Weekly global protein digest: watch India for food inflation, HPAI, ASF, China's pork output up

Analyst Jim Wyckoff shares an update on global protein news
calendar icon 22 April 2023
clock icon 19 minute read

Weekly USDA beef, pork export sales

Beef: US net sales of 19,100 MT for 2023 were up noticeably from the previous week and up 47 percent from the prior 4-week average. Increases were primarily for South Korea (5,500 MT, including decreases of 400 MT), Japan (4,200 MT, including decreases of 300 MT), Mexico (2,800 MT), Taiwan (2,200 MT, including decreases of 100 MT), and China (2,100 MT, including decreases of 100 MT). Exports of 16,000 MT were up 1 percent from the previous week and from the prior 4-week average. The destinations were primarily to South Korea (4,500 MT), Japan (3,700 MT), China (2,400 MT), Mexico (1,400 MT), and Taiwan (1,200 MT).

Pork: US net sales of 36,100 MT for 2023 were up 33 percent from the previous week, but down 3 percent from the prior 4-week average. Increases primarily for Mexico (13,100 MT, including decreases of 200 MT), Japan (4,600 MT, including decreases of 300 MT), Australia (4,200 MT), South Korea (3,500 MT, including decreases of 300 MT), and Colombia (3,000 MT), were offset by reductions for Nicaragua (400 MT). Exports of 34,100 MT were down 8 percent from the previous week, but up 4 percent from the prior 4-week average. The destinations were primarily to Mexico (13,600 MT), China (5,500 MT), Japan (3,500 MT), South Korea (3,300 MT), and Canada

For food price inflation clues, watch India

India’s monsoons are an essential economic indicator for a country that relies on rainfall to feed 1.4 billion people. A poor season can topple governments and threaten global food security. U.S. and Australian forecasts now point to an increased probability of an El Niño episode in 2023. El Niño is a periodic weather event that drives monsoon clouds away from India — and has historically hurt food production. A subpar monsoon is an underappreciated threat to global food security and inflation, writes the Wall Street Journal.

USDA official: Agency focused on eradicating bird flu, preventing ASF from reaching US

USDA Undersecretary for Marketing and Regulatory Programs Jenny Lester Moffitt told lawmakers USDA remains focused on eradication to tackle the ongoing Highly Pathogenic Avian Influenza (HPAI) outbreak. “At this stage of the outbreak, continuing our current strategy of eradication or ‘stamping out’ HPAI is our best and most effective option,” she said during a House Agriculture Subcommittee on Livestock, Dairy and Poultry hearing Tuesday (April 18). Link to video of hearing and Moffitt testimony.

Moffitt said USDA has devoted $1.3 billion to quell a 14-month-old outbreak of HPAI and to keep African Swine Fever (ASF) out of the country. A record 58.7 million birds, mostly egg-laying hens and turkeys being raised for meat, have died of bird flu since outbreaks began in February 2022, helping cause a surge in egg prices.

She noted USDA’s Agricultural Research Service (ARS) continues to work on developing a vaccine effective against the currently circulating strains of the virus. “This work is ongoing, and it will still be a while before a vaccine could be commercially available and easily applied. Even then, there would be many factors we would weigh before authorizing its use, especially with respect to the likely trade impacts of a vaccination campaign,” she said, adding that discussions with stakeholders and trade partners on the issue are ongoing. It would be 18-24 months before a vaccine would be available and there are many factors to weigh about using it, Moffitt stressed.

Key quote: “At this stage of the outbreak, continuing our current strategy of eradication or ‘stamping out’ HPAI is our best and most effective option,” said Moffitt in testimony at a House Agriculture subcommittee hearing. “We continue to stress more than anything else the importance of strong biosecurity to every producer.”

Regionalization agreements have proven to be an effective tool for mitigating the trade impacts of the current outbreak, Moffitt noted. Around 15% of U.S. poultry meat is exported. The issue: U.S. trading partners would have to agree to accept meat from vaccinated birds and the U.S. would have to prove the meat was free of the virus. Problem: HPAI tests currently do not easily distinguish between infected and vaccinated birds, so a new protocol may be needed.

As for ASF, efforts by USDA and other federal agencies including Customs and Border Protection (CBP) to prevent the disease from spreading from the Caribbean to herds in the mainland U.S. have been successful, Moffitt revealed. “We will continue to work with animal health officials in the region in further developing those plans and do everything we can to keep this high consequence disease out of the country,” she stated.

USDA annual livestock slaughter summary: Record beef production in 2022

Total red meat production for the United States totaled 55.6 billion pounds in 2022, 1 percent lower than the previous year. Red meat includes beef, veal, pork, and lamb and mutton. Red meat production in commercial plants totaled 55.5 billion pounds. On-farm slaughter totaled 93.3 million pounds.

Beef production totaled 28.4 billion pounds, up 1 percent from the previous year. Veal production totaled 58.7 million pounds, up 1 percent from last year. Pork production, at 27.0 billion pounds, was 2 percent below the previous year. Lamb and mutton production totaled 136.2 million pounds, down 5 percent from 2021.

Commercial cattle slaughter during 2022 totaled 34.3 million head, up 1 percent from 2021, with federal inspection comprising 98.1 percent of the total. The average live weight was 1,369 pounds, down 2 pounds from a year ago. Steers comprised 47.0 percent of the total federally inspected cattle slaughter, heifers 30.6 percent, dairy cows 9.1 percent, other cows 11.7 percent, and bulls 1.7 percent. Commercial calf slaughter totaled 369,200 head, 6 percent lower than a year ago with 98.1 percent under federal inspection. The average live weight was 253 pounds, up 17 pounds from a year earlier.

Commercial hog slaughter totaled 125 million head, 3 percent lower than 2021 with 99.5 percent of the hogs slaughtered under federal inspection. The average live weight was up 1 pound from last year, at 289 pounds. Barrows and gilts comprised 97.3 percent of the total federally inspected hog slaughter.

Commercial sheep and lamb slaughter, at 2.07 million head, was down 8 percent from the previous year with federal inspection comprising 84.9 percent of the total. The average live weight was up 4 pounds from 2021 at 126 pounds. Lambs and yearlings comprised 93.7 percent of the total federally inspected sheep slaughter.

There were 946 plants slaughtering under federal inspection on January 1, 2023 compared with 905 last year. Of these, 776 plants slaughtered at least one head of cattle during 2022 with the 12 largest plants slaughtering 49 percent of the total cattle killed. Hogs were slaughtered at 659 plants, with the 14 largest plants accounting for 59 percent of the total. For calves, 3 of the 160 plants accounted for 54 percent of the total and 1 of the 553 plants that slaughtered sheep or lambs in 2022 comprised 14 percent of the total head.

Iowa, Nebraska, Kansas, and Texas accounted for 50 percent of the United States commercial red meat production in 2022, unchanged from 2021.

China pork imports increased in March

China imported 150,000 MT of pork in March, up 11.2% from last year. During the first three months of this year, China imported 530,000 MT of pork, up 27.7% from the same period last year.

China’s Q1 pork output hits five-year high

China’s pork output in the first quarter rose 1.9% from year-ago to 15.9 MMT, the highest quarterly production since the fourth quarter of 2017. A spike in infections of African swine fever earlier this year forced many farms in the world's top pork producer to cull pigs, pushing up slaughter numbers. China slaughtered 198.99 million hogs in the quarter, up 1.7% from the same period last year. China’s pig herd, though 2% higher than the same period a year earlier, contracted from the prior quarter’s 452.56 million head to 430.94 million.

Dairy and the new farm bill focus of listening session in New York

Dairy producers do not just increase milk production, but they also want increases in their farm bill support programs. During a House Ag listening session in New York held Friday, April 14, participants urged:

  • Expanded coverage options in the Dairy Margin Coverage (DMC) program
  • Updated supplemental feed cost payments and make them permanent rather than let them expire as planned this year.
  • DMC coverage levels should be expanded to $12 per cwt. to help address the impacts of inflation. 
  • Suggestions: Expand coverage up to 10 million pounds of production, up from the current 5 million pounds.

As usual, stakeholders did not offer any cost estimates of their farm programs suggestions.

Livestock, Dairy, and Poultry Outlook: April 2023 Chicken Ahead of Beef and Pork in 2022

Global Exports In global exports of beef and chicken in 2022, the United States was second only to Brazil. The European Union (EU) topped pork exports, followed by the United States and Brazil. The EU was also a major exporter of chicken. The chart below shows 2022 exports for the major traders, with breakouts for the top five exporters of beef, chicken, and pork. For pork, the top five countries made up 92 percent of all exports by volume. For chicken, the share was 82 percent, and for beef, 66 percent of all exports in 2022 were from the top five exporting countries.

Beef/Cattle: Based on recent slaughter data, the first-quarter beef production forecast is lowered. However, a temporal shift of higher forecast fed cattle slaughter in the second and third quarters more than offset a decline in the fourth quarter. This results in a net increase of the annual beef production outlook of 110 million pounds from last month to 26.8 billion pounds. Cattle prices are raised on firm demand. The trade forecast is raised for both imports and exports.

Sheep/Lamb: Total lamb and mutton imports for the first 2 months of 2023 were lower than expected. The first-quarter 2023 import forecast has been lowered from 97 to 80 million pounds. Second-quarter import forecasts were also lowered. Dairy: The milk production forecast for 2023 is raised from last month based on a larger expected dairy herd size throughout the year. With higher average prices expected for cheese and dry whey, the Class III milk price forecast for 2023 has been raised to $18.25 per hundredweight (cwt), $0.70 higher than last month’s forecast. With the lower projected price of nonfat dry milk more than offsetting higher projected price of butter, the Class IV price forecast has been lowered to $18.10 per cwt, down $0.20 from the previous month’s projection. The all-milk price forecast for 2023 has been raised to $20.65 per cwt, $0.20 higher than last month’s forecast.

Pork/Hogs: Using information from the March Quarterly Hogs and Pigs report, the 2023 pork production forecast was reduced about 50 million pounds to 27.36 billion pounds, up 1.4 percent from total production last year. U.S. pork exports in February were 504 million pounds, almost 4 percent above same-period shipments last year. Expectations for continued strength of shipments to Western Hemisphere nations prompted a 30-million-pound increase of the first-quarter export forecast to 1.64 billion pounds, 6.1 percent higher than a year ago. Exports for 2023 are expected to be about 6.4 billion pounds, about 1 percent above those of 2022.

Poultry/Eggs: Broiler production was adjusted up in the first half of 2023 on recent data. Export forecasts for both broilers and turkeys were increased in 2023, while import forecasts were decreased sharply due to the discovery of HPAI in commercial flocks in Chile. Broiler prices were adjusted up on recent trends. Following current production data and table-egg layer flock indicators, the 2023 table-egg production forecast is revised downward. The average wholesale egg price (New York, Grade A, large) forecast is adjusted to reflect first-quarter reported data. Eggs and egg product import and export forecasts are revised downward. Projected turkey production in 2023 is unchanged. Projected turkey prices are adjusted up on recent price strength.

Dairy Forecasts for 2023

US milk production for 2023 is projected at 228.7 billion pounds, 0.2 billion higher than last month’s forecast. Milk cows are projected to average 9.400 million head, 10,000 higher than last month’s forecast. The annual milk-per-cow projection decreased 10 pounds from last month at an average 24,335 pounds per head. Dairy export projections for 2023 are adjusted lower on increased price competition and weaker expected international demand for U.S. dairy products. The forecast for 2023 dairy exports on a milk[1]equivalent milk-fat basis has been adjusted to 12.2 billion pounds, 0.8 billion lower than last month’s forecast.

On a milk-equivalent skim-solids basis, the 2023 dairy export forecast has been adjusted to 50.7 billion pounds, 1.2 billion lower than last month’s projection. Dairy import projections for 2023 are adjusted higher. On a milk-fat basis, projections for 2023 have been increased to 7.7 billion pounds (+0.3 billion). On a skim-solids basis, imports have been increased to 6.9 billion pounds (+0.4 billion). Import volumes of butter, cheese, casein, and milk protein concentrates are expected to remain strong throughout 2023. The domestic use forecasts for dairy products have been raised for 2023.

The projections for 2023 domestic use are raised from the previous month’s forecast to 222.8 billion pounds (+1.2 billion) on a milk-fat basis and 183.3 billion pounds (+1.8 billion) on a skim-solids basis. Domestic demand for dairy products is projected to continue strong throughout the year, which is expected to support domestic wholesale prices for cheese, butter, and dry whey. For 2023, the price forecast for Cheddar cheese has been adjusted up 4.5 cents from last month’s forecast to $1.855 per pound.

The wholesale prices of butter and dry whey were also adjusted higher than last month’s forecast, to $2.420 (+8.5 cents), and $0.425 (+3.5 cents) per pound, respectively. However, the price for NDM was adjusted down from last month’s forecast at $1.165 per pound (-6.5 cents) on weaker expected demand. With higher average prices expected for cheese and dry whey, the Class III milk price forecast for 2023 has been raised to $18.25 per cwt, $0.70 higher than last month’s forecast. With lower projected prices of NDM more than offsetting higher projected prices for butter, the Class IV price forecast has been lowered to $18.10 per cwt, down $0.20 from the previous month’s projection. The all-milk price forecast for 2023 has been raised to $20.65 per cwt, $0.20 higher than last month’s forecast.

Weekly USDA dairy report

CME GROUP CASH MARKETS (4/14) BUTTER: Grade AA closed at $2.3275. The weekly average for Grade AA is $2.3495 (+0.0214). CHEESE: Barrels closed at $1.5125 and 40# blocks at $1.7750. The weekly average for barrels is $1.5715 (-0.1941) and blocks, $1.7990 (-0.0154). NONFAT DRY MILK: Grade A closed at $1.1300. The weekly average for Grade A is $1.1410 (-0.0028). DRY WHEY: Extra grade dry whey closed at $0.3625. The weekly average for dry whey is $0.3675 (-0.0513).

BUTTER HIGHLIGHTS: Cream volumes are available throughout all regions, and contacts in the West say supplies are outpacing butter production needs. Some butter makers in the East are churning seven days a week, and others in the Central region report operating throughout the recent holiday weekend. In the West, some butter makers are running at capacity, though others say they are operating reduced schedules due to the rebuilding or maintenance of churns. Demand for butter is steady from retail and food service customers. In the East, stakeholders say retail demand has slowed following the spring holidays, while food service sales are steady to stronger. Contacts in the central region say both retail and food service sales of butter have been somewhat quiet in April. Bulk butter inventories are available in the Central region. Butter inventories vary by manufacturer in the East, as some are looking to rebuild depleted stocks. In the West, some stakeholders say salted butter inventories are heavier than unsalted inventories. Across all regions, bulk butter overages range from 0 to 10.75 cents over market value.

CHEESE HIGHLIGHTS: Milk is available for cheesemaking in the Midwest, and contacts relay volumes of milk continue to trade for as little as $11 under Class III. In the West, cheesemakers are operating strong production schedules as they work through ample supplies of milk. Milk volumes are trending higher in the Northeast, and cheesemakers are operating stronger production schedules. Some plant managers in the region report having to operate below capacity due to labor shortages. Retail demand has softened a bit in the Northeast, while food service demand is strengthening. Stakeholders in the Midwest relay health demand, and some say orders are outpacing production. In the West, demand for cheese is strong from retail and food service customers, though export sales are, reportedly, mixed. Loads of cheese are available for spot purchasing in the West, though some cheesemakers say inventories are sold out through April.

FLUID MILK: The Dairy Market News staff and their myriad contacts are saddened to hear of the fire that occurred at a dairy operation in Texas, where an employee was injured, and thousands of dairy cattle were lost. Farm level milk output is steady to growing across most of the country. In the Northeast and Mid-Atlantic states spring flush conditions are progressing. There is ample fluid milk, condensed skim, and cream available. Field work is beginning in several regions. Some bottling orders have been affected by school closures for spring break. In the Midwest, milk supplies are very strong. The spot milk price range continues to be as low as $11 to $4 under Class III. Production of certain soft serve mixes and frozen desserts is steady at the moment, and Class II multiples remained steady in all regions. Contacts have shared that they expect frozen dessert production to pick up in the near term. In the West, milk volumes vary. Persistent flooding continues to impede cow comfort in some areas of California, whereas other locales are seeing strong output. In Arizona, Utah, Colorado, and Idaho farm level milk output is steady to stronger. Milk output in New Mexico is level. F.O.B. cream multiples are 1.15-1.30 in the East, 1.17-1.25 in the Midwest, and .95-1.22 in the West.

DRY PRODUCTS: Bearish market tones persist for many of the dairy powder commodities, as prices either slipped lower or were unchanged. Prices for low/medium heat nonfat dry milk moved lower in all regions. Dry whole milk prices were unchanged and demand is quiet. The West dry buttermilk price series was unchanged but the mostly series dropped lower. The East dry buttermilk price range also dropped lower. Domestic demand for dry buttermilk remains quiet but inventories are noted to be strong. Domestic demand for dry whey is quiet, and prices for the West and Central regions moved lower at the bottom ends of their ranges. The East dry whey price dropped slightly at both ends of the series. Lactose prices were unchanged and the mostly series slid lower due to overall light domestic and international demand. Lactose production is steady to lighter. Prices for rennet and acid casein were unchanged and trading is quiet. Lower prices for high protein whey protein concentrates have encouraged some processors to place greater production focus on whey protein concentrate 34% (WPC 34%). Domestic demand is soft and there is little export interest. WPC 34% prices slid lower at the top of the range and both ends of the mostly series.


WESTERN EUROPEAN OVERVIEW: Western European milk output has started the year ahead of the two previous years. According to CLAL data made available to USDA, January 2023 EU cows' milk delivered to dairies is estimated at 11,812,000 MT, up 0.8 percent compared to last year. Among some of the top Western EU milk producers, the January 2023 milk deliveries and the percentage changes compared with January 2022 are Germany, 2,772,000 MT, +3.6 percent; France, 2,045,000 MT, -1.5 percent; Netherlands, 1,212,000 MT, +4.6 percent; and Italy, 1,103,000 MT, -2.8 percent. Dairy contacts expect this trend to continue. In Germany, where year to date milk collections remain about 3 percentage points ahead of milk volumes from last year, weekly collections have recently plateaued. Regardless, industry contacts suggest there is plenty of milk available for processing. Inventories of many dairy products are readily available, and there is no urgency from buyers to make additional purchases.

EASTERN EUROPEAN OVERVIEW: Some eastern European countries ended 2022 milk production ahead of 2021 milk volumes. Poland and Belarus had percentage increases of milk production or milk delivered to dairies for the 2022 calendar year when compared to 2021. According to CLAL data made available to USDA, the Eastern European milk producers and their 2022 provisional milk production or milk delivered to dairies and percentage changes compared with 2021 are Poland, 12,771,000 MT, +2.2 percent; and Belarus, 7,869,000 MT, +0.6 percent. And in January 2023, cows' milk delivered to dairies in Poland was 1,086,000 MT, up 0.2 percent from January 2022. In another Eastern European country, Ukraine, the dairy industry has been severely damaged by the Russian invasion. Without stable income, farmers have reduced herds. And processors are facing labor shortages as many people have either sought refuge in surrounding countries or have left their jobs to join their country's defense.

OCEANIA OVERVIEW: NEW ZEALAND: In New Zealand, recent reports show milk production maintained its positive movement during February 2023 compared to one year ago. Dairy farms appear to have enough feed and good pastures to support milk production increases as moisture and temperatures, above the same time last year, continue to drive pasture growth as New Zealand moves closer to colder months. On a different note, the New Zealand milk price continued a downward trajectory. Milk prices fell 8 cents to 8.35/kgMS. Sources point to a lack in China WMP demand as limiting expected higher New Zealand farmgate milk prices. Of note, the New Zealand and China tariff agreement expired last year, affecting WMP and other dairy exports to the country. New Zealand is now also seeing lower volumes purchased by countries in Southeast Asia that may have helped compensate for the decreases in 2023 China demand. AUSTRALIA: In Australia, domestic competition for available milk is gaining momentum as the milk production season nears an end. Substantial declines in milk supply are prompting aggressive supply chain strategies within the dairy industry. Meanwhile, milk plant closings are developing daily as Australia's surplus plant capacity, in the milk processing sector, overshadows the limited milk supply. On the heels of further weakening of milk supplies, sources note one of the nation's giant supermarket chains recently purchased two milk processing facilities to build the security of their long-term milk supply. In view of Australia's milk production problems, competition for available milk supply is likely to continue in the near-term. On another note, sources communicate that plant closures are leading to investment opportunities, with an emphasis on manufacturing dairy products that carry a higher value, which can be sold in the domestic market and traded internationally.

SOUTH AMERICA DAIRY MARKET OVERVIEW: Contacts in the region say the seasonal weather patterns are starting to provide some clearly needed rainfall in areas of the continent. Still, the fall is reportedly warmer than typical. That said, temperatures, albeit warm, are not hot enough to push cow comfort levels to any extremes. Contacts are hopeful the rain, despite the warmth, brings on heartier grazing pastures this fall/winter season. Milk production is still noted as limited, and that is not expected to change much near term due to heat and drought that have persisted for years in some areas of Argentina and Uruguay, specifically. Contacts say that many farmers have had to sell cows into beef markets due to the notable grazing shortness and increasing feed costs year over year. Brazilian importing interests are noted as voracious. Argentina and Uruguay continue to move dairy commodities to their large neighbor. South American contacts, both in and outside of Brazil, say these trends are likely to slow down at some point, but the current consensus is that import increases month to month and year to year are notable. As processors in the MERCOSUR region continue to contend with limited milk availability, prices in the region are not expected to ease anytime soon, even as other global markets are experiencing bearish pressure.

US NATIONAL RETAIL REPORT: Total conventional dairy ads decreased 15 percent. Organic dairy ads went in the opposite direction, increasing 92 percent. Conventional ice cream in 48-64 ounce containers remained the most advertised dairy item this week, despite appearing in 31 percent fewer ads. This item had a weighted average advertised price of $3.97, down 17 cents. Organic ice cream appeared in no ads this week. Milk in gallon containers had an organic premium of $2.98.

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