Weekly global protein digest: China milk report, Global food prices ease

Analyst Jim Wyckoff shares an update on the US futures market, USDA reports and global protein news.
calendar icon 10 June 2022
clock icon 8 minute read
Jim Wyckoff Commentary -  TheCropSite

US pork, beef export sales slide in latest week

USDA Thursday reported US pork net sales of 16,700 MT for 2022 were down 48 percent from the previous week and 44 percent from the prior 4-week average. Increases primarily for Mexico (8,300 MT, including decreases of 200 MT), Japan (4,700 MT, including decreases of 100 MT), South Korea (900 MT, including decreases of 500 MT), Canada (800 MT, including decreases of 400 MT), and Colombia (700 MT), were offset by reductions for Chile (100 MT). Exports of 24,300 MT were down 22 percent from the previous week and 24 percent from the prior 4- week average. The destinations were primarily to Mexico (11,300 MT), Japan (3,500 MT), China (3,300 MT), South Korea (1,800 MT), and Canada (1,200 MT).

US beef net sales of 17,700 MT for 2022 were down 1 percent from the previous week and 21 percent from the prior 4-week average. Increases were primarily for Japan (5,600 MT, including decreases of 900 MT), China (5,200 MT, including decreases of 300 MT), South Korea (3,600 MT, including decreases of 600 MT), Canada (1,000 MT), and Mexico (800 MT, including decreases of 100 MT). Total net sales of 400 MT for 2023 were reported for Canada. Exports of 17,400 MT were down 9 percent from the previous week and from the prior 4-week average. The destinations were primarily to Japan (6,000 MT), South Korea (4,600 MT), China (2,400 MT), Mexico (900 MT), and Canada (800 MT).

China’s meat imports remain sluggish

China’s meat imports in May were virtually unchanged from the previous month at 590,000 MT, though that was down 24.7% from last year. China doesn’t provide a breakdown of meat imports by category in its preliminary data, though the sharp year-over-year reduction was due to reduced pork imports. Through the first five months this year, China imported 2.85 MMT of meat, down 34.2% from the same period last year.

China to keep buying pork for reserves

China will buy another 40,000 MT of frozen pork for state reserves on June 10. China has bought more than 200,000 MT of pork for its reserves so far this year in an effort to support hog farmers facing weak prices and soaring costs.

US Dept. of Justice is launching third inquiry into chicken manufacturing executives

The DOJ said executives may have violated federal antitrust law by colluding to fix prices. The trial against current and former executives of Tyson Foods, Pilgrim’s Pride, and other companies, which starts today in the U.S. District Court for the District of Colorado, underscores the DOJ antitrust regulators’ insistence on seeing their claims through to the end — despite skepticism from industry proponents and even the court’s judge.

USDA’s semi-annual China milk report

USDA reports that in 2022, China's raw milk production is forecast to reach 39.65 million metric tons due to a larger herd and production efficiency gains. China’s zero-COVID policy is expected to remain unchanged for the foreseeable future. In 2022, the resurgence of COVID-19 and government restrictions, such as lockdowns, are expected to impact dairy and dairy product distribution and use. Dairy processors are expected to increase whole milk powder production from raw milk to limit losses. In 2022, Post estimates that butter imports will increase compared to 2021, due to demand in the bakery sector. Imported fluid milk (primarily ultrahigh temperature milk) is expected to increase over 2021, due to consumer demand for shelf-stable products. Post estimates that imports of whole milk powder, skim milk powder, and cheese will be lower in 2022. High prices for imported dairy products in 2022 are expected to weigh on growth.

Global food prices ease but still near recent record high

The U.N. Food and Agriculture Organization (FAO) global food price index eased for a second straight month after hitting a record high in March but was still 22.8% above year-ago. Declines in the price of vegoils, dairy and sugar more than offset increases in cereal grains and meat. Compared to year-ago, prices surged 13.6% for meat, 16.9% for dairy, 29.7% for cereal grains, 31.1% for vegoils and 12.6% for sugar.

Bird flu is curbing turkey supplies in the US

Starting in the third quarter, there will be “large supply gaps” for Jennie-O branded turkey products, parent company Hormel Foods warned Thursday. The shortages anticipated in the coming months come as one of the worst-ever avian influenza outbreaks wipes out flocks across the U.S. Midwest.

USDA’s weekly dairy report

CME GROUP CASH MARKETS (6/3) BUTTER: Grade AA closed at $2.9150. The weekly average for Grade AA is $2.9050 (+0.0225). CHEESE: Barrels closed at $2.2450 and 40# blocks at $2.2700. The weekly average for barrels is $2.2794 (-0.0321) and blocks, $2.2531 (-0.0629). NONFAT DRY MILK: Grade A closed at $1.8625. The weekly average for Grade A is $1.8663 (+0.0298). DRY WHEY: Extra grade dry whey closed at $0.5575. The weekly average for dry whey is $0.5463 (+0.0438).

CHEESE HIGHLIGHTS: Throughout the country, milk is available, allowing cheese producers to run active schedules. Contacts in the Midwest and West continue to report that they have labor shortages. Some plant managers in the West say that those shortages and delays to production supply deliveries are causing them to run below capacity. Cheesemakers in the Midwest say that they are busy trying to keep up with strong seasonal demand for curd and processed cheese. Retail demand is steady to lower in the Northeast but unchanged in the West. Export purchasing is strong, as contacts in the West say that they are receiving orders for loads to ship to Asian markets in early 2023. Spot inventories are available in both the Northeast and West regions. Market prices have moved lower throughout the last two weeks, on the CME; some contacts in the West suggest that marginally larger inventories of cheese in cold storage, compared to month ago and year ago levels, may be contributing to bearish market movements.

BUTTER HIGHLIGHTS: Cream is available across all regions. Contacts in the West say that demand has picked back up following Memorial Day weekend. Butter makers throughout the country say that staffing shortages are reducing their butter output. Stakeholders in the Central region say that increased cream availability has allowed them to spend more time on churning rather than micro-fixing bulk butter. In the Northeast, butter inventories are trending downward compared to this time last year. Meanwhile, loads of salted and unsalted butter are available in the West. Demand for butter varies throughout the country, but market tones remain firm. Contacts report some bullishness in butter markets as they anticipate higher demand and tighter inventories in the fall. FLUID MILK: Milk output remains mixed from one region to the next. Midwestern contacts say milk yields likely peaked sometime in May, but cooler temperatures continue to keep output more steady than lower. Northeastern contacts relay similar sentiments. Output reports in Florida and throughout the West are mostly steady or lower. As Class I demand expectedly ebbs due to school ordering hiatuses, Class II and Class III processors are taking on extra milk. Cheesemakers reported spots of $2.75 under Class to Class. Cream was also generally more available during the shortened work week, as multiples slid lower in the Midwest and East, while continued demand from ice cream/cream cheese manufacturers pushed multiples higher in the West. F.O.B. cream multiples are 1.30-1.35 in the East, 1.25- 1.32 in the Midwest, and 1.05-1.31 in the West.

DRY PRODUCTS: Low/medium heat nonfat dry milk (NDM) prices continued to firm in every region. Demand is more widespread, as both domestic and international interests have perked up in recent weeks. Dry buttermilk prices were steady in the Central/East, while the price range decreased in the West, although market tones remain firm due to regular reports of tight overall supplies and limited production time. Dry whole milk prices were unchanged on the shortened trading week. Dry whey prices are mixed this week. The mostly series in the Central region, along with the range and mostly in the West, all contracted on uncertain market tones. Whey protein concentrate (WPC) 34% prices on the bottom of the range and mostly slid lower, while the top of the range did the opposite. Demand for infant formula grade WPC 34% remains hearty. The lactose price range moved lower on the top, but all other prices were unchanged. Rennet and acid casein prices are unchanged, although market tones are clearly bullish.

ORGANIC DAIRY MARKET NEWS: During April 2022, organic whole milk utilization totaled 16.5 million pounds, down from 18.7 million pounds the prior year. Utilization of organic reduced fat milk, 16.7 million pounds, declined from 18.2 million pounds a year ago. The May 2022 in-store retail surveys of selected supermarkets in twenty-nine U.S. cities show the retail prices of organic whole milk in the half gallon container. The prices range from $3.39 in Denver, CO, to $6.29 in Pittsburg, PA.

NATIONAL RETAIL REPORT: Total conventional dairy ads decreased 24 percent from last week, and organic dairy ads slipped 83 percent. The most advertised dairy item is conventional ice cream in 48-64 ounce containers. The national weighted average advertised price for that ice cream in 48-64 ounce containers is $3.07, $0.35 less than last week. Conventional cheese advertisements are down 14 percent. This week’s most advertised cheese item is conventional 8- ounce shred cheese, despite 20 percent fewer ads compared to last week. The weighted average advertised price for conventional 8-ounce shred cheese is $2.39, $0.24 more than last week. Total conventional milk ads jumped 22 percent. Organic milk ad numbers sank 88 percent from last week.

TheCattleSite News Desk

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