23 August 2024

12 minute read

By: Jim Wyckoff

North America

Asia

Weekly USDA US beef, pork export sales

Beef: Net US sales of 15,900 MT for 2024 were down 44 percent from the previous week and 8 percent from the prior 4-week average. Increases were primarily for Japan (5,100 MT, including decreases of 200 MT), South Korea (4,300 MT, including decreases of 300 MT), China (2,200 MT, including decreases of 200 MT), Mexico (1,300 MT, including decreases of 100 MT), and Indonesia (1,000 MT). Exports of 12,500 MT were down 11 percent from the previous week and 19 percent from the prior 4-week average. The destinations were primarily to South Korea (2,900 MT), Japan (2,800 MT), China (1,700 MT), Mexico (1,400 MT), and Taiwan (1,300 MT).

Pork: Net US sales of 19,300 MT for 2024--a marketing-year low--were down 7 percent from the previous week and 34 percent from the prior 4-week average. Increases were primarily for Mexico (4,700 MT, including decreases of 100 MT), Canada (3,100 MT, including decreases of 600 MT), Japan (3,000 MT, including decreases of 700 MT), Colombia (2,100 MT, including decreases of 200 MT), and China (1,400 MT, including decreases of 100 MT). Net sales of 200 MT for 2025 were reported for Australia (100 MT) and Japan (100 MT). Exports of 28,800 MT were unchanged from the previous week, but down 8 percent from the prior 4-week average. The destinations were primarily to Mexico (12,900 MT), Japan (3,900 MT), China (2,300 MT), Colombia (2,100 MT), and Canada (2,000 MT).

China investigating EU dairy imports

China initiated an anti-subsidy investigation into dairy imports from the European Union, escalating trade tensions between the two economic giants. The probe, announced by China's Ministry of Commerce, will scrutinize several dairy products, including fresh and processed cheese, and will review 20 EU subsidy programs, particularly those under the Common Agricultural Policy and specific to Italy and Finland's dairy sectors. This move is seen as a response to the European Union's recent decision to expand tariffs on Chinese-made electric vehicles (EVs) and impose tariffs on Tesla Inc. cars produced in China.

USDA annual report on China poultry industry

Production: USDA forecasts China chicken meat production in will continue to grow moderately year-over-year in 2025. The growth will mainly come from white broiler as producers respond to demand drivers and as broiler meat would be a substitute for other animal proteins. Yellow broiler production is forecast to stay at levels similar, but slightly below, 2024 estimates.

Consumption: USDA forecasts China chicken consumption to grow in 2025 due to dietary shifts. With economic headwinds and expected higher pork prices in 2025, Post forecasts some consumers will shift from higher priced pork to lower priced chicken for animal protein demand.

Trade: USDA forecasts China chicken imports to decline in 2025 due to expected increases in domestic production and constraints or suspensions facing major supplying countries. Chicken exports are forecast to grow in 2025 as China’s poultry meat remains a competitively priced protein in overseas markets.

USDA annual report on China livestock industry

Cattle Production: USDA’s attache (post) forecasts China calf production in 2025 to decline marginally based on lower cow stocks. Cattle Imports: Post forecasts cattle imports to further decline in 2025 due to adaptability issues of imported cattle breeds, abundance of domestic cattle, and declining milk prices.

Beef Production: Post’s forecast of China beef production in 2025 to decline marginally. Additionally, sources report demand for domestic beef is flat and the inventory of finished cattle will decline.

Beef Imports: Post forecasts China beef imports in 2025 to grow marginally due to domestic production constraints and increased demand for imported cuts. Owing to economic headwinds and strong volumes of imported beef in previous years, the year-to-year growth is curbed from past trends.

Swine Production: Post forecasts China swine production in 2025 to grow marginally due to a higher sow inventory in 2024.

Swine Imports: Post forecasts China swine imports in 2025 to be stable from 2024. The consensus is that China’s swine herd has recovered following its decimation by African swine fever (ASF) that continued through to 2021 and that integrated pork industry members have improved herd management. Additionally, sow numbers are being met mostly by domestic breeds and complemented by modest imports.

Pork Production: Post forecasts China pork production to decline in 2025 because of expected fewer swine for slaughter and weak pork demand. Post expects pork production in the second half of 2025 to be higher than in the first half as swine companies react to price signals in late 2024 and early 2025 to begin increasing production.

Pork Imports: Post forecasts pork imports in 2025 to remain flat because of weak consumer demand in the sluggish economy. In addition, industry sources report imported pork has not been moving as quickly through the market as before and traders appear to have adequate inventories

Russian pork producers target EU’s share of China's pork market

The move adds to the growing economic ties between Russia and China in the face of increasing sanctions against both countries by the West.

Perdue Foods LLC issued a voluntary recall of approximately 167,171 pounds of frozen, ready-to-eat chicken products

This is due to potential metal contamination. This recall was initiated after consumer complaints revealed the presence of metal wire in the products. The affected items include:

• Perdue Simply Smart Organic Gluten Free Breaded Chicken Breast Nuggets
• Perdue Breaded Chicken Breast Tenders
• Butcher Box Organic Free Fully Frozen-Cooked Breast Chicken Nuggets

These products were produced on March 23, 2024, and have a "best if used by" date of March 23, 2025. They were distributed nationwide to retail locations and sold online. The recall was coordinated with USDA’s Food Safety and Inspection Service (FSIS), and the affected packages bear the establishment number "P-33944" on the packaging.

Perdue's Senior Vice President of Food Safety, Jeff Shaw, stated that the recall was a precautionary measure after identifying a thin strand of metal wire inadvertently introduced during manufacturing. There have been no reports of illness or injury related to the consumption of these products. Consumers are advised to discard the products or return them to the place of purchase. For further information, consumers can contact Perdue at 866-866-3703.

Recent discussions emerge on accusations of price gouging in the US food industry

• Food industry's stance: Representatives from the food industry, including the National Grocers Association and FMI, The Food Industry Association, have rejected accusations of price gouging. They argue that high input costs are the primary reason for increased grocery prices, not deceptive practices. Greg Ferrara, president and CEO of the National Grocers Association, emphasized that independent grocers are also affected by inflationary pressures and called for a focus on reducing credit card fees and regulations instead of implementing a price gouging ban. Leslie Sarasin, President and CEO of FMI, stated that the food industry has zero tolerance for price gouging and highlighted that grocery stores operate on tight profit margins.
• Political proposals: Vice President Kamala Harris has proposed a federal ban on price gouging in the food industry, arguing that it would prevent businesses from exploiting crises to charge excessive prices. However, some economists and critics argue that such a ban could lead to unintended consequences, such as discouraging new market entrants and potentially maintaining the status quo. The proposal is part of a broader agenda aimed at reducing costs for consumers, including food, housing, and medicine.
• Economic and political context: Under the Biden/Harris administration, food prices increased significantly, contributing to public dissatisfaction with the economy. While inflation is reportedly moderating, grocery prices remain a concern for many voters. Some economists suggest that addressing barriers to market entry and focusing on anti-competitive behaviors might be more effective than implementing price gouging bans.
  

USDA defends response to the avian influenza outbreak amid calls from lawmakers for increased action

Reps. Randy Feenstra (R-Iowa) and Jim Costa (D-Calif.) have urged USDA to create a strategic initiative focused on researching biosecurity measures, developing vaccines, and improving methods for culling infected birds. USDA has emphasized that its current measures, in collaboration with other federal agencies, have maintained the safety of the food supply.

USDA is also exploring the development of vaccines for poultry, acknowledging that while vaccines are important, implementing a vaccination strategy domestically poses challenges and could have significant trade implications. A vaccine for cattle is considered promising but is still in the early stages of development. Meanwhile, health experts are encouraging producers to adopt voluntary biosecurity measures to mitigate the spread of the virus.

Of note: The current outbreak of Highly Pathogenic Avian Influenza (HPAI) has resulted in the deaths of over 100 million domestic and commercial birds and has affected dozens of dairy herds since 2022. As fall approaches, federal officials anticipate a rise in bird flu cases due to wild bird migrations but do not expect an increased risk to dairy cattle.

Weekly USDA dairy report

CME GROUP CASH MARKETS (8/16) BUTTER: Grade AA closed at $3.1800. The weekly average for Grade AA is $3.1410 (+0.0400). CHEESE: Barrels closed at $2.2550 and 40# blocks at $2.1000. The weekly average for barrels is $2.1840 (+0.2370) and blocks $2.0495 (+0.1275). NONFAT DRY MILK: Grade A closed at $1.2550. The weekly average for Grade A is $1.2380 (-0.0155). DRY WHEY: Extra grade dry whey closed at $0.5500. The weekly average for dry whey is $0.5590 (-0.0275).

BUTTER HIGHLIGHTS: Butter production, namely churning, has likely reached its seasonal/annual nadir. As spot cream supplies dwindle in the East and Central regions, churning schedules have shifted into lower gears. Conversely, West region butter contacts share that churning has maintained a steady pace. Butter demand is starting to pick up ahead of the fall demand rush. Customers are actively seeking out volumes to get ahead of the aforementioned push. Traders say inventories of 80 percent butterfat loads remain accessible. Butter markets are steady with bullish indicators moving into late summer.

CHEESE HIGHLIGHTS: Cheese production is trending steady to lighter throughout the U.S. Milk handlers in the East note tightening milk volumes and increases in Class I demand, which has limited the amount of milk available to cheese manufacturers. Foodservice demand is steady while retail demand has increased week over week. Cheese producers in the Central region report tight spot milk availability with estimations that spot milk prices will remain above Class III until around Labor Day. Regional demand for cheese is steady. Cheese inventories vary from manufacturer to manufacturer. Cheese production in the West is active. Milk availability remains tight in the region, but some manufacturers relay there is enough for processing. Cheese demand is steady to stronger, namely as educational institutions reopen. Cheese inventories are mixed.

FLUID MILK: Most dairies in the United States are feeling the heat. As the doldrums of summer run on, farm milk volumes lessen. Class I needs for the upcoming school year have milk shifting within regions to fulfill orders. Processors in the East are altering schedules, and milk is being dispatched down the region to fill demand. The Midwest is feeling the seasonal tightness, but some processors relay milk is still somewhat available. Temperatures as high as triple-digits stifle milk volumes in the mountain states and those in the southern desert states. The Pacific Northwest is the exception, where high temperatures in the 70s with nighttime temperatures in the 50s have aided in cow comfort and resulted in somewhat steady milk volumes. Under this pressure, spot milk prices have reached $3.50 over Class, $1.00 more than week 33 of 2023. Cream availability has paralleled milk across the country. Cream is tight in the East and Midwest while somewhat accessible in the West. End users are searching for spot cream. Class II demand remains steady, Class III processing is expected to finish the summer strong, and availability for Class IV curtails as spot prices rise. Condensed skim availability is meeting some needs, but as milk availability dips, so go skim solids. Cream multiples are 1.36 – 1.52 in the East, 1.29 – 1.45 in the Midwest, and 1.17 – 1.34 in the West.

DRY PRODUCTS: Low/medium heat nonfat dry milk (NDM) prices were steady to higher in all regions. Supplies are stable to tighter, as condensed skim availability moves lower, in line with seasonal milk output. Dry buttermilk prices were mixed, as stocks are available but not growing. Dry whole milk prices were unchanged on tight supplies and limited spot market activity. Dry whey prices were mixed throughout the regions. Tighter supplies of selectively branded whey are keeping markets somewhat bullish. Whey protein concentrate 34% prices shifted higher, and processors continue to put their foci on higher protein concentrate markets. Lactose prices were generally steady, but inventories for higher[1]mesh volumes are limited. Acid casein prices are steady to lower, while rennet casein prices were steady.

INTERNATIONAL DAIRY MARKET NEWS

WEST EUROPE: Milk production in West Europe is continuing the seasonal slide. Hot weather in France, Germany, and the Netherlands has stifled milk production and component levels for the last couple weeks, dropping weekly milk collections below volumes of the same week in the previous year. The downward trend in milk volumes has infused a dose of uncertainty of the availability of milk for the coming months. Inventories of a number of dairy products are tight and manufacturers are not too eager to put much production into storage at current prices. Cream and farm gate milk prices have both firmed over the last few weeks. 

EAST EUROPE: Even as the seasonal decline of milk production spreads across Europe, some East Europe countries continue to experience milk production growth. According to CLAL data made available to USDA, the provisional June 2024 cows' milk production in Belarus was 763,000 MT, up 3.7 percent from June 2023. January - June 2024 provisional milk production in Belarus, 4,410,000 MT, is up 7.0 percent from January - June 2023.

OCEANIA: AUSTRALIA: Dairy Australia recently released export data for Australia showing milk export volumes from July 2023 - June 2024 were 181,799 MT, down 23.5 percent from the same time period a year earlier. The July 2024 Production Inputs Monitor from Dairy Australia was recently released. This report stated rainfall across much of Australia was average to above average in July, but Southern Australia remained drier than typical. Despite increased rainfall in July, pressure remains on feed markets in the country and prices have been driven by strong demand for supplementary feed in most regions. Throughout most of the dairy producing regions rainfall is expected to remain average or above average from August to October.

NEW ZEALAND: A group in New Zealand, which forecasts dairy prices, increased the forecasted milk price for the 2024/2025 season, following GDT event 361, by 34 cents, to $8.66/kgMS. The group stated the higher index price for whole milk powder during the event contributed to most of the increase in the forecasted milk price for the upcoming season. 

SOUTH AMERICA: Neutral weather patterns have been somewhat friendly for milk output in the South American region so far this winter. Milking season has begun, in earnest, and so far, reports on pasture quality and cow comfort have been stable to positive. Brazil is reportedly having a somewhat productive season, while reports are similar from Uruguayan and Argentinian contacts, as well. Bottlers are busy, as are processors.

NATIONAL RETAIL REPORT: Week over week, more retail advertisement totals were tallied than during week 32. Conventional ad numbers increased five percent, while organic ads increased 52 percent. Conventional ice cream in 48-to-64-ounce containers took the gold medal in single-item ad totals, beating out the silver medalist, conventional cheese in six-to-eight ounce shreds. The reigning ad champion in the organic aisle, half-gallon milk, maintained its top spot on the podium.