Weeky protein report: China slaps up to 43% duties on EU dairy in escalating trade dispute

24 December 2025

17 minute read

By: Jim Wyckoff

South America

North America

Asia

USDA quarterly hogs and pigs report leans bearish

USDA Tuesday afternoon reported the US inventory of all hogs and pigs on December 1 was 75.5 million head--up 1 percent from December 1, 2024, and up slightly from September 1, 2025. Breeding inventory, at 5.95 million head, was down 1 percent from last year, but up slightly from the previous quarter. Market hog inventory, at 69.6 million head, was up 1 percent from last year, and up slightly from last quarter. The September-November 2025 pig crop, at 35.0 million head, was up slightly from 2024. Sows farrowing during this period totaled 2.93 million head, up slightly from 2024. 

The sows farrowed during this quarter represented 49 percent of the breeding herd. The average pigs saved per litter was 11.93 for the September-November period, compared to 11.92 last year. Hog producers intend to have 2.89 million sows farrow during the December 2025-February 2026 quarter, up 2 percent from the actual farrowings during the same period one year earlier, but down 1 percent from the same period two years earlier. 

Intended farrowings for March-May 2026, at 2.91 million sows, are up 2 percent from the same period one year earlier, but down slightly from the same period two years earlier. The total number of hogs under contract owned by operations with over 5,000 head, but raised by contractees, accounted for 52 percent of the total United States hog inventory, up 2 percent from the previous year. 

“This is the smallest US Dec 1. breeding herd since 2014,” economist Lee Schulz said during a webinar hosted by the National Pork Board and as reported by Farm Journal’s Pork Daily. “Farrowing intentions are also above year-ago levels at 2.89 million sows for the December 2025 through February 2026 quarter. The outlook is favorable so the incentive is there to farrow more sows, but there is a limit given the size of the breeding herd.” 

The breeding inventory was in line with pre-report expectations, Schulz said. However, some believed the breeding herd could have seen some modest expansion and been larger than a year ago.

USDA reports on livestock imports

USDA reports Import-side shifts: livestock and beef stand out.

• Livestock, dairy, and poultry imports are forecast at $31.7 billion, higher than August but slightly below FY 2025.
• Beef and veal imports are projected at $13.9 billion, up from August and above FY 2025 levels, reflecting continued reliance on foreign supply.
• Cattle and calf imports rise modestly from August but remain well below FY 2025.

Imports from Brazil are forecast to rebound to $7.8 billion, though still short of FY 2025 levels, while Argentina is seen steady near $2 billion.

Brazil antitrust watchdog eyes US meatpacker probe as Trump DOJ investigation expands

CADE seeks clarity from US authorities amid allegations that foreign-owned processors may be manipulating beef prices, raising cross-border competition concerns 

Brazil’s antitrust authority, the Administrative Council for Economic Defense (CADE), is preparing to contact the US Department of Justice to determine the scope of an American investigation into potential anticompetitive conduct by meatpackers operating in the United States.

The move follows a formal request from Izalci Lucas, who urged CADE to examine whether alleged cartel behavior abroad could harm Brazil’s economy. According to sources cited by Valor, CADE’s General Superintendence will first seek details from US authorities before deciding whether to open its own inquiry.

In his letter, Lucas said Donald Trump directed the Justice Department to investigate foreign-owned meat processors for possible cartelization, price-fixing, and price manipulation. Trump has argued it is suspicious that US cattle prices have fallen while beef prices remain elevated.

Industry groups dispute that claim. The Meat Institute, which represents more than 350 companies, said meatpackers have been operating at losses for over a year and that transactions are transparent. It argues that despite high retail beef prices, producers are squeezed by record cattle costs — a situation expected to persist into 2026.

Brazilian firms feature prominently in the US protein market. JBS is the largest meat producer in the United States, while National Beef — owned by Marfrig — is the fourth largest and among the most profitable. Lucas also cited CADE’s 2024 approval of Minerva’s acquisition of Marfrig assets, which came with conditions reflecting competition concerns, including adjustments to non-compete clauses and required divestments.

 Of note: Legal experts note that while a request from a lawmaker carries weight, Brazil’s competition law fast-tracks only submissions from congressional committees into formal administrative inquiries. Still, the episode revives a familiar theme: the meat sector has faced congressional scrutiny before, notably in 2005, when complaints led to one of CADE’s earliest cease-and-desist agreements.

 For now, CADE’s next step hinges on what the Justice Department reveals about the US probe — and whether alleged conduct abroad warrants parallel action at home.

China slaps up to 43% duties on EU dairy in escalating trade dispute

Beijing targets subsidized cheese and cream imports after probe, adding pressure to already strained China/EU trade ties

China has imposed preliminary duties of as much as 43% on selected dairy imports from the European Union, marking another escalation in its tit-for-tat trade conflict with the bloc, according to Bloomberg.

China’s Commerce Ministry said the move follows an anti-subsidy investigation that found certain EU dairy products — including some fresh and processed cheeses and cream — benefited from government support. The levies are being collected in the form of deposits while the investigation continues.

Among the companies affected, French dairy producer Fromarsac faces duties of about 30%, while units linked to Dutch cheesemaker FrieslandCampina were hit with the highest rate of 43%. Neither company immediately responded to requests for comment.

Though narrowly targeted, the dairy action risks deepening tensions between European Union and China. The move comes after the EU voted last year to impose tariffs of up to 45% on Chinese electric vehicles and launched broader investigations into state subsidies across multiple sectors.

Beijing first opened the dairy probe in 2024 and extended it by six months in August, citing the case’s complexity. The dairy duties follow China’s recent decision to impose anti-dumping levies of 5% to 20% on EU pork imports, partially easing tougher preliminary measures announced earlier.

The EU has challenged the dairy investigation by seeking consultations through the World Trade Organization. Meanwhile, EU cheese exports in 2025 have been led by shipments to the US, UK, and Japan, underscoring the potential commercial impact if China — a key market — further restricts access.

Market impacts: Reports note that while China imported roughly $589 million of EU dairy products last year, it is expected to increase purchases from New Zealand and Australia, potentially offering marginal gains for US dairy exporters. The bigger question is how aggressively EU suppliers discount product into alternative markets.

USDA cattle-on-feed report mostly near market expectations; placements less than expected

USDA on Friday afternoon released its December cattle-on-feed report. The agency reported cattle and calves on feed for the slaughter market in the US for feedlots with capacity of 1,000 or more head totaled 11.7 million head on December 1. The inventory was 2 percent below December 1, 2024. Placements in feedlots during November totaled 1.60 million head, 11 percent below 2024. 

Net placements were 1.54 million head. Placements were the lowest for November since the series began in 1996. During November, placements of cattle and calves weighing less than 600 pounds were 435,000 head, 600-699 pounds were 375,000 head, 700-799 pounds were 320,000 head, 800-899 pounds were 255,000 head, 900-999 pounds were 130,000 head, and 1,000 pounds and greater were 80,000 head. 

Marketings of fed cattle during November totaled 1.52 million head, 12 percent below 2024. Marketings were the second lowest for November since the series began in 1996. Other disappearance totaled 53,000 head during November, 4 percent below 2024, said USDA.

RealAgriculture.com: Beef markets quiet into year-end as cross-border cattle flows reshape supply

Packers pull back amid margin pressure, US feeder shortages contrast with surging exports to Canada, and cow-calf producers close 2025 on strong footing

In the final Beef Market Update of 2025 from RealAgriculture.com, US cattle markets have settled into a seasonally quieter tone as packers pull back after earlier buying at elevated price levels. Cash trade held roughly steady with live cattle around $228 in the North and dressed trade at about $357, while the Choice beef cutout dipped 85 cents to $357.25. Traders are now focused on the December 1 US Cattle on Feed report, where placements are expected to be about 8% lower and on-feed inventories down about 2%, reflecting limited feeder cattle supplies and constrained flows from Mexico.

A notable shift in feeder cattle trade is underway between the US and Canada. In September, nearly 65,000 US feeder cattle entered Canada, up 34% from a year ago and the second-highest September total on record. With fourth-quarter data pending, the 2025 total has reached about 294,000 head, running 20% ahead of 2024 year-to-date and placing Canada on pace to surpass last year’s record of roughly 400,000 feeder cattle imports. RealAgriculture sources Gateway Livestock Exchange’s Anne Wasko in noting that strong demand from Western Canadian feedyards and favorable economics are driving this northward movement.

Domestic contrasts are evident — Texas is experiencing feeder cattle shortfalls linked to Mexican screwworm, and US packers are processing fewer cattle amid negative margins. As Wasko notes, “when they’re not making money, they don’t kill cattle,” underscoring weaker slaughter activity.

Despite these pressures, cow-calf producers are finishing 2025 in robust shape: Alberta fed cattle prices are up about 20% from last year, and calves commanded roughly 50% higher prices during the fall run.

Overall, RealAgriculture highlights a tightly interwoven cross-border beef supply chain, with this year standing out particularly for cow/calf producers and shifting feeder cattle trade patterns.

USDA Dairy: World Markets and Trade 

Milk Production Continues Growth in 2026 Milk production by major dairy product exporters is forecast 0.4 percent higher in 2026 as growth in the United States, Australia, and Argentina offsets slight reductions for the European Union (EU) and New Zealand. Accounting for most of the growth, US milk production is forecast 1.2 percent higher in 2026 as dairy farmers continue to increase herds to supply growth in processing capacity. Growing cheese production is fueling demand for milk while strong exports have also boosted demand for dairy products. Argentina milk production is forecast 4.0 percent higher in 2026, amid good pasture conditions and low feed prices. 

Output is expected to rebound above previous highs reached before production was negatively impacted by drought and high input costs in 2024. Australia milk production is forecast to rebound by 1.8 percent as steady farmgate milk prices and relatively low feed costs will support herd recovery. In particular, improved rainfall in Southwestern Victoria and South Australia in 2025 is expected to lead to production recovery. Output in New Zealand is forecast to contract slightly as the cow herd continues to decline. European Union milk production is expected to decline for the second year in a row due to continued contraction in the cow herd, despite small growth in milk per cow. 

Although EU dairy margins improved during much of 2025, environmental policies and disease continue to weigh on the sector. EU processors are expected to continue to focus on high margin products, like cheese, as total milk production declines. his growth follows a 1.9-percent production decline in 2025 as poor pasture conditions and reduced water availability during the first half of the year limited production. While herd sizes and production in Southwestern Victoria and South Australia are expected to rebound beginning in 2026, production in Northern Victoria and New South Wales remains constrained by reduced availability of irrigation water. The Australia dairy sector experienced significant changes in the last 2 decades. 

The number of Australian dairy farms declined 71 percent from 2002 to 2024, while milk production only fell by 25 percent. Industry consolidation is expected to continue in 2026 as smaller producers, particularly less efficient farms in the northern tropical and subtropical regions, continue to exit the industry. However, expected strong feed availability and strong farmgate prices will support marginally higher herd expansion in southern dairy regions. 

Argentina fluid milk production is forecast to increase 4.0 percent in 2026, reaching 12.0 million tons. This increase builds on an expected 8.5-percent increase in 2025 as feed availability and pasture conditions rebound from 2024. While producer margins in 2025 have declined from 2024 levels, margins remain supportive of continued strong feed use per liter of milk produced, and therefore of higher milk production per cow. Despite anticipated strong production recovery in 2025 and 2026, Argentina milk production remains limited by domestic demand, which has failed to recover to levels seen before 2024. 2026 Argentina fluid milk consumption is expected 31 percent below 2023 levels. Argentina producers will increase WMP production for exports to absorb production. 

However, key Argentina export markets including Brazil and Algeria are expecting limited or no import growth in 2026. European Union (EU) fluid milk production is forecast to decline 0.5 percent to 144.8 million tons in 2026, continuing the marginal decline from 2024. The EU dairy herd is anticipated to decline as well, but at a slower pace compared to 2025, as the improved profitability of dairy production has provided some support for retaining cows. In the first half of 2025, feed costs declined and fodder availability improved while EU milk prices remained elevated, supported by strong domestic demand from processors for cheese production. 

In August 2025, EU farmgate milk prices were 12 percent higher year over year and 25 percent above the 5-year average. Despite improved margins, continued pressure on the dairy sector from environmental policies and disease outbreaks is expected to lead to industry consolidation. Environmental regulations – such as the agricultural carbon tax in Denmark and environmental protection regulations in Germany – have contributed to herd reductions. 

In 2025, Bluetongue virus (BTV) and Lumpy Skin Disease (LSD) were reported in several EU member states. These diseases often lead to a temporary drop in milk yield, fertility problems, and elevated mortality rates. The trend of industry consolidation has been exacerbated by lack of generational renewal as the sector fails to attract young producers due to the heavy workload and uncertain profits. While consolidation drives productivity gains, improved efficiency is outpaced by herd contraction, leading to lower milk production.

USDA reviewing possible four inspection sites Re: allowing Mexican cattle back into US

Announcement of phased-in re-entry will be science-based and take time to proceed

USDA may soon announce how it will implement a science-based and very cautious program allowing a phased-in number of Mexican cattle into the United States. 

Subject to change, here is what USDA may announce:

• A number of Mexican cattle from a “safe” region of Mexico will be tested at Mexican Testing Site Number One for NWS screwworm.
• Those Mexican cattle testing positive will be treated and will still go with cattle testing negative to Mexican Testing Site Number Two. Any cattle testing positive at the second site will remain in Mexico, with the other cattle moving to Mexican Testing Site Number Three.
• Those testing negative in Mexican Testing Site Number Three will be allowed into a designated location in the United States where there will be a fourth testing site for the cattle.

 The timeline for the announcement and the testing dates and number of cattle are not known at this time. 

Weekly USDA dairy report

CME GROUP CASH MARKETS (12/19) BUTTER: Grade AA closed at $1.4150. The weekly average for Grade AA is $1.4480 (-0.0305). CHEESE: Barrels closed at $1.4200 and 40# blocks at $1.3600. The weekly average for barrels is $1.4040 (-0.0085) and blocks $1.3805 (+0.0315). NONFAT DRY MILK: Grade A closed at $1.1575. The weekly average for Grade A is $1.1605 (-0.0065). DRY WHEY: Extra grade dry whey closed at $0.7050. The weekly average for dry whey is $0.7260 (-0.0290). 

BUTTER HIGHLIGHTS: Domestic retail butter demand is strong. Many sellers note domestic food service demand is down compared to this time last year. Demand from international buyers is strong. Cream loads are widely available. Spot cream demand from butter manufacturers varies from light to steady. Butter manufacturers are running busy production schedules ahead of December holiday weeks. Loads of 80 percent butterfat salted butter are widely available. Loads of 80 percent butterfat unsalted and domestic bulk butter are somewhat tight. Bulk butter overages range from 2 cents below to 5 cents above market across all regions. 

CHEESE HIGHLIGHTS: Cheese activity in the East is steady as manufacturers balance year-end demand with planned downtime. Some plants are increasing production to cover holiday needs, while others begin easing schedules as bulk demand softens. Export interest is quiet, and the regional tone remains stable. Midwestern cheesemakers continue running steady schedules, though winter weather is creating some logistical challenges for milk movement. Domestic demand is steady, while export interest has eased modestly this week. Spot cheese loads remain available to meet current needs. Ample milk supplies continue to support steady cheese production in the West as processors move through the back-to-back holiday weeks. Domestic demand is mixed, with some early forward contract activity limiting spot availability in select cases. Export demand is uneven, while cheese load availability remains broad across most varieties. 

FLUID MILK HIGHLIGHTS: Several regions’ milk volumes were negatively affected by severe weather this week. Despite this, year over year milk output is up. Milk components remain strong. Demand is softening for Class I as many educational institutions are closing for the winter break. Spot volumes of milk are readily available as a result. Bottling demand will pick up in early January when schools reopen. Class II demand is lighter this week. Retail demand for seasonal dairy products is slow. Class III production is strong, but not balanced with demand. Demand for Class III is light with many processors planning holiday downtime. Class III milk prices are lower this week, ranging from $6-under to $1-over. Some contacts suggest prices may decline further in the coming weeks. Class IV production is strong. Cream volumes are high, providing more spot loads for the market. Condensed skim availability is growing as the upcoming holiday downtime approaches. Contacts report a dramatic drop in price for condensed skim destined for Class III facilities. Condensed skim sales ranged from $0.80 to $1.64 per pound. Cream multiples for all Classes range: 1.06 – 1.30 in the East; 0.95 – 1.15 in the Midwest; 0.95 – 1.20 in the West.  

DRY PRODUCTS HIGHLIGHTS: Low/medium heat nonfat dry milk (NDM) prices decreased at the top of the ranges in all regions and held steady at the bottom. High heat NDM prices were unchanged in the East and Central regions, but the bottom of the West range moved higher, and the top moved lower. Dry buttermilk prices are steady in the Central and East regions. The top of the West dry buttermilk price range moved lower, while prices were unchanged at the bottom. Both ends of the dry whole milk price range pushed higher this week. In the East and Central regions, dry whey prices increased at the bottom of the ranges, but prices were unchanged at the top of each. In the West, dry whey prices remain steady. The top of the lactose price range moved higher, but prices were steady at the bottom of the range. Whey protein concentrate prices moved lower at the bottom of the range but were unchanged at the top. Acid and rennet casein prices held steadt this week.  

INTERNATIONAL DAIRY MARKET NEWS

WEST EUROPE: European dairy markets continue to face heavy pressure as oversupply weighs on prices. Raw milk values have fallen to multi-year lows, reflecting abundant milk availability and subdued demand. Cream and skimmed milk concentrate prices continue to weaken, while butter prices remain under pressure heading into early-year delivery. Cheese markets are also trending lower, with declines reported across key varieties. 

EAST EUROPE: Eastern European milk supplies continue to expand, led by Poland, where collections have increased steadily through 2025 on improved yields. Strong milk flows across the region add to overall European supply growth, while global demand remains insufficient to absorb additional volumes. 

OCEANIA: AUSTRALIA: Dairy Australia recently released data on packaged milk sales. In October 2025, milk sales totaled 199.2 million liters, up 0.1 million liters year over year. Dairy Australia recently released export data for Australia showing milk export volumes from July - October 2025 totaled 57,293 metric tons, an increase of 16.0 percent compared to export volume totals from July - October 2024. 

NEW ZEALAND: DairyNZ recently released their quarterly economic update. Overall, margins are expected to decrease but remain comfortable in the 2025/2026 season as the milk price declines and expenses increase. The report updated the breakeven milk price forecast for the 2025/2026 season. The projected breakeven milk price is $8.50 per kilogram milk solids (kgMS). 

SOUTH AMERICA: Argentina's milk production remained strong in November, according to contacts, even after the seasonal peak in October, underscoring a resilient supply. Brazil's dairy market is under pressure as flush season output meets stagnant consumption. Contacts note that domestic prices have weakened, with Ultra-high-temperature (UHT) milk prices falling sharply from mid-year highs into December.