Weekly global protein digest: USDA reports on livestock production in India, S. Korea, Thailand & Turkey

Analyst Jim Wyckoff shares protein news from around the globe
calendar icon 15 September 2023
clock icon 13 minute read

Weekly US export sales for beef, pork

Beef: Net sales of 6,200 MT for 2023 were down 48 percent from the previous week and 56 percent from the prior 4-week average. Increases primarily for China (2,000 MT, including decreases of 100 MT), Mexico (1,300 MT, including decreases of 400 MT), Japan (600 MT, including decreases of 1,000 MT), Hong Kong (400 MT, including decreases of 100 MT), and Guatemala (400 MT), were offset by reductions for the United Kingdom (100 MT). Exports of 13,200 MT were down 10 percent from the previous week and 15 percent from the prior 4-week average. The destinations were primarily to South Korea (3,700 MT), China (2,600 MT), Japan (2,100 MT), Mexico (1,000 MT), and Hong Kong (900 MT).

Pork: Net sales of 23,100 MT for 2023 were down 12 percent from the previous week and 26 percent from the prior 4-week average. Increases primarily for Mexico (6,300 MT, including decreases of 200 MT), Canada (4,500 MT, including decreases of 700 MT), Japan (4,200 MT, including decreases of 200 MT), South Korea (2,100 MT, including decreases of 500 MT), and Colombia (1,500 MT, including decreases of 100 MT), were offset by reductions for Nicaragua (1,400 MT). Exports of 20,700 MT were down 32 percent from the previous week and 28 percent from the prior 4-week average. The destinations were primarily to Mexico (7,200 MT), China (3,200 MT), Japan (2,400 MT), South Korea (2,200 MT), and Canada (1,800 MT).

USDA lowers meat production and exports

USDA cut its beef production forecast by 40 million lbs. from last month amid a slower pace of marketings during the third quarter. Beef production is now expected to drop 1.35 billion lbs. (4.8%) from last year. USDA lowered its 2023 beef export forecast 160 million lbs. from last month, with shipments now expected to fall 13.8% from year-ago. Those changes resulted in no adjustment to the 2023 average cash steer price, which is projected at $178.50, unchanged from last month but up $34.10 from last year.

For 2024, USDA made no change to its beef production projection, but reduced exports. Beef production is forecast to 6.6% next year, with exports likely to drop another 5.0%.

USDA cut its pork production forecast 105 million lbs. from last month amid “a lower expected pace of slaughter and lighter carcass weights,” though it is still expected to rise 0.6% from last year. The pork export forecast was cut 125 million lbs., though shipments are still expected to rise 7.2% from last year. USDA lowered its 2023 average cash hog price $2.30 from last month to $59.90, which would be down $11.31 from last year.

For 2024, USDA made no change to its pork production projection, but reduced exports. Pork production is expected to rise 0.6% from this year, while exports are still anticipated to rebound 1.5% from this year’s level.

USDA reports on Australia beef market

USDA says Australian beef supply is forecast to recover in 2024 to the point of reaching the sixth highest production on record. The 2024 forecast is after a significant turning point in 2023, where production is estimated to grow by 16 percent from the lows of 2021 and 2022 not seen for 25 years because of a strong herd rebuild phase restricting cattle supply for processing. Beef exports are forecast to reach the fourth highest on record in 2024 and regain some market share in three of its biggest Asian market destinations. Australian pork production is forecast to increase slightly in 2024 after strong growth in 2023. The rise in pork production is forecast to result in a slight increase in exports but lower than usual imports. Pork imports from the United States are expected to revert to past dominance of in excess of half of overall imports.

USDA reports on Ukraine livestock industry

Ukraine’s cattle inventory is expected to remain on its historical downward trend in 2023 and 2024. Exports of live cattle and beef will remain strong as lower disposable incomes result in decreased domestic demand. The major destination markets for Ukraine's livestock and beef products will remain the same, with North African and Middle Eastern countries being importers of live cattle and China being a major importer of beef. A significant pork price increase that started in 2022 and accelerated in 2023 inspired domestic production as pork imports became expensive for price-sensitive Ukrainian processors. Increased production is expected to nearly compensate for the import drop and remain high in 2024 as pork prices show no sign of decline in 2023. The EU is expected to remain the major exporter of pork to Ukraine. Ukraine is not a major exporter of pork. African Swine Fever is present in various regions making long-term export perspectives unclear.

Environmental groups sue EPA over regulation of large livestock feeding operations

Environmental organizations have taken legal action by filing a lawsuit in the 9th Circuit Court of Appeals in San Francisco, aiming to compel the EPA to increase its oversight of large livestock feeding operations. The lawsuit was initiated after the EPA declined two petitions submitted in 2017, which had called for more stringent regulation of major hog, cattle, and chicken feeding operations in the U.S.

The legal action seeks a reconsideration of the proposed changes outlined in the petitions, including the types of farms subject to regulations and which discharges are exempt from oversight.

In response to the rejected petitions, the EPA indicated that it would conduct an assessment of its existing programs governing these operations and determine if revisions were necessary. Additionally, the agency pledged to create a panel consisting of representatives from agriculture, environmental groups, and researchers to further investigate the matter over the next 12 to 18 months.

USDA: India Livestock and Products Annual

FAS New Delhi (Post) in market year 2024 (January-December) forecasts India’s national cattle herd growing to 307.6 million head, up by some 135 thousand head from the U.S. Department of Agriculture (USDA) official 2023 estimate of 307.5 million head. Post attributes the slight increase in cattle herd numbers to the calf crop growing in 2024 to 70.4 million head, up by 300 thousand head compared to the USDA official 2023 estimate of 70.1 million head. Post forecast India’s 2024 meat production (i.e., carabeef, derived from Asian domestic water buffaloes) at 4.55 million metric tons (MMT) on a carcass-weight-equivalent (CWE) basis, up over two percent compared to the USDA official 2023 production estimate figure of 4.44 MT. All data reported herein is in CWE. The marginal increase from the USDA official figure is due to a foreseen uptick in 2024 slaughter numbers. FAS New Delhi forecasts India’s 2024 carabeef exports at 1.50 MMT, up two percent compared to the USDA official 2023 estimate of 1.47 MMT.

USDA: South Korea Poultry and Products Annual

Post forecasts a rebound in Korean poultry production for 2024, surmounting 2023 supply challenges to meet rising consumer demand for chicken meat. Post has revised the 2023 production estimate down to 930,000 MT and forecasts 2024 production will increase to 945,000 MT. Since lifting COVID-19 restrictions in late 2022, Korea’s chicken demand has increased as social activities resumed and restaurants reopened. However, domestic chicken production in 2023 was hampered by decreased parental stock broiler productivity and high production costs. At the end of 2023, Korea is expected to end its recent import policy of increasing chicken tariff rate quotas to fill the chicken supply shortfall and stabilize food prices.

USDA: Thailand Poultry and Products Annual

FAS Bangkok estimates Thailand’s chicken meat production to marginally increase in 2023 amid a surge in exports, a slow recovery in the tourism sector and high feed costs. Post forecasts chicken meat production will further slow down in 2024 in line with chicken meat exports and a slow recovery in domestic consumption.

USDA: Turkey Livestock and Products Annual

Turkey’s cattle inventories are forecast to contract in 2024 for the fourth straight year as farmers continue marketing their underweight animals ahead of schedule to minimize losses from rising input costs, especially feed. Higher slaughter numbers are projected to push beef production upward to nearly 1.7 million metric tons in 2024. However, even with this increase, beef demand will continue to outpace production, putting upward pressure on retail beef prices. Meantime, a kilogram of ground beef in August of this year is selling for 300 Turkish Lira per kilogram ($11.35/kg), more than 2.5 times than last year. To alleviate high beef prices, the Turkish government has temporarily authorized imports of feeder cattle and beef. However, these interventions have not yet provided meaningful relief to consumers.

USDA finalizes rule for Milk Loss Program (MLP) to compensate dairy producers affected by disasters

USDA has formally established the Milk Loss Program (MLP), designed to provide compensation to dairy producers who suffered losses due to the dumping or removal of milk without compensation resulting from disaster events. These events include droughts, wildfires, hurricanes, floods, derechos, excessive heat, winter storms, freeze (including a polar vortex), and smoke exposure that occurred during the years 2020, 2021, and 2022. Recent legislation has added tornadoes in 2022 as an eligible disaster event.

The rule, set to be published in the Federal Register on Sept. 11, also marks the beginning of the signup period, which is scheduled to conclude on Oct. 16.

The funding for MLP is derived from the fiscal year (FY) 2021 appropriations package, providing $10 billion for crop and milk losses in the calendar years 2020 and 2021. The Disaster Relief Supplemental Appropriations Act has allocated an additional $3.7 billion for disaster assistance related to similar crop losses in calendar year 2022.

Under MLP, the base period is defined as the first full month of milk production before the milk's dumping or removal due to a qualifying event. Dairy producers can file claims for each month in which milk was lost due to the disaster event. Producers affected in multiple months must submit separate applications for each period of loss.

For the years 2020, 2021, and 2022, producers have a 30-day window each year to file claims for losses. Payments will be calculated at 90% of the fair market value of normal marketings for underserved farmers and ranchers and at 75% for all other affected producers, minus any amounts previously received for milk marketed during the application's prior coverage period and any non-refundable payments received from a milk handler.

Payments will be disbursed as applications are received and approved by USDA. The total expected payouts under MLP have not been disclosed by USDA at this time.

The National Milk Producers Federation praised USDA for addressing overdue disaster relief for farmers. But the trade group urged Congress and USDA to be better prepared for future disasters. “On top of the challenges created by wild price gyrations and the COVID-19 pandemic, dairy farmers since 2020 have also faced an inadequate federal mechanism for addressing unforeseen weather catastrophes, further straining finances at a time when strains have been hard to bear,” said NMPF President Jim Mulhern. “NMPF never accepted that situation, and it’s gratifying to see a compensation plan in place from USDA that will address this backlog of disaster assistance.”

Weekly USDA milk report

CME GROUP CASH MARKETS (9/8) BUTTER: Grade AA closed at $2.6800. The weekly average for Grade AA is $2.7100 (+0.0670). CHEESE: Barrels closed at $1.8275 and 40# blocks at $1.9250. The weekly average for barrels is $1.8575 (+0.0075) and blocks, 1.9500 (-0.0245). NONFAT DRY MILK: Grade A closed at $1.1000. The weekly average for Grade A is $1.0869 (-0.0026). DRY WHEY: Extra grade dry whey closed at $0.3025. The weekly average for dry whey is $0.3131 (+0.0201).

BUTTER HIGHLIGHTS: Throughout the country, cream availability picked up following the holiday weekend. However, in the Central and West regions, contacts say volumes quickly tightened as the week progressed. Some butter makers in the East report being able to operate strong production schedules this week, due to the extra loads of cream available. Others report labor issues and other obstacles have kept them from utilizing additional cream volumes. In the Central region, churning was more active this week, though some anticipate butter making to slow in the coming weeks. Western butter production is mixed, as some butter makers relay steady churning, while others say limited cream availability is preventing them from operating full schedules. Demand for butter from retail and food service customers is steady to strong in the East and West, and strengthening in the Central region.

CHEESE HIGHLIGHTS: In the Northeast, Class I operations are pulling on milk supplies, reducing availability for cheesemakers. Contacts in the Midwest note declining milk availability and report spot trading at $1 over Class III and higher. Meanwhile in the West, cheesemakers say milk supplies are balanced with strong to steady production schedules. Northeastern cheese production has been hampered by persistent labor issues and pauses in manufacturing over the holiday weekend. Midwestern cheese output has declined from the winter/spring months when ample milk volumes enabled cheesemakers to operate busy schedules. Some regional plant managers relay more downtime now, while others are paying higher prices for spot milk to maintain strong cheese output. Cheesemakers in the Midwest, particularly mozzarella and pizza cheesemakers, are growing more concerned with their ability to meet market demands. Restaurant demand for cheese is steady in the Northeast, while retail sales are strong. In the West, contacts report strong to steady retail and food service cheese demand.

FLUID MILK: Farm milk output is variant in the West and East, while generally moving lower in the Central region. Class I facilities’ intakes continue to spread the fluid milk pool for all types of processors as schools have begun throughout the regions. Cheesemakers in the Upper Midwest reported spot milk prices from $1 to $2.50 over Class III. Labor Day downtime at the plant level did not have milk handlers offering more spot milk loads, as a number of cheesemaking contacts in the region said offers were quiet again this week. Condensed skim availability has followed general milk output and is noted as tight to tightening in most areas. Cream availability was affected by the Monday holiday, though, as butter makers reported taking on some extra spots. That said, butter plant contacts relayed cream availability was already beginning to tighten up by midweek. F.O.B. cream multiples are 1.32- 1.38 in the East, 1.23-1.34 in the Midwest, and 1.18-1.38 in the West.

DRY PRODUCTS: Low/medium heat nonfat dry milk prices decreased in the Central/East regions, while prices were mixed in the West. Despite condensed skim availability slipping lower, end users are not necessarily clamoring for extra loads as market tones remain uncertain. Dry buttermilk prices edged higher in the Central/East, while holding steady in the West. Condensed buttermilk has grown a little more available in the Central region, but generally lower milk volumes have slowed drying in the West. Dry whole milk spot market activity was quiet, as prices went unchanged. Dry whey prices moved higher in the Central and Eastern regions, while prices moved lower in the West. Milk availability for cheesemakers has lightened up, but whey market tones remain uncertain mid- to long-term, based on uncertainty in export markets. Whey protein concentrate 34% prices were mixed, but contacts suggest a recent increase in domestic customer interests. Lactose prices were also mixed, as processors are offering prices near the low ends of the range to entice international customers. Acid prices shifted lower on quiet demand, while rennet casein prices were steady.

ORGANIC DAIRY MARKET NEWS: With the aid of funding received through the USDA Partnerships for Climate-Smart Commodities, a nationwide organic coop has announced this week that they are doubling the size of their carbon insetting program. The coop's program is using strategies to increase carbon sequestration. The United States Geological Survey defines carbon sequestration as "the process of capturing and storing atmospheric carbon dioxide." Following the previous holiday week, the total number of organic dairy advertisements decreased by 24 percent. Of these advertisements, the largest percentage comes from organic cheese at 44 percent. In this week's survey, organic ads representing butter, cheese, milk, sour cream, and yogurt were present. Organic butter ads were the least advertised, appearing in 2 percent of the organic ads. This was followed by organic sour cream, which appeared in 4 percent of the total organic ads for the week.

NATIONAL RETAIL REPORT: Following the recent holiday week, the total number of organic dairy advertisements decreased by 24 percent. Of these advertisements, the largest percentage comes from organic cheese at 44 percent. In this week's survey, organic ads representing butter, cheese, milk, sour cream, and yogurt were present. Organic butter ads were the least advertised, appearing in 2 percent of the organic ads. This was followed by organic sour cream, which appeared in 4 percent of the total organic ads for the week.

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