Weekly global protein digest: exports, Prop 12, USDA to publish cattle prices

Analyst Jim Wyckoff shares an update on the USDA reports and global protein news
calendar icon 9 December 2022
clock icon 8 minute read

Weekly USDA beef, pork export sales

USDA Thursday reported US beef net sales of 1,600 MT for 2022 primarily for China (4,800 MT, including decreases of 300 MT), Japan (1,600 MT, including decreases of 1,100 MT), Mexico (900 MT, including decreases of 100 MT), Canada (500 MT, including decreases of 200 MT), and Taiwan (400 MT, including decreases of 200 MT), were offset by reductions primarily for South Korea (7,900 MT). Net sales of 16,300 MT for 2023 were primarily for South Korea (13,100 MT), Japan (1,300 MT), Hong Kong (700 MT), China (300 MT), and Guatemala (300 MT). Exports of 16,900 MT were primarily to South Korea (5,100 MT), Japan (4,300 MT), Mexico (1,900 MT), China (1,600 MT), and Taiwan (1,300 MT).

Pork: US net sales reductions of 7,900 MT for 2022 resulting in increases for Mexico (3,100 MT, including decreases of 4,000 MT), China (900 MT, including decreases of 300 MT), Honduras (200 MT), the Dominican Republic (200 MT, including decreases of 200 MT), and Chile (100 MT), were more than offset by reductions primarily for Japan (4,400 MT), Australia (3,400 MT), South Korea (2,300 MT), and Canada (2,200 MT). Net sales of 2,400 MT for 2023 were primarily for Colombia (1,300 MT), Japan (500 MT), South Korea (200 MT), and Nicaragua (200 MT). Exports of 32,500 MT were primarily to Mexico (15,900 MT), China (4,700 MT), Japan (3,300 MT), South Korea (2,100 MT), and Canada (1,900 MT).

US beef, pork exports rise in October

The U.S. exported 301.1 million lbs. of beef during October — a record for the month. Beef shipments increased 25.3 million lbs. from September and 26.6 million lbs. from October 2021. Through the first 10 months of 2022, the U.S. shipped 2.993 billion lbs. of beef, up 5.1% from the same period last year, driven by a 26% increase in exports to China. U.S. pork exports totaled 539.7 million lbs. in October, up 26.7 million lbs. from September and 487,000 lbs. above last year. Through the first 10 months of this year, U.S. pork shipments totaled 5.198 billion lbs., down 12.1% from the same period last year as exports to China plunged 54%.

China’s meat imports increase but still below year-ago

China imported 670,000 MT of meat during November, up 6.4% from October but 1.0% less than last year. Through the first 11 months of this year, China imported 6.7 MMT of meat, down 23.2% from the same period last year.

USDA to publish cattle prices in bid to boost transparency

USDA will publish information on the contracts between meatpackers and cattle producers, including prices paid and amount purchased, in a pilot program aimed at making beef markets more transparent. The Cattle Contracts Library pilot program, which USDA will establish in a rule to be published today, is an effort to help producers figure out how much they should be getting for their cattle.

US pork checkoff rate adjustment

Effective Jan. 1, 2023, the Pork Checkoff rate will drop a nickel to 35 cents per $100 of value. This change is a result of a resolution passed by voting delegates at the 2022 Pork Industry Forum. Pork Checkoff payments are collected for all pigs sold with a change of ownership. This includes sales of weaned pigs, breeding age animals and at the final market destination. The Pork Checkoff is mandated by the Pork Promotion, Research, Consumer Information Act. The rate change was a recommendation of the Pork Industry Vision Task Force — a group of 19 leaders from the National Pork Board, NPPC and various state associations — to ensure the pork industry’s long-term success.

US Prop 12 enforcement will wait in California for Supreme Court ruling

A California judge extended his ban on enforcement of voter-approved Proposition 12 until July 1, to allow time for the Supreme Court to rule on the constitutionality of the animal welfare law. The Sacramento County Superior Court injunction was to expire on Feb. 28. Justices heard arguments on the farm-group challenge of Prop 12 in October and a decision is expected by the end of June. Approved in a statewide referendum in 2018, Prop 12 requires hog farmers to provide at least 24 square feet of floor space for breeding sows and it bars the sale of pork produced on farms that do not meet California’s standards. The pork industry prefers sow crates that greatly restrict movement by sows and argues that Prop 12 violates the dormant Commerce Clause by setting unfair barriers to interstate trade.

World food prices ease for eighth straight month

The UN Food and Agriculture Organization (FAO) global food price index ticked down 0.2 point in November – the eighth straight monthly decline – though it was 0.4 point (0.3%) above year-ago. Declines in cereal grains, dairy and meat slightly more than offset increases in vegetable oils and sugar. Compared to year-ago, prices were up 4.1% for meat, 9.1% for dairy and 6.4% for cereal grains, while vegoils dropped 16.2% and sugar declined 4.9%.

Weekly USDA dairy report

CME GROUP CASH MARKETS (12/2) BUTTER: Grade AA closed at $2.9000. The weekly average for Grade AA is $2.9130 (-0.0128). CHEESE: Barrels closed at $1.8975 and 40# blocks at $2.1000. The weekly average for barrels is $1.8460 (+0.0243) and blocks, $2.0960 (-0.0873). NONFAT DRY MILK: Grade A closed at $1.3600. The weekly average for Grade A is $1.3690 (-0.0452). DRY WHEY: Extra grade dry whey closed at $0.4500. The weekly average for dry whey is $0.4480 (+0.0080).

BUTTER HIGHLIGHTS: Cream is available across all regions, and contacts in the Northeast say volumes are meeting processors’ needs. Some Central butter makers report they are declining spot load offers of cream as they have reached their capacities. Butter makers in the West are running active schedules to work through available cream, though some say labor shortages are preventing them from running full churning schedules. In the Northeast and Central regions, butter churning is active. Retail customers in the Northeast are buying butter ahead of the winter holidays. Demand for butter is strong from both retail and food service customers in the West. Central region butter contacts also report strong demand for unsalted and salted butter. Spot purchasers say there is some tightness for butter, but inventories are available. Meanwhile in the Northeast, bulk butter supplies are reportedly tight. Bulk butter overages range from 5 to 15 cents above market, across all regions.

CHEESE HIGHLIGHTS: Milk is plentiful for cheese making in all regions, and processors in the Northeast and West say they are running active production schedules this week. In the Midwest, some cheesemakers are keeping full schedules while others report some downtime for scheduled maintenance this and next week. Some volumes of spot milk are being sold at a discount in the Midwest, though demand slowdowns are preventing some cheesemakers from purchasing additional loads of milk. Some Midwestern retail customers have, reportedly, met their holiday purchasing needs. Strong summer and fall demands have abated from cheese barrel purchasers in the Midwest. In the Northeast, stakeholders say demand is steady from both retail and food service customers, but export demand is softening amid declining international prices. Retail demand is steady in the West, while food service demand has picked up following last week’s holiday.

FLUID MILK: Milk production is mixed across the United States this week. While milk outputs are trending steady to higher in much of the country, industry contacts report slightly lower milk production in California and in the mountain states of Colorado, Idaho, and Utah. In the East, industry contacts report balancing plant intakes were up slightly over the holiday last week, but bottling demand has picked up once again, and drying activity has lessened. Processors generally suggest milk is widely available to meet processing needs. Many cheesemakers say they are full of self-sourced or contracted milk; therefore, they are not seeking extra spot loads. Spot milk loads in the Midwest region are $3 below to flat Class III. Demand for condensed skim milk is steady to higher in the East but is weaker in the West. Cream availability is trending higher, riding the wave of increasing milk output and higher milk components. Cream multiples for all Classes are 1.24 – 1.38 in the East, 1.18 – 1.26 in the Midwest, and 1.00 – 1.27 in the West.

DRY PRODUCTS: With a slightly bearish tone, low/medium heat nonfat dry milk prices are steady to lower, and high heat nonfat dry milk prices are trending downward. End users say they are getting low/ medium NDM offers more regularly now. Prices for dry buttermilk moved lower. Purchasers are looking for loads priced at or below NDM prices. Dry whole milk prices are unchanged. Dry whey prices are mixed but are generally contracting into narrower price ranges. Trading is limited. Animal feed whey prices are unchanged. Whey protein concentrate 34% prices are steady to lower amid quiet spot trading. Prices for lactose are unchanged. Quarter 1 lactose offers are taking shape, but market viewpoints vary. Acid and rennet casein prices are unchanged, as market participants work toward contractual agreements for 2023. Initial market tones suggest a bearish attitude.

ORGANIC DAIRY MARKET NEWS: During October 2022, organic whole milk utilization totaled 18.1 million pounds, up from 13.8 million pounds the previous year. Butterfat content, 3.26 percent, declined 3 percent from a year ago. The November 2022 in-store retail survey of selected supermarkets in twenty-nine U.S. cities shows the retail prices of organic whole milk in the half gallon container. The prices ranged from $3.94 in Indianapolis, IN, Cincinnati, OH, Detroit, MI, and Houston, TX, to $6.79 in Pittsburg, PA.

NATIONAL RETAIL REPORT: Total conventional dairy ads decreased this week by 25 percent, while organic dairy ads decreased this week by 22 percent. Conventional ice cream in 48–64-ounce containers appeared prominently in ads again and had a weighted average advertised price of $3.52, up 1 cent. Conventional shred cheese in 8-ounce packages appeared in 6 percent fewer ads and had a weighted average advertised price of $2.81, up 52 cents. Conventional block cheese in 8-ounce packages appeared in 53 percent fewer ads and had a weighted average advertised price of $2.69, up 48 cents. Conventional milk ads increased 53 percent, and organic milk ads increased 26 percent this week.

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