21 January 2022

7 minute read

U.S. finds more avian flu in wild birds

USDA reported two more cases of highly pathogenic avian flu in wild birds late Tuesday afternoon, one in Colleton County, South Carolina, where Friday’s infection was found in a wild duck, and another in Hyde County, North Carolina. USDA said all three confirmed cases are a Eurasian H5 type of the virus and the H5N1 strain. There have been no trade disruptions for U.S. poultry from the avian flu findings in wild birds.

China’s pork production jumps 29% in 2021

China's 2021 pork output reached 53.0 MMT last year, just below the 53.4 MMT produced in 2017, prior to the African swine fever (ASF) outbreak that decimated the country’s hog herd. China slaughtered 671.3 million hogs in 2021, up 27% from a year earlier. The country’s hog herd totaled 449.2 million head at the end of December, up from 437.6 million head at the end of the previous quarter.

Hong Kong reports ASF finding

Hong Kong reported an African swine fever (ASF) discovery in a wild boar in the northern part of the territory, the World Organization for Animal Health (OIE) said on Monday. No domestic pig farms had been found affected by this case, it said.

USDA Sec. Vilsack writes letter to Wall Street Journal re: meat inflation editorial

USDA Secretary Tom Vilsack wrote: “Regarding your editorial ‘Carving Up Biden’s Inflation Beef’ (Jan. 8): This isn’t about covering higher costs or a lack of product, as the editorial claims. From beef to pork to poultry, the industry is dominated by a small number of massive companies that use their leverage to extract as much profit as possible — and it isn’t trickling down to producers.

“I’ve traveled the country and met with the hardworking ranchers and farmers that feed it. For example, I heard from producers in Iowa, where the beef packers are making $1,800 a head, while producers struggle. The challenge is not a lack of product; it is a lack of accessible options for producers to get their product to market at a fair price. This dynamic is harming Main Street, rural areas and Americans across the country.

“Fifty years ago, ranchers got over 60 cents of every dollar a consumer spent on beef, compared with about 39 cents today. Hog farmers got 40 to 60 cents on each dollar spent 50 years ago, down to about 19 cents today.

“This isn’t a new problem, but the pandemic made it worse and provided a new opportunity for large companies to leverage higher profits. In July 2021, President Biden signed an executive order to promote competition in the U.S. economy. Immediately after, the Agriculture Department got to work seeking input from producers on how to add capacity and competitors to the meat-processing bottleneck. Last week we announced the Action Plan for a Fairer, More Competitive, and More Resilient Meat and Poultry Supply Chain. We will not stand idle while these large companies use their market share to continue to overcharge consumers and set unfair prices for farmers and ranchers.”

China’s meat imports dropped 5.4% last year

China imported 654,000 MT of meat in December, bringing the yearly total for 2021 to 9.4 MMT, down 5.4% from 2020. China’s imports of beef jumped last year, but demand for pork fell sharply amid a surge in domestic supplies as the country’s hog sector rebuilt from the African swine fever outbreak that started in August 2019.

Consumer price indexes for U.S. animal products higher in 2021

The U.S. Department of Labor’s Bureau of Labor Statistics released consumer price indexes (CPIs) for 2021 on January 12, 2022. The chart below compares the 2021 and 2022 CPIs for all products and for food, beef, pork, poultry, eggs, and dairy products. The CPI for all items, a measure of inflation, increased 4.7 percent from 2020 to 2021. The CPI for food increased at less than the overall inflation rate, 3.9 percent. The inflation rates for beef and veal, pork, and poultry all exceeded the general inflation rate. The CPIs for eggs and dairy both increased less than the general inflation rate.

Beef/Cattle: USDA’s 2021 commercial beef production forecast was raised slightly from last month to 27.950 billion pounds on higher non-fed cattle slaughter and heavier carcass weights. Fed and feeder steer prices were raised in 2022. November’s beef imports totaled 297 million pounds, up 27 percent from a year ago. The 2021 annual forecast for beef imports was increased by 40 million pounds from last month to 3.355 billion pounds. The 2022 beef import forecast was unchanged from last month at 3.265 billion pounds. Beef exports in October were up 298 million pounds, 8 percent above last year. The annual forecasts for 2021 and 2022 beef exports were unchanged from last month at 3.455 and 3.270 billion pounds, respectively.

Dairy: While November 2021 milk production fell below November 2020, domestic use in November was above November of the previous year, and dairy exports have continued to be robust. From the week ending December 11 to the week ending January 8, wholesale prices increased for all dairy products reported in the USDA National Dairy Products Sales Report. Recent dairy export prices of major global competitors have been relatively high. Due to the recent increase in dairy product prices, stronger expected demand, and expectations for only a modest increase in the global milk supply, wholesale price forecasts have been raised for major dairy products. The all-milk price forecast for 2022 is $22.60 per hundredweight, $1.85 higher than last month’s forecast.

Pork/Hogs: Among the information in the December Quarterly Hogs and Pigs report, three take-aways are notable: that U.S. breeding inventory’s decline may have ended; that litter rates will continue to increase, at times achieving new records; and, that there will likely be fewer animals available for processing in 2022. Pork production this year is expected to be 27.5 billion pounds, about 1 percent below production in 2021. U.S. quarterly pork export forecasts for 2022 are reduced as China’s pork import demand declines in response to rebounding domestic production, with the country’s African Swine Fever effects appearing subdued. U.S. pork exports in 2022 are expected to be 7 billion pounds, about 1 percent below export volumes in 2021, based largely on expectations for strong shipments to Western Hemisphere nations.

Poultry/Eggs: Based on recent data, broiler production was adjusted up in the fourth quarter of 2021 and the first quarter of 2022. Ending stocks for 2021 were adjusted down. After a major revision in 2021 data, broiler exports in 2021 are projected to be about even with 2020, and 2022 exports were adjusted down to 7.45 billion pounds. Based on recent strong price data, the broiler price forecast was adjusted up to average 112 cents per pound in 2022. Fourth-quarter 2021 table egg production was revised down due to recent production data. Fourth-quarter 2021 table egg production was revised down due to recent production data. First-half 2022 forecasts for wholesale egg prices were revised up based on higher-than-expected fourth-quarter 2021 average prices. Egg and egg products export forecasts for fourth-quarter 2021 and the first half of 2022 were revised down based on lower-than-expected October and November shipments. Turkey production was left unchanged in 2021 and 2022, while ending stocks for 2021 were adjusted down to 190 million pounds. Turkey exports were also adjusted down on recent data to 550 million pounds in 2021. Turkey prices were adjusted up on strong data and are forecast to average 125.5 cents per pound in 2022.

November Pork Exports Lower, Due Mostly to China’s Reduced Demand for U.S. Pork

U.S. pork exports were 580 million pounds in November, more than 8 percent lower than a year ago, due largely to China’s reduced demand for U.S. pork. Shipments to China\Hong Kong totaled 47 million pounds, 72 percent lower than shipments in November 2021. As was the case in October, shipments to Mexico and other Western Hemisphere nations were particularly strong in November: exports to Mexico were 43 percent larger than a year earlier, shipments to Caribbean nations were 57 percent ahead of November 2021, and exports to Central and South American nations combined were 38 percent higher than a year ago. However, strong Western Hemisphere shipments were unable to offset the significant year-over-year shortfall in export volumes to China\Hong Kong.

TheCattleSite News Desk

IMPORTANT NOTE: I am not a futures broker and do not manage any trading accounts other than my own personal account. It is my goal to point out to you potential trading opportunities. However, it is up to you to: (1) decide when and if you want to initiate any traders and (2) determine the size of any trades you may initiate. Any trades I discuss are hypothetical in nature.

Here is what the Commodity Futures Trading Commission (CFTC) has said about futures trading (and I agree 100%): 1. Trading commodity futures and options is not for everyone. IT IS A VOLATILE, COMPLEX AND RISKY BUSINESS. Before you invest any money in futures or options contracts, you should consider your financial experience, goals and financial resources, and know how much you can afford to lose above and beyond your initial payment to a broker. You should understand commodity futures and options contracts and your obligations in entering into those contracts. You should understand your exposure to risk and other aspects of trading by thoroughly reviewing the risk disclosure documents your broker is required to give you.