are available as production outpaces demand. Dry whey prices are lower to higher in the Central and West. Prices firmed in the Northeast as availability tightened around specific brands. Dry whey production is steady on active cheese making. Dry whole milk prices are mixed, with expectations of increased spot market availability near year’s end. Prices for whey protein concentrate 34% moved lower this week. Weaker prices for nonfat dry milk are competing for end user protein needs. Lactose prices are steady to lower in a quiet market. Prices for rennet casein are steady to lower, while acid casein markets are steady to higher.

ORGANIC DAIRY MARKET NEWS: The Agricultural Marketing Service (AMS) reported September 2022 estimated fluid product sales. The U.S. sale of total organic milk products was 238 million pounds, up 1.1 percent from September 2021, but down 1.2 percent year-to-date. Organic whole milk sales, 113 million pounds, were up 6.4 percent compared to a year earlier and up 2.7 percent year -to-date. Reduced fat milk (2%) sales were 79 million pounds, down 1.5 percent from the previous year and down 3.1 percent year-to-date. Organic flavored whole milk sales, 1 million pounds, decreased 68.1 percent from the previous year, but increased 0.1 percent year-to-date. This week, organic dairy advertisements soared 125 percent above the previous retail survey's total organic ad number. Meanwhile, organic fluid milk promotions produced 51 percent of the total organic retail ads by commodity, followed by organic butter at 38 percent of total organic ads by commodity. Organic ice cream held 5 percent of total organic ads by commodity as ads increased 210 percent compared to the previous period.

NATIONAL RETAIL REPORT: This week both total conventional dairy ads and organic dairy ads increased. Total organic ads increased by a much higher 125 percent compared to the 7 percent increase for conventional ads. Conventional ice cream in 48 to 64-ounce containers was again the most advertised dairy product, appearing in 27 percent more ads this week. Conventional butter appeared in 14 percent more ads and has a weighted average advertised price of $3.91 for a 1- pound package, down 31 cents from last week. Conventional cheese in 8-ounce block packages appeared in 63 percent more ads, and conventional cheese in 8-ounce shred packages also appeared in 44 percent more ads. Conventional yogurt ads decreased 46 percent and organic yogurt ads decreased 62 percent. Milk ads reversed trends from last week with conventional milk ads decreasing 57 percent but organic milk ads increasing 50 percent this week.

© 2000 - 2022 - Global Ag Media. All Rights Reserved | No part of this site may be reproduced without permission.