Weekly global protein digest: US meatpacker CEOs to testify before Congress, HPAI outbreaks continue,

Analyst Jim Wyckoff shares an update on global protein news
calendar icon 22 April 2022
clock icon 8 minute read
Jim Wyckoff Commentary -  TheCropSite

US dairy retail report

USDA reports total conventional US dairy ads increased 27 percent from last week while organic dairy ads are down 22 percent. The most advertised dairy item is conventional ice cream in 48 to 64-ounce containers. The national weighted average advertised price for conventional ice cream in 48 to 64-ounce containers is $3.31, up from $3.22 last week. Retailers saw it as an opportune time to advertise butter and cream cheese leading into a spring holiday weekend. Ads for conventional cream cheese in 8-ounce containers jumped 84 percent, and conventional 1-pound butter ads moved 44 percent higher. The weighted average advertised price for that 1-pound butter is $3.41, 48 cents less than last week.

US Pork, beef export sales slump in latest week

USDA on Thursday reported weekly US pork net export sales of 12,900 MT for 2022--a marketing-year low--were down 46 percent from the previous week and 55 percent from the prior 4-week average. Increases primarily for Mexico (4,700 MT, including decreases of 600 MT), South Korea (2,800 MT, including decreases of 1,300 MT), the Philippines (1,300 MT), Canada (800 MT, including decreases of 500 MT), and the Dominican Republic (700 MT), were offset by reductions for China (100 MT). Exports of 28,200 MT were down 11 percent from the previous week and 6 percent from the prior 4-week average. The destinations were primarily to Mexico (11,600 MT), Japan (4,600 MT), China (3,800 MT), South Korea (2,700 MT), and Canada (1,300 MT).

US beef net sales of 15,000 MT for 2022 were down 13 percent from the previous week and 27 percent from the prior 4-week average. Increases were primarily for Japan (4,600 MT, including decreases of 700 MT), South Korea (4,100 MT, including decreases of 700 MT), China (2,500 MT, including decreases of 700 MT), Canada (1,000 MT, including decreases of 100 MT), and Taiwan (600 MT, including decreases of 100 MT). Exports of 21,000 MT were up 13 percent from the previous week, but down 16 percent from the prior 4-week average. The destinations were primarily to South Korea (6,800 MT), Japan (5,200 MT), China (3,600 MT), Taiwan (1,200 MT), and Mexico (1,000 MT).

Chinese pork output expected to rise 2.9%

China’s pork production is forecast to rise 2.9% to 54.5 MMT this year as the country’s hog sector continues to expand after being sharply reduced by African swine fever. But the rise in production has oversupplied the market, which along with high feed costs, has caused negative hog production margins for hog farmers. A Chinese ag ministry official forecasts Chinese hog farmers should see a return to profitable levels by the third quarter of this year, as he expects feed prices will decline. But he also warned hog farmers against heavy sow liquidation.

Meantime, hog production losses in China have been increasing due to rising animal feed prices and weak pork rates. Losses widened to about 300 yuan ($47) per head in March, from about 200 yuan in February. Pork and hog prices are about to recover, costs and selling prices may match in June, Ma noted. A sustainable financial support system is needed to keep hog production stable.

USDA lists more details on Pennsylvania HPAI

USDA’s Animal and Plant Health Inspection Service (APHIS) lists the confirmed highly pathogenic avian influenza (HPAI) case in Lancaster County, Pennsylvania as involving 1,443,000 commercial layer chickens. The agency also said there was another commercial operation in Wisconsin confirmed with HPAI — 20,000 commercial turkeys in Polk County. Other confirmed HPAI cases listed by APHIS for April 15 and 16 were in backyard mixed species (non-poultry).

Bottom line: Egg farm losses from bird flu top 20 million hens. Wholesale prices for eggs were at least $1 higher per dozen than a year ago, with HPAI as a factor.

China’s pork exports plunge in March as domestic production rises

China imported 140,000 MT of pork last month, down 70% from the previous year. Through the first three months of this year, Chinese pork imports totaled 420,000 MT, down 64.2% from the same period last year. A strong increase in domestic production has sharply reduced China’s domestic pork prices and the need to import foreign supplies. China’s pork production totaled 15.6 MMT in the first three months of this year, up 14% from the same period last year and the highest quarterly output since the fourth quarter of 2018. China’s hog herd declined to 422.5 million head at the end of March, down from 449.2 million head at the end of last year.

CEOs from major US meatpackers to testify to Congress on beef prices

Chief executives of Tyson Foods, Cargill, JBS and National Beef Packing will testify at a House Agriculture Committee hearing on beef prices and competition in cattle markets, the House Ag Committee announced. “It is very important, very vital, and very urgent that we hear the perspectives from the CEOs at these companies and get the full picture of why prices have gone up for consumers and down for ranchers,” House Agriculture Committee Chairman David Scott (D-Ga.) said in a statement announcing the executives agreed to testify. Scott previously announced an April 27 hearing to “determine whether anti-competitive behavior by the largest meatpacking companies caused increased beef prices, and unfair difficulties to ranchers and farmers, to the detriment of U.S. food consumers.” Consumer prices for beef and veal in March were up 16% from a year earlier, outpacing an overall inflation rate of 8.5%, according to Labor Department data.

USDA’s weekly dairy market at a glance

CME GROUP CASH MARKETS (4/14) BUTTER: Grade AA closed at $2.7550. The weekly average for Grade AA is $2.7719 (+0.0174). CHEESE: Barrels closed at $2.4400 and 40# blocks at $2.3725. The weekly average for barrels is $2.3888 (+0.0873) and blocks, $2.3356 (+0.0426). NONFAT DRY MILK: Grade A closed at $1.8225. The weekly average for Grade A is $1.8219 (-0.0071). DRY WHEY: Extra grade dry whey closed at $0.6350. The weekly average for dry whey is $0.6350 (+0.0215).

CHEESE HIGHLIGHTS: Domestic demand for cheese is steady to strong across retail and food service markets. Export interest is strong in the Northeast and West as domestically produced loads of cheese are being sold at favorable prices compared to loads produced internationally. The price for cheese barrels moved above blocks, on the CME, last week, and prices for both continued to move higher throughout this week. Cheese inventories are available for spot purchasing. Cheese deliveries are facing delays in the Western region due to port congestion and a shortage of truck drivers. Cheesemakers in the Midwest report that production is stunted due to staffing shortages and difficulties regarding hauling. This is contributing to greater milk availability in the region and some loads being sold at below-Class prices. Meanwhile, cheese production is active in the Northeast and West regions.

BUTTER HIGHLIGHTS: Cream inventories are available for production demands throughout the country. Demand for butter is steady to lower, as contacts report that spring holiday purchasing has begun to slow this week. Export demand for butter is strong as internationally produced loads are priced at a premium to those produced domestically. Inventories of bulk butter vary across different manufacturers in the Northeast, while remaining available in the West. Some Western butter makers say that they are moving loads of butter to other regions with tighter spot availability. Butter producers are running busy schedules in the Central and West regions, though production is mixed in the Northeast. Bulk butter overages range from 5 to 15 cents above market, across all regions.

FLUID MILK: Milk production is trending higher throughout most of the country. In some warmer areas milk output is leveling off or declining. Contacts in some parts of the country say that their dairy operations are being hampered by labor shortages and a shortage of available truck drivers. Midwest stakeholders say that milk would be tighter, seasonally, were it not for these labor shortages. Demand for Class I is mixed; spring break beginning or ending in different states is contributing to adjustments in educational purchasing. Condensed skim is available in both the East and West, but contacts in both regions say that a shortage of available tankers and drivers is limiting their ability to move loads. Demand for cream is strong throughout the country, as warmer weather is contributing to increased ice cream production. Cream is available to meet strong production demands; contacts in the East and Midwest report that cream is becoming more available as the holiday weekend approaches. Cream multiples for all classes are 1.32-1.38 in the East, 1.24-1.33 in the Midwest, and 1.00- 1.28 in the West.

DRY PRODUCTS: Prices for low/medium heat nonfat dry milk (NDM) were steady to lower across the country. Low/medium heat NDM spot inventories are becoming more available in the West, while contacts in the Central and East regions report that spot loads are tight. High heat NDM prices were steady in the East and Central regions, but mixed in the West. High heat NDM inventories are tight nationwide. Dry buttermilk prices pushed higher at the bottom of the range in both the Central and East regions. Domestic demand is steady throughout much of the country. Dry buttermilk spot inventories are tight. Dry whole milk demand is level in both domestic and export markets. Contacts report that production varies, and spot availability is limited. Prices for dry whole milk are steady. Dry whey prices were mixed throughout the country. Domestic demand for dry whey is steady in the Northeast and West, but contacts report that international demand is soft. In the Central region demand is trending higher as some purchasers are more receptive to current market prices. Whey protein concentrate (WPC) 34% prices moved higher at the top of the range, while the mostly price series expanded due to some divergence in the market. Demand and prices for interchangeable loads of WPC 34% have declined, while loads that meet specific user specifications are seeing increased demand and pricing. Lactose prices tightened across the range and the mostly price series. Milk output and cheese production are trending higher and are contributing to increased lactose production. The price ranges for both acid and rennet casein were unchanged this week. Demand is outpacing production, but spot purchasers say trading is limited ahead of the holiday weekend.

INTERNATIONAL DAIRY MARKET NEWS: WESTERN EUROPEAN OVERVIEW: Milk production in Western Europe may be increasing seasonally, but it is still behind normal output levels. In both Germany and France, the largest milk producing countries, milk deliveries are well behind the level of deliveries posted for the previous year. Inventories for almost all dairy products remain tight and prices are supported. Prices for dairy products are rising in the grocery aisle as well.


TheCattleSite News Desk

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