Weekly global protein digest: food price inflation, dairy prices up, HPAI

Market analyst Jim Wyckoff shares highlights from this week's activities in the global protein market.
calendar icon 4 March 2022
clock icon 8 minute read
Jim Wyckoff Commentary -  TheCropSite

U.S. pork, beef export sales show marked improvement in latest week

USDA Thursday reported Net U.S. pork sales of 42,200 MT for 2022 were up 59 percent from the previous week and 80 percent from the prior 4-week average. Increases were primarily for Mexico (17,000 MT, including decreases of 700 MT), China (16,600
MT, including decreases of 300 MT), Japan (3,000 MT, including decreases of 200 MT), South Korea (2,400 MT, including decreases of 900 MT), and Canada (1,300 MT, including decreases of 400 MT). Exports of 30,100 MT were unchanged from the previous week, but down 3 percent from the prior 4-week average. The destinations were primarily to Mexico (12,900 MT), Japan (4,500 MT), China (4,300 MT), South Korea (2,800 MT), and Colombia
(1,400 MT).

Beef: Net sales of 23,800 MT for 2022 were up 64 percent from the previous week and 23 percent from the prior 4-week average. Increases were primarily for South Korea (9,800 MT, including decreases of 500 MT), China (4,100 MT, including decreases of 200 MT), Japan (2,800 MT, including decreases of 700 MT), Taiwan (2,000 MT, including decreases of 300 MT), and Canada (1,300 MT). Exports of 17,600 MT were up 15 percent from the previous week and 11 percent from the prior 4-week average. The destinations were primarily to South Korea (5,200 MT), Japan (4,500 MT), China (2,700 MT), Mexico (1,400 MT), and Taiwan (1,200 MT).

China to buy pork for state reserves

China will buy 40,000 MT of pork for state reserves this week in the first round of stockpiling this year, China Merchandise Reserve Management Center said. The National Development and Reform Commission will also guide local authorities to actively buy pork for local reserves. China is seeking to support hog prices after a sharp fall following the Lunar New Year holiday, when excess supply and flat demand weighed on the market.

China’s sow herd declines, still up from year-ago

China’s sow herd fell 0.9% during January to 42.9 million head, though that was still up 2% from last year, according to the country’s ag ministry. The country’s hog slaughter totaled 28.5 million head during January, down 1.7% from December, but up 45.9% from last year.

USDA’s 2022 food price inflation forecasts rise

USDA now expects food price inflation in 2022 to rise 2.5% to 3.5% from last year, up from its prior outlook food prices would increase 2% to 3%. The forecast for food away from home (restaurant) prices is for an increase of 4% to 5%, the second increase in as many months. Food at home (grocery store) prices are now forecast to be up 2% to 3% in 2022, up from USDA’s initial outlook that those prices would increase 1.5% to 2.5% from 2021 levels.

US dairy product prices rising

US dairy prices are seen rising 2.5% to 3.5% in 2022 versus 2021, the second month in a row the price outlook has been increased. In January, USDA raised the forecast to a rise of 1.5% to 2.5% which was a sharp upward move from the initial outlook that prices would be down 0.5% to up 0.5%.

US avian influenza confirmations in additional commercial and backyard flocks

USDA’s Animal and Plant Health Inspection Service (APHIS) has confirmed the presence of H5N1 highly pathogenic avian influenza (HPAI) in two commercial turkey flocks in Greene County, Indiana, and in backyard flocks in Kalamazoo County, Michigan (mixed species, non-poultry) and Knox County, Maine (pet chickens, non-poultry), the second confirmed backyard find in Maine. There are now seven confirmed commercial operations with HPAI in Indiana, Delaware, and Kentucky, and five backyard flocks in Virginia, Maine, New York, and Michigan. More countries have added restrictions on poultry/products from Delaware.

USDA’s Meyer does not cite concentration as factor for higher food prices

The Biden administration, including USDA Secretary Tom Vilsack, has been citing concentration in the U.S. meat industry in particular as a factor that has helped push meat prices higher for consumers. USDA Chief Economist Seth Meyer opened the USDA Outlook Forum by setting the economic stage for U.S. agriculture. In terms of food price inflation, Meyer noted food prices were up around 7%, with several factors contributing to the increase. “The drivers of these rising prices are extremely complex, including strong domestic and foreign demand, labor challenges, short-term supply chain constraints as well as geopolitical uncertainties that are driving up the prices of energy and raw materials, directly impacting the production costs of many goods,” Meyer explained. “Additionally, weather-related agricultural production shortfalls in many parts of the world put upward pressure on commodity and food prices.”

USDA provides funding for expanded meat and poultry processing

USDA announced on Feb. 24 that it is making available up to $215 million in grants to expand meat and poultry processing capacity.

US hog producer deadline extended

US hog producers will have an additional seven weeks, until April 15, to apply for coronavirus aid if they sold pigs for low prices on the cash market during the worst of the pandemic in 2020.

USDA’s latest US dairy market report

CME GROUP CASH MARKETS (2/25) BUTTER: Grade AA closed at $2.5875. The weekly average for Grade AA is $2.6350 (-0.1300). CHEESE: Barrels closed at $1.9000 and 40# blocks at $1.9450. The weekly average for barrels is $1.9350 (-0.0030) and blocks, $1.9856 (+0.0131). NONFAT DRY MILK: Grade A closed at $1.8600. The weekly average for Grade A is $1.8613 (-0.0207). DRY WHEY: Extra grade dry whey closed at $0.7800. The weekly average for dry whey is $0.7950 (-0.0220).

CHEESE HIGHLIGHTS: Cheese demand has found some more steadiness/strength in recent weeks. Western contacts say export demand, particularly from Asian markets, has improved as buyers there are ordering for summer/fall deliveries. Cheese production is steady, but stilted by laborer and driver shortages, which continue to obstruct cheese plant managers nationwide. Milk is generally available for the cheese vats, as discounts reached $1.50 under Class this week, although there were still some Class III prices reported, as well. Cheese market tones are steadily bullish. Cheese block prices hit the $2 mark on Thursday's CME spot call, while barrel prices are hovering just below.

BUTTER HIGHLIGHTS: Cream is available to Eastern and Central butter makers. There are some reports of short cream supplies this week in the West as inclement weather and driver shortages have delayed some deliveries. Butter output varies somewhat from plant to plant, but production is generally active. The January NASS Cold Storage report indicates a 33 percent drop in year to year inventory levels, and some contacts have relayed tightness in regional inventories while others say supplies are adequate for near term needs. Food service demand is increasing while retail sales are softening. Export demand is reportedly strong. Across the country this week, bulk butter overages range from 7 to 15 cents above market.

FLUID MILK: Farm milk production is generally steady to higher across much of the country. The exception being the Pacific Northwest and mountain states of Idaho, Utah and Colorado, where weather issues have negatively impacted cow comfort and milk production this week. Demand for milk supplies into Class I is steady to lower. Contacts say that while retail bottling sales are healthy, some K-12 education institutions are on mid-term breaks. Milk is available for Class II and III processing. Midwest spot milk discounts are -$1.50 to flat Class. Logistical hurdles and staffing shortages are prompting some plant managers to schedule cleaning, repairs, and maintenance. Interest in condensed skim loads is a bit subdued this week. Cream supplies are mixed, being steady in the East, more available in the Midwest and tightening in the West. F.O.B. cream multiples are 1.20- 1.30 in the East, 1.18-1.28 in the Midwest, and 1.00-1.28 in the West.

DRY PRODUCTS: Prices for low/medium heat nonfat dry milk are slightly higher at the bottom of the ranges, but steady to lower at the top of the price ranges. NDM trading was quiet this week. High heat NDM prices are steady to higher on slow trading. Inventories are tight. Dry buttermilk prices pushed higher as spot loads have been hard to come by. Dry whole milk prices are unchanged, and inventories remain snug. Dry whey prices are mixed, with the Northeast and Central price ranges contracting and the West price range steady to higher. Dry whey inventories are a little more available. Animal feed whey trading is slow, as prices are unchanged. Prices for whey protein concentrate 34% moved upwards. Manufacturers report getting a lot of interest from buyers looking for WPC 34%. The lactose price range is unchanged this week. Stronger demand for Western Europe and New Zealand produced casein has pushed acid and rennet casein prices higher.

ORGANIC DAIRY MARKET NEWS OVERVIEW (DMN): The U.S. sale of total organic milk products was 242 million pounds, down 4.1 percent from December 2020 and down 2.6 percent year-to-date. Organic whole milk sales, 111 million pounds, were down 3.2 percent compared to a year earlier and down 1.0 percent year-to-date. Organic reduced fat milk (2%) sales were 82 million pounds, down 3.2 percent from the previous year and down 3.2 percent year-to-date. Meanwhile, organic flavored whole milk sales increased 73 percent year-to-date. During January 2022, organic whole milk utilization totaled 13.8 million pounds, lower than the 14.5 million pounds the previous year. The butterfat content was 3.28 percent, a 0.02 percent decline from the previous year. The utilization of organic reduced fat milk (2%), 15.4 million pounds, declined from the 16.8 million pounds a year ago, while, the butterfat content, 1.35 percent, dropped 0.07 percent from a year ago.

NATIONAL RETAIL REPORT (DMN): This week, total conventional dairy ads decreased by 3 percent, while total organic dairy ads increased by 43 percent. Flavored milk in half gallon containers had the largest percentage increase of ads for conventional dairy products, 243 percent. The largest percentage increase for organic ads, 327 percent, was for 1-pound packages of butter. Total ads for conventional yogurt decreased by 8 percent; organic yogurt ads grew by 1 percent. Conventional cheese ad numbers moved slightly higher. Ads for conventional milk were up 53 percent, while organic milk appeared in 11 percent more ads.

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