Weekly global protein digest: China’s meat imports plunged in March

Analyst Jim Wyckoff shares highlights from the global protein market.
calendar icon 15 April 2022
clock icon 10 minute read
Jim Wyckoff Commentary -  TheCropSite

USDA weekly US dairy retail report

Total US conventional dairy ads increased nine percent from last week. The most advertised dairy item is ice cream in 48-64 ounce containers. Conventional yogurt ad numbers increased five percent. Greek yogurt in 4 to 6-ounce containers, the most advertised conventional yogurt item, has a weighted average advertised price of $0.99, two cents more than last week. Conventional cheese advertisements are down two percent. This week’s most advertised cheese item is conventional 8-ounce shred cheese, with 31 percent more ads than last week. The weighted average advertised price for conventional 8-ounce shred cheese is $2.45, a penny less than last week. Total conventional milk ads dropped 14 percent. Conventional gallon milk is the most advertised milk item this week, with ads featuring a weighted average price of $3.35, up six cents from last week. The national weighted average advertised price for conventional milk half gallons is $2.17, compared to $4.17 for organic milk half gallons, providing an organic price premium of $2.00.

US pork export sales up, beef down

USDA reported Thursday US pork net sales of 24,000 MT for 2022 were down 42 percent from the previous week and 26 percent from the prior 4-week average. Increases were primarily for Mexico (6,100 MT, including decreases of 500 MT), Japan (5,400 MT, including decreases of 200 MT), China (4,000 MT, including decreases of 200 MT), South Korea (2,600 MT, including decreases of 300 MT), and Australia (1,900 MT). Exports of 31,800 MT were up 10 percent from the previous week and 11 percent from the prior 4-week average. The destinations were primarily to Mexico (14,200 MT), Japan (4,700 MT), China (4,300 MT), South Korea (2,900 MT), and the Dominican Republic (1,100 MT).

US Beef: Net sales of 17,200 MT for 2022 were up 23 percent from the previous week, but down18 percent from the prior 4-week average. Increases were for South Korea (7,500 MT, including decreases of 500 MT), Japan (4,200 MT, including decreases of 600 MT), Canada (1,300 MT, including decreases of 100 MT), Mexico (1,200 MT), and Hong Kong (600 MT). Total net sales of 100 MT for 2022/2023 were for Canada. Exports of 18,600 MT were down 4 percent from the previous week and 24 percent from the prior 4-week average. The destinations were primarily to South Korea (5,800 MT), Japan (4,600 MT), China (3,000 MT), Taiwan (1,400 MT), and Mexico (900 MT).

Eight new HPAI commercial flocks confirmations in US

USDA’s Animal and Plant Health Inspection Service has confirmed new cases of highly pathogenic avian influenza (HPAI) in eight commercial flocks in Nebraska (1,746,853 commercial layer chickens in Dixon County), Minnesota (214,277 commercial layer chickens in Morrison County; 43,286 commercial broiler chickens in Morrison County; 50,000 commercial turkeys in Yellow Medicine County; 38,000 commercial turkeys in Kandiyohi County; and 45,000 commercials turkeys in Morrison County), and Wisconsin (52,000 commercial turkeys in Barron County). This brings the commercial flocks confirmed with HPAI to 121.

Meantime, the severe bird flu outbreaks in the United States and France are tightening global egg supplies and raising prices. Wholesale prices for large eggs in the U.S. Midwest topped $3 per dozen in March and reached the second-highest level ever, up nearly 200% from a year earlier on the spot market, data firm Urner Barry said. Prices remained below the record of $3.09 per dozen set at the beginning of the COVID-19 pandemic. Egg products like liquid whole eggs are at record highs, though, Urner Barry said. In France, wholesale shell egg prices have climbed 69% from last year, French farm office FranceAgriMer said. As a result, consumers could see higher prices for food products made with eggs. The outbreak of war, not just disease, is disrupting supply chains for Middle East buyers.

China’s meat imports plunged in March

China imported 594,000 MT of meat in March, down 42% from last year’s record. Its meat imports during the first three months this year at 1.7 MMT fell 37% from the same period last year. The preliminary data doesn’t give specifics of meat imports by category, but the sharp drop was driven by a significant decline in pork arrivals as domestic pork production has surged as the country aggressively rebuilt its herd after the African swine fever outbreak.

USDA: Worldwide pork production to rise this year

Global pork production is forecast by USDA at up nearly 3 percent year-over-year in 2022 at 110.5 million tons primarily on higher output in China. Hog inventories in China continued to grow during 2021 and were reported at nearly 450 million head – up 11 percent year-over-year. This should support China pork production in the first half of the year as these animals are marketed. However, currently high input prices and relatively weak pork demand have pressured producer margins, taking a financial toll on hog operations and making it likely that output growth will slow later in the year.

Overall, China pork production is forecast at 51.0 million tons in 2022, 7 percent higher than 2021. In a global context, this will offset tighter supplies in the European Union, where a long-term trend of declining consumption coupled with slowing export demand drove producer margins down last year. This has led the breeding herd to contract by more than 3 percent. Even with continued growth in sow productivity, EU pig supplies will be lower as a result, pushing pork production 2 percent lower year-over-year to 23.2 million tons.

Global exports are expected at 11.7 million tons in 2022, 4 percent lower year over year as contracting China and Philippines imports more than offset growth elsewhere. China imports are forecast to decline 19 percent in 2022 as domestic production continues to grow and consumer demand remains relatively weak. Meanwhile, Philippines imports are forecast down 18 percent due to the expiration of expanded tariff rate quota volumes and lower tariffs. On the other hand, rebounding foodservice business is expected to spur South Korea imports 12 percent higher.

Mexico imports are expected to remain firm, growing 4 percent, as pent-up consumer demand and recovering foodservice business supports consumption. U.S. production and exports: U.S. production is forecast at 12.3 million tons in 2022, 2 percent lower than 2021, as lower hog inventories and farrowing intentions lead to tighter pig supplies for the remainder of the year.

Meanwhile, tight domestic pork supplies and correspondingly high prices will weigh on U.S. exports while lower imports from China will increase competition in other Asian markets. U.S. exports are forecast to decline 6 percent year over year to just under 3.0 million tons.

Global Beef and veal production to rise: USDA

USDA reports global beef and veal production is forecast nearly 1 percent higher in 2022 based on growth in Australia, Brazil, India, and Mexico. High global beef prices will induce more slaughter while greater supplies of cattle and stable carcass weights support the increase in beef production.

Australia production is expected to expand by 12 percent as improved pasture conditions have expedited herd rebuilding over the past year. Meanwhile, greater cattle availability and improved slaughterhouse profitability will drive a 4 percent increase in Brazil beef production. India carabeef production is forecast up 4 percent, thus continuing its recovery and exceeding pre-pandemic levels. Lastly, Mexico is projected to reach record levels of production thanks to the cattle sector’s profitability and rebounding hotel, restaurant, and institutional demand.

Meanwhile, production in Canada, the United States, and European Union are forecast down 3 percent, 1 percent, and 1 percent, respectively. Drought conditions and tight feed availability in Western Canada will accelerate Canada’s herd contraction. U.S. production is anticipated to decrease because of a contracting cattle herd as well. Lastly, unprofitability in the EU cattle sector will lead to lower beef production in 2022.

Global beef and veal exports in 2022 are forecast to increase by 3 percent on firm demand, particularly in East Asia markets. Ample supplies of slaughter-ready cattle and regaining China market access will drive Brazil exports and offset expected declines to Mercosur neighbors. Improved demand from price-sensitive markets will also boost India exports of carabeef to the Middle East and Southeast Asia. Rebounding Australia supplies and firm demand will spur shipments to East Asia and the United States. However, tight cattle supplies in both New Zealand and some Mercosur members (Paraguay, Uruguay, and Argentina) will limit these countries’ exports for 2022.

China to buy more pork for reserves

China’s state planner will buy another 40,000 MT of frozen pork for state reserve – its fourth round of stockpiling this year. The move is an effort to support domestic prices, which have fallen sharply. While lower pork prices are helping ease consumer inflation, they are squeezing hog production margins. China has previously purchased 118,000 MT of pork for reserves, though that’s a small fraction of its annual production, which reached 53 MMT last year.

USDA’s dairy market at a glance

CME GROUP CASH MARKETS (4/8) BUTTER: Grade AA closed at $2.7825. The weekly average for Grade AA is $2.7545 (+0.0390). CHEESE: Barrels closed at $2.3675 and 40# blocks at $2.3200. The weekly average for barrels is $2.3015 (+0.0905) and blocks, $2.2930 (+0.0620). NONFAT DRY MILK: Grade A closed at $1.8225. The weekly average for Grade A is $1.8290 (-0.0125). DRY WHEY: Extra grade dry whey closed at $0.6350. The weekly average for dry whey is $0.6135 (-0.0580).

CHEESE HIGHLIGHTS: Domestic cheese demand is steady throughout the country. Contacts report that export demand for cheese is strong, as loads produced domestically are priced favorably compared to cheese produced internationally. Port congestion is causing delays to some export loads departing from the West coast. Purchasers in Asia are looking to lock in loads for shipment in early 2023. Spot cheese inventories are available throughout all regions. Milk is available for cheesemakers to run busy schedules. Labor shortages are impacting cheese production in all regions, but producers in the Northeast and West are reporting strong output. Some Midwestern cheese plants have reported that labor shortages are contributing to some unplanned down time, but other nearby cheese plants are processing loads of milk intended for these plants.

BUTTER HIGHLIGHTS: Cream inventories are mixed, with contacts in the Northeast reporting tighter cream availability. Butter makers in the Central region are sourcing supplies of cream locally and from the West. Domestic demand for butter is steady to higher across the country. Contacts report that internationally produced loads are being sold at a premium to butter produced domestically. This is contributing to strong export demand, though some sellers in the West say that port congestion is preventing them from moving more butter to international markets. Butter production is mixed; contacts in the Northeast report lighter output, while butter production is steady in the Central and West regions. Across all regions, bulk butter overages range from 5 to 15 cents above market.

FLUID MILK: Farm level milk production continues along an upward trajectory. In Texas, spring flush-like output is reported. Upper Midwestern flows are demonstrating a slighter increase as some wintery weather lingers. Bottling sales are fairly firm. In the East and Midwest, healthy volumes of milk are clearing to Class III to maintain active cheese production. Staffing shortages persist. Some dairy processing facilities are running under capacity or using downtime due to labor constraints. Contracted condensed skim is steady in the West. In other regions, hauling shortages continue to hamper the ability to move condensed skim. Cream access is tighter for some Eastern producers, but availability is reportedly looser in the Central and West. Demand is seasonally strong across regions. F.O.B. cream multiples for all classes are 1.32-1.40 in the East, 1.25 -1.34 in the Midwest, and 1.10-1.30 in the West.

DRY PRODUCTS: Low/medium heat nonfat dry milk (NDM) prices are mixed. Supplies are more available in the West than in other regions; Central and East inventories range from tight to tighter. High heat NDM prices are also mixed, and trading is muted due to skinny, and shrinking, inventories. Dry buttermilk prices are steady to higher. Spot availability is snug, and domestic and international demand is steady to stronger. Dry whole milk prices are unchanged. Production is sporadic. Minimal off-contract availability has been indicated. Dry whey prices are mostly lower. Steadier production schedules and softer export demand are helping to increase domestic availability. Whey protein concentrate (WPC) 34% prices are higher. Production is steady, but output falls short of current end user demands. Lactose prices are unchanged. Export demand is healthy, but port congestion and equipment shortages complicate timely shipping. Acid casein prices are steady. The bottom of the rennet casein price range increased.

ORGANIC DAIRY MARKET NEWS: The U.S. Department of Agriculture's Agricultural Marketing Service (USDA AMS) has announced finalization of the origin of livestock requirements for dairy animals under the USDA organic regulations. The rule specifies that organic milk and milk products must be from animals that have been under continuous organic management from the last third of gestation onward, with an exception for newly certified organic livestock operations. A partnership to support New York and New England organic dairy industry through the redevelopment of a former manufacturing facility into a state-of-the-art dairy processing facility has been announced. The strategically located facility will produce and market milk sourced from family dairy farms that recently had their supply agreements terminated. Meanwhile, a cheese maker in California recently completed its transition to 100 percent organic. Last year the cheese maker completed construction of a new 50,000 square foot packaging plant.

TheCattleSite News Desk

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