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Weekly global protein digest

23 October 2020
Jim Wyckoff Commentary -  TheCropSite

Read the latest updates on the global beef and dairy markets from livestock analyst Jim Wyckoff.

US beef sales rise in latest week

The weekly USDA export sales report released Thursday morning showed U.S. pork net sales of 26,800 MT reported for 2020 that were unchanged from the previous week, but down 35 percent from the prior 4-week average. Increases primarily for Mexico (13,800 MT, including decreases of 800 MT), Japan (4,900 MT, including decreases of 200 MT), China (1,800 MT, including decreases of 1,500 MT), South Korea (1,500 MT, including decreases of 500 MT), and Colombia (1,000 MT), were offset by reductions for Vietnam (100 MT). For 2021, net sales of 800 MT were primarily for New Zealand (400 MT), Australia (300 MT), and Mexico (100 MT). Exports of 36,600 MT were up 2 percent from the previous week and 4 percent from the prior 4-week average. The destinations were primarily to China (12,500 MT), Mexico (11,100 MT), Japan (4,300 MT), Canada (2,500 MT), and South Korea (1,500 MT).

US beef net sales of 21,700 MT reported for 2020 were up 62 percent from the previous week and 13 percent from the prior 4-week average. Increases primarily for South Korea (5,400 MT, including decreases of 400 MT), China (3,700 MT), Japan (3,600 MT, including decreases of 600 MT), Mexico (2,800 MT), and Hong Kong (2,600 MT, including decreases of 200 MT), were offset by reductions for Chile (100 MT). For 2021, net sales of 2,600 MT resulting in increases for Japan (1,400 MT) and South Korea (1,300 MT), were offset by reductions for Hong Kong (200 MT). Exports of 17,800 MT were up 10 percent from the previous week and 6 percent from the prior 4-week average. The destinations were primarily to Japan (4,500 MT), South Korea (4,200 MT), China (2,000 MT), Mexico (1,600 MT), and Hong Kong (1,500 MT).

Japan to see higher milk production

USDA this week reported fluid milk production in Japan is projected to increase around one percent in 2020 and 2021 as increased numbers of young heifers born in 2018 and 2019 start milking. Nationwide school closures in the spring due to COVID-19 pushed excess fresh milk to further processing into butter and non-fat dry milk. With foodservice demand sluggish, increased production will expand stocks of both commodities and put downward pressure on imports in 2020 and 2021. Cheese production is forecasted to rise slightly in both years on increased availability of fluid milk and steady demand growth while imports remain flat.

New Zealand milk output decreases

New Zealand’s milk production in 2021 is forecast at 22 million metric tons (MMT), down slightly from the record volume now estimated for 2020 (22.19 MMT). This is a result of marginally lower dairy cow numbers and based on expectations of a return to more typical milk yields during the second half of the year. Recovery from the North Island-wide drought that persisted for most of the first half of 2020 has been exceptional. Dairy processors continue to diversify milk away from the main commodities and towards fresh cheeses, infant milk formula, as well as develop new consumer offerings for staples such as butter and cheese.

The Philippines to import less milk

The Philippines imports virtually all of its dairy products, especially milk powder, as domestic production cannot meet the country’s dairy demand of nearly 3.0 million metric tons (MMT) liquid milk equivalent (LME) per year, according to the National Dairy Authority (NDA). Total imports in 2020 are projected to drop due to dampened consumer demand caused by the COVID-19 induced economic slowdown. Dairy imports in 2021 will likely increase marginally as the local economy recovers and purchasing power improves. Major suppliers are New Zealand (37 percent), the United States (31 percent), and Australia (5 percent). In 2019, the Philippines was the sixth largest market for U.S. dairy products by value at $273 million.

USDA international dairy report

EUROPE

WESTERN OVERVIEW: Autumn weather in Western Europe has been favorable to milk production. Most of the primary producing countries have reported year on year increases in recent weeks. While an annual increase is expected for 2020, some dairy experts in Western Europe caution that the pace of recent YOY increases folded into full 2020 data may effectively slow in the final three months of 2020 because in 2019, it was the final quarter where growth really broke through and lifted the annual data.

There is also concern about future global dairy pricing if milk production increases in Western Europe are added to expected increases in the United States and Oceania. Milk production is seasonally declining.

Germany is heading toward the expected seasonal low in November. A similar pattern is noted in France. Last week many dairy processors met under the auspices of the European Commission to review the status of the European dairy industry. It is reported by some attendees that sentiment was more positive than at the last meeting in June. There was general consensus that the dairy market has been resilient. Strong exports, retail sales, partial recovery of food service demand, and government stimuli are cited as factors. Nevertheless, there was uncertainty expressed as to the future, due to possible impacts of economic factors on consumer purchasing, as well as COVID-19 factors limiting dining out.

Cheese manufacturers are maintaining busy schedules to keep up with demand. Orders from within the EU have increased. Not all buyers can receive delivery as soon as they would like. Export interest is very strong even if a bit weaker than several months ago. The cheese business in Western Europe is doing very well. Increased milk production this year has helped keep milk flowing into cheese plants.

EASTERN OVERVIEW: In Poland January – August 2020 milk production was reported as 4.7 percent higher than January – August 2019 according to CLAL data provided to USDA. Production of some dairy commodities in Poland January – August 2020 compared with January – August 2019, are cheese, +4.0 percent; butter, +8.9 percent; and SMP, +5.8 percent.

USDA’s US dairy market at a glance

FLUID MILK: Milk production is steady to increasing in most regions. Class I sales are up in the Midwest, Northeast, Texas and Arizona. In California Class I is steady. Mid Atlantic Class I sales are mixed. Midwest and Western manufacturers are generally receiving as much milk as they want for processing. Western condensed skim milk is available for ice cream processing and NDM. Cream availability is mixed in the West and Midwest, and tighter in the East. F.O.B. cream multiples for all Classes are 1.30-1.40 in the East; 1.25-1.35 in the Midwest; and 1.05-1.26 in the West. DRY

PRODUCTS: Mixed nonfat dry milk pricing was reported in all regions this week. This reflects varying conditions for individual plants in the regions. Some manufacturers have access to spot milk while others face limited supplies. Another factor is competition for dryer time from buttermilk and dry milk. Western markets are called steady and Midwest markets have a bullish tone.

Dry buttermilk prices are steady in the Central and East regions, but higher in the West. Spot trading was slower as more production is contracted. Dry whole milk markets are steady with modest trading. More milk availability is expected to increase drying schedules. Dry whey prices are higher east to west. Whey is reported to be available to buyers even as stocks are called tighter. This is enabling sellers to nudge prices higher. Export interest is contributing to sales. Whey protein concentrate 34% prices are steady. Demand is mixed. Lactose prices are steady to lower. Production is steady to higher with mixed spot market activity. The rennet casein price range is steady while the acid casein price range moved higher. Contracting for Q1 and Q2 of 2021 is well underway.

ORGANIC DAIRY MARKET NEWS: Organic Milk Product Sales. The Agricultural Marketing Service (AMS) reports estimated US sales of total organic milk products for June 2020 were 237 million pounds, up 20.2 percent from June 2019 and up 14.4 percent year-to-date compared to the previous year. Organic whole milk sales for June 2020, 102 million pounds, were up 18.9 percent compared to a year earlier and up 17.6 percent compared to year-to-date 2019. Reduced fat milk (2%) sales were 82 million pounds, up 23.2 percent from the previous year and up 19.0 percent year-to-date 2019. NATIONAL

RETAIL REPORT: This week, the total number of conventional ads increased 1 percent, and organic ads increased 62 percent. Ads for conventional 1-pound butter decreased 32 percent, with a weighted average advertised price of $3.24, down 2 cents from last week. The total number of conventional cheese ads increased 2 percent. The weighted average price for 8-ounce conventional cheese shreds is $2.48, up 13 cents from last week. Organic 8-ounce cheese shreds have an average price of $3.49, resulting in a $1.01 organic price premium. The total number of conventional yogurt ads increased 12 percent and the total number of organic yogurt ads increased nearly six times. Conventional Greek yogurt in 4-6 ounce containers was the most advertised yogurt item this week.

 

TheCattleSite News Desk

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