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Weekly global protein digest: Australia's beef herd recovering, HPAI, US dairy markets

11 March 2022
Jim Wyckoff Commentary -  TheCropSite

Market analyst Jim Wyckoff shares highlights from the global protein market

Australian beef herd continues recovery

USDA report that in 2022, the Australia beef industry is set to continue its herd rebuilding phase which began in 2021. As the herd numbers have begun to recover, overall cattle slaughter is expected to rise from the 50-year low of last year. With ample pasture production in key beef producing areas, and a continued high proportion of cattle finished by feedlots, carcass weights are expected to improve moderately in 2022. Higher slaughter and strong slaughter weights are expected to result in a 12 percent rise in beef production and a 13 percent increase in beef exports for 2022. For pork, another record grain harvest has helped curtail any increase in feed costs, and this combined with strong pork prices are expected to result in Australia’s 2022 pork production matching last year’s record level.

USDA forecasts lower beef exports from Argentina

Argentine beef exports in 2022 are forecast at 700,000 tons, carcass weight equivalent, which is 30,000 tons below the official USDA number. This number is as the result of a marginally smaller slaughter and beef production than earlier projected. The ending stock for 2022 is lowered to 53.27 million head, 640,000 head lower than the official USDA number primarily because of a severe drought in north and northeastern Argentina combined with devastating fires in cow-calf areas, especially in Corrientes province, which will negatively affect the next calving season.

China’s meat imports plunge in first two months of 2022

China imported 1.1 MMT of meat in January and February, down 33% from the same two-month period last year. An increase in domestic production, especially pork, curbed demand for meat imports.

China to buy more pork for state reserves

China will buy 38,000 MT of pork for state reserves on Thursday. Beijing started buying domestic pork for state reserves last week to support falling hog prices.

US pork export sales down, beef up in latest week

USDA Thursday reported US pork net sales of 25,400 MT for 2022 were down 40 percent from the previous week and 4 percent from the prior 4-week average. Increases primarily for Mexico (12,800 MT, including decreases of 200 MT), China (3,600 MT, including decreases of 300 MT), South Korea (2,100 MT, including decreases of 100 MT), Japan (2,000 MT, including decreases of 500 MT), and Honduras (1,200 MT), were offset by reductions for Chile (100 MT). Exports of 28,500 MT were down 5 percent from the previous week and 6 percent from the prior 4-week average. The destinations were primarily to Mexico (11,900 MT), Japan (5,200 MT), China (3,600 MT), South Korea (2,600 MT), and Canada (1,500 MT).

Beef: Net sales of 27,500 MT for 2022--a marketing-year high--were up 16 percent from the previous week and 36 percent from the prior 4-week average. Increases were primarily for China (10,400 MT, including decreases of 100 MT), Japan (6,400 MT, including decreases of 300 MT), South Korea (3,700 MT, including decreases of 500 MT), Canada (1,300 MT), and Taiwan (1,100 MT, including decreases of 100 MT). Exports of 15,900 MT were down 10 percent from the previous week and 1 percent from the prior 4-week average. The destinations were primarily to South Korea (4,500 MT), Japan (4,100 MT), China (2,600 MT), Taiwan (1,500 MT), and Mexico (1,000 MT).

More HPAI cases confirmed in commercial flocks in three US states

USDA’s Animal and Plant Health Inspection Service (APHIS) confirmed additional cases of highly pathogenic avian influenza (HPAI) in commercial poultry operations in three states — Queen Anne’s County, Maryland (broiler flock with 150,000 birds), New Castle County, Delaware (pullet flock with 265,000 birds) and Jasper County, Missouri (turkey flock with 27,000 birds). This brings total HPAI confirmations to 26 flocks with 16 of those being commercial poultry operations located in seven states — Indiana, Kentucky, Delaware, Missouri, Maryland, Iowa and South Dakota.

Hong Kong detects COVID-19 on imports of Brazilian frozen beef, Polish frozen pork skin

Hong Kong continues to take random tests on imports of chilled and frozen foods and their packaging for the COVID-19 virus. The latest detections were connected to frozen meats’ packaging from Brazil and Poland in February 2022. In 2021, Brazil was the largest supplier of beef and pork products for Hong Kong while Poland ranked as the fifth supplier for pork products.

US hog producer USDA payment recap

US hog producers who sold hogs through a spot market sale during the Covid-19 pandemic have until April 15, to submit their applications for USDA’s Spot Market Hog Pandemic Program (SMHPP). SMHPP is part of USDA’s Pandemic Assistance for Producers initiative and originally had a deadline to submit applications by Feb. 25. SMHPP assists hog producers who sold hogs through a spot market sale from April 16, 2020, through Sept. 1, 2020, the period during which these producers faced the greatest reduction in market prices due to the pandemic. USDA is offering SMHPP in response to a reduction in packer production and supply chain issues due to the Covid-19 pandemic, which resulted in fewer negotiated hogs being procured and subsequent lower market prices. USDA’s Farm Service Agency (FSA) began accepting applications for SMHPP on Dec. 15, 2021. In December, USDA published a notice of funding availability for hog producers who were not able to sell hogs on the spot cash market during the pandemic. USDA Secretary Tom Vilsack previously said when USDA initially set it up, it realized some issues relative to eligibility requirements that created challenges.

USDA’s weekly US dairy market at a glance

CME GROUP CASH MARKETS (3/04)
BUTTER: Grade AA closed at $2.6850. The weekly average for Grade AA is $2.6770 (+0.0420).
CHEESE: Barrels closed at $1.9700 and 40# blocks at $2.1500. The weekly average for barrels is $1.9460 (+0.0110) and blocks, $2.0655 (+0.0799).
NONFAT DRY MILK: Grade A closed at $1.8725. The weekly average for Grade A is $1.8665 (+0.0052).
DRY WHEY: Extra grade dry whey closed at $0.7575. The weekly average for dry whey is $0.7530 (-0.0420).

CHEESE HIGHLIGHTS: Cheese markets are moving in a bullish fashion this week, on continually steady demand and balanced cheese supplies. Milk remains steadily available for production, but trucker and labor shortages continue to keep full production on plant managers' wish lists. Cheesemakers in the Midwest reported spot milk prices at $1.50 under Class to Class III. A number of cheesemakers say they are more willing to use contracted or internally sourced milk supplies in lieu of spots, as milk prices continue to increase. Contacts in the East and West report steady to strengthened retail demand, as COVID measures continue to be relaxed at the local level.

BUTTER HIGHLIGHTS: Cream is available to butter makers for now. In the East, where cream multiples are higher, some manufacturers are selling surplus cream. Across all regions, butter production is generally steady to more active. Some facilities, however, are operating under full capacity due to labor pool issues and production supply delays. Plant managers are working to expand tight inventories ahead of spring holiday demand. Vacillating prices lend an unsettled tone to the butter market currently. Some industry contacts are predicting short butter availability later this summer and fall. Orders are reportedly mixed from both retail and food service sectors. Across the country this week, bulk butter overages range from 6 to 15 cents above market.

FLUID MILK: Mixed Midwest milk production finds production climbing in southern to central areas, but steady in upper reaches. Milk production is trending higher in the Northeast, California, and mountain states. New Mexico is steady to higher. Dry conditions in the Midwest are causing concern as feed and other costs continue increasing. This week's spot milk prices ranged from $1.50 under to Class. During week 9 of 2021, prices ranged from $7 to $2 under Class III. Cream is reported to be available in all regions. In some instances, multiples are increasing. Midwest bottling orders have slowed with some school district orders being reduced in advance of breaks. Class I purchasing in California is steady to higher. In the East, Class I demand is healthy with firm bottling demand. F.O.B. cream multiples are 1.28-1.36 in the East, 1.22-1.29 in the Midwest, and 1.00-1.28 in the West.

DRY PRODUCTS: Prices for low/medium heat nonfat dry milk are mixed due to lower top range prices and higher low range prices. Mostly prices are unchanged to lower at the top. End users are increasingly averse to higher prices and are slowing NDM purchases. High heat NDM interest is quiet with generally steady prices. Dry buttermilk prices move higher at the low end of the ranges but remained steady at the top. Inventories are sufficient for the steady demand. Production is limited to mixed. Shipping delays continue. Dry whole milk prices are steady. Most production is focused on filling contracted orders. Dry whey price ranges are regionally mixed. Central prices decreased, Northeast prices are up at the bottom and down at the top, West prices are steady to lower. Upper range price hesitancy has been noted, slowing some buying interest. Whey protein concentrate 34% prices firmed. Spot market availability is limited. The market tone is strong. Lactose prices are steady with mixed demand. Contracts are being filled but spot market buyers report tight availability. Production is stable. Acid and rennet casein prices increased. Supplies are tight and demand is increasing.

TheCattleSite News Desk

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