19 January 2024

11 minute read

By: Jim Wyckoff

Europe

North America

Asia

China’s December pork imports fall sharply from year-ago

China imported 90,000 MT of pork during December, unchanged from November but 54.3% less than last year. For 2023, China imported 1.55 MMT of pork, down 11.7% from the previous year.

US Cattle slaughter slowly rebounding amid wintry weather

Wednesday’s estimated cattle slaughter improved to 118,000 head, though that was still 3,712 head below last year. The week-to-date tally stood at 341,000 head, up from last week but still well behind last year. Most beef plants are expected to run sizable Saturday kills to make up for holiday and weather-related downtime. As slaughter regulates, packer demand for cash cattle is expected to improve and support cash cattle prices.

China’s pork production reaches record in 2023

China produced a record 57.94 MMT of pork in 2023, official data showed, after farmers ramped up slaughter during the last quarter to cut losses amid an oversupply of pigs. Annual pork output expanded 4.6% from the previous year, as slaughter rose 3.8% to 726.62 million head. Pork production in the fourth quarter totaled 14.93 MMT, up 7% from the same period in 2022. China’s beef output rose 4.8% to 7.53 MMT, poultry meat production rose 4.9% to 25.63 MMT and mutton increased 1.3% to 5.31 MMT in 2023.

Philippines bans poultry imports from California, Ohio due to HPAI

The Philippines’ ag ministry has banned poultry imports from California and Ohio because of several outbreaks there of highly pathogenic avian influenza (HPAI). The ban covers imports of domesticated and wild birds, including poultry meat and eggs, the ministry said. All shipments coming from California and Ohio that are already in transit, loaded or accepted at Philippine ports before Jan. 15 will be allowed entry if they were slaughtered two weeks before the outbreak began. In 2023, the Philippines imported 166,356 MMT of poultry products worth $175.8 million from the US, government data showed.

As Americans eat more cheese and butter, US farmers are scrambling to get their cows to produce fattier milk

The efforts include using different cow breeds and feed mixes and making sure animals are comfortable and don’t get too hot. The result is that the average amount of butterfat in milk produced by US dairy herds has climbed past 4% and above the previous record set during World War II. Wall Street Journal.

In November, US pork exports reached new records in key markets

The surge in US pork exports is driven by outstanding performances in Mexico, Central America, and Colombia. These figures are based on data from USDA and compiled by the US Meat Export Federation (USMEF).

Pork exports to Mexico, a leading market, reached a value record in November, marking a 5% increase from the previous year. Export volume also surged by 14%, totaling 100,313 metric tons, making it the second-largest on record, with only October 2023 surpassing it.

Central America saw big growth in pork exports in November, with significant increases in Honduras, Guatemala, and El Salvador. Shipments to the region surged by 35% compared to the previous year, reaching 16,565 metric tons, setting monthly records.

South Korea also experienced substantial growth in pork exports in November, up by 19% compared to the previous year, with shipments totaling 17,406 metric tons.

Oceania witnessed a notable rebound in pork exports throughout 2023, and this trend continued in November, with shipments nearly tripling compared to the previous year, reaching 6,414 metric tons, which is an impressive 186% increase.

In terms of production, exports accounted for 30.1% of total pork production in November, with muscle cuts making up 26.2%. Both figures increased by approximately 1 percentage point compared to the previous year.

USDA report: livestock and poultry, world markets and trade

Competition Tightens for Leading Pork Exporter

The revised 2024 forecast of pork shipments by US and EU, the world’s top two exporters, are nearly on par for the first time since 2015. US and EU exports for 2024 are both revised lower compared to the October forecast. However, the gap is narrowed for these competitors as US shipments are revised only 1 percent lower whereas EU shipments are revised 3 percent lower. The downward revisions for US and EU exports are driven by expected weaker shipments to China, the world’s largest importer.

Continued weak demand by China reduces export opportunities, particularly for the EU. Although US export volumes to China remain a significant part of total exports, US share of exports to China is less than for the EU. In 2022, US shipments to China accounted for 10 percent of total exports, while EU shipments to China accounted for 27 percent of total exports. In addition, EU production has declined in recent years and is revised 2 percent lower in 2024, tightening exportable supplies.

Forecast growth in US production and lower prices are expected to underpin US exports competitiveness in several markets.

Beef

Global beef production for 2024 is revised 1 percent upward from the October forecast to 59.5 million tons as upward revisions for the United States and Australia more than offset declines for Argentina and the EU. Nonetheless, US production is still expected to decline year on year. Australia continues herd liquidation and processors have announced additional shifts supporting higher slaughter levels which will offset slightly lower weights. Argentina production is revised lower on tighter cattle supplies following a smaller calf crop and drought-induced liquidation in 2023. EU production is revised down on lower slaughter amid multi-year herd contraction and sluggish consumer demand. The production forecast for Brazil is unchanged.

Global beef exports for 2024 are revised 1 percent higher from the October forecast to 12.1 million tons. Shipments by Brazil and Australia are revised upward on ample production and firm global demand. Australia and Brazil, the world’s leading exporters, will benefit from robust US import demand spurred by declining domestic production. However, Brazil shipments will be constrained by US beef import quotas whereas Australia shipments are unlimited and duty-free due to the United States- Australia Free Trade Agreement. The forecast for China demand is slightly improved despite slower expected economic growth.

Pork

Global pork production for 2024 is revised down 1 percent from the October forecast to 114.2 million tons on lower output in China, the EU, and Brazil. China production is revised lower as continued weak demand discourages expanding domestic production. EU production is revised lower on continued regulatory pressure and changing consumer preferences. Brazil production is revised lower as imports from top market China continue to weaken. US production is virtually unchanged with declines in the farrowings offset by increased pigs per litter. • Global pork exports for 2024 are lowered 2 percent from the October forecast to 10.2 million tons as the EU, United States, and Brazil increasingly compete for lower China imports. Although US exports remain strong to many core markets, including Mexico and Canada, aggregate exports are revised lower against weak import demand from Japan and China. United Kingdom exports are also revised lower on declining demand from the European Union.

Chicken Meat

Global chicken meat production for 2024 is virtually unchanged from the October forecast at 103.3 million tons. A downward revision in US production is mostly offset by upward revisions for the EU and UK. The production forecasts for Brazil and China remain unchanged. • Global chicken meat exports for 2024 are revised 1 percent lower from the October forecast to 13.9 million tons as reductions in Brazil and US shipments are not offset by minor gains from other leading exporters. Weaker than expected demand from Saudi Arabia, South Korea, and Japan will primarily impact Brazil, the world’s leading exporter. Despite the downward revision in Brazil exports, volumes are still expected to reach a record level and continue to account for a growing portion of world trade. US exports are revised lower on softer Cuba and Angola demand stemming from macroeconomic challenges.

China’s 2023 meat imports slip below year-ago

China imported 566,000 MT of meat during December, up 1.6% from November but nearly 19% below year-ago. For 2023, China imports 7.38 MMT of meat, down 0.3% from the previous year.

Eggs getting more expensive at US grocery stores as HPAI strikes industry again

The price of eggs shot up 8.9% from November, marking the highest monthly increase since January of last year as highly pathogenic avian influenza (HPAI) outbreaks impacted the industry. For now, economists believe this latest HPAI outbreak won’t be as severe as the one in 2022 that devastated flocks and sent egg prices sky-high – at one point rising 70% annually. Of note: For the 12 months that ended in December, egg prices were down 23.8%.

Weekly USDA dairy report

CME GROUP CASH MARKETS (1/12) BUTTER: Grade AA closed at $2.5675. The weekly average for Grade AA is $2.5595 (-0.0893). CHEESE: Barrels closed at $1.4450 and 40# blocks at $1.5625. The weekly average for barrels is $1.4600 (+0.0400) and blocks, $1.5280 (+0.0717). NONFAT DRY MILK: Grade A closed at $1.1850. The weekly average for Grade A is $1.1910 (+0.0147). DRY WHEY: Extra grade dry whey closed at $0.4300. The weekly average for dry whey is $0.4270 (+0.0257).

BUTTER HIGHLIGHTS: Retail and bulk butter demands are mostly steady. However, some lighter domestic demand is reported in the western region as a few manufactures indicate demand is below expectations. Persistently weak food service demand is noted in the east region. In the central region, food service demand is expected to take a temporary hit from recent winter storms. Cream is readily available. Strong to steady production schedules are reported. Some butter makers are turning down cream offers due to currently being at capacity. Winter weather caused some hauling disruptions at some plants in the central region. Bulk butter overages range from 1 to 8 cents above market, across all regions.

CHEESE HIGHLIGHTS: Due to storm activity in many eastern states, many milk loads intended for Class III processors were diverted into Class I channels. Processors note production schedules are steady to lighter commensurate with milk availability. Contacts in the Northeast relay increased export demand. Spot milk availability remains strong in the Central region, and prices are being reported as low as $7 below Class III. Some plants note downtime for either maintenance or inspection. Cheesemakers note steady demand and comfortable inventory levels. Winter weather is expected to add obstacles for both milk and cheese transport. In the West, retail cheese demand is noted to be lighter. Foodservice demand is following a similar downward trend. Contacts note strong Class III demand has made production schedules steady to stronger. Contacts in the West also report increased international purchasing interest.

FLUID MILK: Farm level milk production is steady to stronger across the US. In the Northeast, farm level milk production continues to grow week over week. Due to winter weather, contacts noted some spot milk loads intended for Class III processing were redirected into Class I channels at the beginning of the week. In the Midwest, winter weather is also proving to be an obstacle to some dairy operations. Milk volumes are available for spot purchases, which plant managers attribute to downtime rather than farm level milk output growth. Spot milk prices were reported from $7 to $0.50 under Class III. Contacts noted Class I orders during this week were stronger than in previous years. Butter processors relay having to turn away cream offers as they are approaching capacity. In California and Arizona, milk output is noted to be steady to stronger. In California, milk production increases are at or above expected levels, and spot milk loads were reported as low as $6 under Class IV. Milk production is steady in New Mexico, where winter weather affected transportation this week. In Idaho, Colorado, and Utah, contacts note milk production is steady. In Washington and Oregon, milk outputs are steady to stronger, and milk handlers note week over week differences have increased from the end of 2023 to now.

DRY PRODUCTS: In the Central region, low/medium heat nonfat dry milk (NDM) market activity was steady to stronger, with prices continuing to land around the $1.20/lb mark. Contacts note demand from Mexico has picked up again. Contacts anticipate winter weather to be an obstacle for moving condensed skim loads to drying facilities. In the West, NDM loads are generally available for spot purchasers. Moderate export demand is noted. NDM production schedules have been steady, though some processors note routine maintenance. Liquid buttermilk availability has grown in the East, Central, and Western regions as churning activity has picked up. In the Central and East regions, dry buttermilk inventories remain tight as NDM has taken primary production focus. Dry whole milk processing remains limited week over week, and inventories are noted to be tight. Dry whey buying interest is light in the East, but steady in the Central and Western regions. Central processors note the firmness of the whey protein concentrate market could indicate production shifts away from dry whey. Similarly, whey protein concentrate 34% inventories have tightened as processors focus on drying whey protein concentrate 80% and whey protein isolate. Domestic demand for lactose increased this week. Contacts note lactose meeting stringent requirements is difficult to obtain, with some processors noting they have limited to no spot availability through Q1. Contacts share acid casein demand has picked up. Rennet casein production has resumed following the winter holidays.

ORGANIC DAIRY MARKET NEWS: The Organic Dairy Data Collection Act, HR 6937, was introduced in the US House of Representatives recently. The reported aim of this bill is to increase understanding of the costs associated with producing organic milk while enhancing USDA data collection. This bill would direct the USDA to collect and publish data regarding the cost of organic feedstuffs produced domestically or imported. It would direct NASS to gather data and report monthly amounts organic dairy farmers are receiving for organic milk. This bill would also direct part of the USDA to publish data illustrating the cost of production by state, the quantity of organic milk produced by region, and pay prices. National Organic Grain Feedstuff trade activity was light on the spot market with moderate demand. Bids for organic feed are mostly $7.00 - $7.75 delivered elevator. Organic feed soybean bids remain mostly unchanged. The bulk of trade activity this period was forward contracts. Compared to the same period last year, organic feed corn sold $2.97 lower delivered elevator and organic feed soybeans sold $8.57 lower.

NATIONAL RETAIL REPORT: Advertisement totals were divided this week, as organic dairy ad numbers nearly doubled following the first full week of the year, while conventional ad totals decreased 14 percent, in toto. Conventional ice cream in 48-to-64-ounce containers was the most advertised dairy item this week, while conventional shredded cheese in six-to-eight-ounce packages was the second-most advertised dairy item. Half-gallon milk remains the most advertised organic dairy item this week.