Weekly global protein digest: US cattle market bill, dairy report, CA's Prop 12, China's pig market warning

Analyst Jim Wyckoff shares an update on global protein news
calendar icon 10 February 2023
clock icon 14 minute read

USDA weekly export sales for US beef, pork

Beef: Net sales of 16,400 MT for 2023 were primarily for South Korea (4,400 MT, including decreases of 400 MT), Japan (3,500 MT, including decreases of 400 MT), Mexico (2,700 MT), Canada (1,400 MT, including decreases of 100 MT), and China (1,400 MT, including decreases of 200 MT). Exports of 15,600 MT were primarily to Japan (4,800 MT), South Korea (4,400 MT), China (1,900 MT), Mexico (1,200 MT), and Taiwan (900 MT).

Pork: Net sales of 28,800 MT for 2023 were primarily for Mexico (12,700 MT, including decreases of 200 MT), South Korea (4,700 MT, including decreases of 1,200 MT), China (3,400 MT, including decreases of 200 MT), Colombia (1,600 MT, including decreases of 100 MT), and Australia (1,500 MT). Exports of 30,400 MT were primarily to Mexico (14,000 MT), China (4,600 MT), Japan (3,000 MT), Canada (2,100 MT), and South Korea (2,100 MT).

US egg prices falling but still elevated

The average wholesale price for a dozen Midwest large eggs stands at $2.81, down nearly 50% from a record of more than $5 in December, research firm Urner Barry found. Retail prices have stayed in the $4 range, according to NielsenIQ data.

USDA monthly supply and demand report for February

LIVESTOCK, POULTRY, AND DAIRY: Red meat, poultry, and egg supply and use estimates for 2022 are adjusted to reflect reported December production, ending stock, and trade data. 

  • For 2023, the beef production forecast is raised from last month. Slaughter is raised for the first quarter but is partly offset by lower carcass weights as cow slaughter is larger than previously forecast. For the second quarter, steer and heifer slaughter is lowered as fourth quarter 2022 placements were lower than expected, implying fewer animals available for marketing in the second quarter. Lower fed cattle slaughter, coupled with lower average carcass weights, more than offsets higher expected cow slaughter. 
  • Pork production is lowered on slightly lighter first-half carcass weights. 
  • Broiler production is reduced for the first three quarters based on recent hatchery data and the current pace of slaughter. 
  • Turkey production is unchanged. 
  • Egg production is reduced slightly on recent layer flock data and slower-than-expected production growth in December 2022.

Beef imports for 2023 are raised for the year with a higher first-quarter forecast partially offset by lower second-quarter imports. The beef export forecast and the pork trade projections are unchanged. Broiler imports and turkey exports are both lowered. Egg imports are projected higher. 

For 2023, cattle prices are raised on expected strength in first-half demand for fed cattle in the face of tightening feedlot numbers. Hog prices are lowered for first-half 2023 reflecting current price movements. First-half broiler prices are projected lower on weaker-than-expected prices thus far in 2023. Egg prices for the first quarter are raised on recent prices.

Milk supply and use estimates for 2022 are adjusted to reflect reported December production, ending stock, and trade data. For 2023, milk production is forecast lower as weaker milk prices are expected to result in lower cow inventories. The Cattle report estimated that the January 1, 2023 dairy cow inventory was only fractionally above 2022 and that producers were retaining about 2 percent fewer heifers for addition to the dairy herd. Output per cow is also reduced slightly. On both fat- and skim-solids bases, imports for 2023 are raised on higher cheese and milk protein containing products, while exports are reduced on lower sales of skim milk powder, cheese, and several other products. Prices are lowered for cheese as stocks remain relatively large and domestic demand is expected to remain generally soft. Butter prices are unchanged as higher early-year prices are offset by weaker prices later in the year. Nonfat dry milk powder and whey prices are lowered on expectations of increased export competition and somewhat softer international demand. Both Class III and Class IV prices are lowered from last month, reflecting lower product price forecasts, and the all milk price is reduced to 20.70 per cwt.

A warning about China’s hog industry

“U.S. hog farmers look at the pictures of those farms in China, and they just scratch their heads and say, ‘We would never dare do that.’” — Brett Stuart, founder of the research firm Global AgriTrends, is worried about disease risks from China’s high-density pig farms, which in some cases pack the animals into tower blocks, according to a report by the New York Times.

US Senators want USDA to accelerate bird flu response with egg, poultry prices rising

Lawmakers are also seeking an APHIS update on the outbreak, and indemnity payments to affected farmers. A bipartisan group of eight senators are urging USDA Secretary Tom Vilsack to move faster to deploy fiscal year (FY) 2023 funding set aside to respond to the ongoing H5N1 highly pathogenic avian influenza (HPAI) outbreak, which has infected over 58 million birds nationwide and contributed to a more than 30% jump in egg prices last year. The letter sent last week to Vilsack was led by Sens. Tammy Baldwin (D-Wis.) and Chris Coons (D-Del.). It calls on USDA’s Animal and Plant Health Inspection Service (APHIS) to “swiftly take further action to address the ongoing outbreak of highly pathogenic avian influenza (HPAI),” including by deploying $64 million in funding set aside under the FY 2023 omnibus spending bill to help respond to the outbreak. The funding level represented a slight increase from the $63 million set aside during FY 2022 and FY 2021.

California’s ban on eggs from caged hens is hitting consumers hard

A Wall Street Journal commentary item provides an update on the impacts in 2018 when California voters approved a ballot measure (Prop. 12) backed by the Humane Society banning the sale in the state of eggs that come from caged hens. It says Prop. 12 has raised egg prices for families while forcing California farmers and those who want to sell eggs in the state to spend millions of dollars retrofitting their barns. Supply shortages have hit the state and become worse as avian flu has wiped out tens of millions of hens across the U.S. California’s egg supply is less resilient. 

“California’s average wholesale price for conventional white eggs has fallen to $5.62 a dozen from a high of $7.50 at the end of December, but that is still far more than the Midwest average of $3.05. Many retailers are selling eggs at a loss because they don’t want to cause sticker-shock for customers.” Nine other states have enacted laws similar to California’s, though most haven’t yet taken effect.

China to replenish pork reserves to stabilize market

China will stockpile pork to replenish state reserves, as pork prices triggered a warning level. The national average of pork prices against grain prices, was 4.96 between Jan. 30 and Feb. 3, falling below the warning level of 5, the National Development and Reform Commission said. China has a three-level warning system for excessive ups and downs in hog prices. The commission said it would work with relevant departments to immediately start the stockpiling work for state reserves and guide local governments to purchase pork.

US Senators reintroduce cattle market bill, but the same hurdles prevail

US Sens. Chuck Grassley (R-Iowa), Deb Fischer (R-Neb.), Ron Wyden (D-Ore) and Jon Tester (D-Mont.) and 18 other cosponsors on Thursday introduced the bipartisan Cattle Price Discovery and Transparency Act of 2023. The legislation would establish regional cash minimums and equip producers with more market information, including permanently authorizing a cattle contract library. NCBA opposes the measure while it is supported by the U.S. Cattlemen's Association. Upshot: Hurdles for the measure are evident in both the House and Senate.

China’s hog numbers continue to rise

China’s sow herd increased 0.6% in December from November to 43.9 million head, according to ag ministry data. Sow inventories rose 1.4% from the end of 2021. China’s pig herd increased 1.9% in December from the month before to 452.6 million head and was 0.7% larger than the previous year.

USDA weekly dairy report

CME GROUP CASH MARKETS (2/3) BUTTER: Grade AA closed at $2.3750. The weekly average for Grade AA is $2.3445 (+0.0730). CHEESE: Barrels closed at $1.6300 and 40# blocks at $1.8650. The weekly average for barrels is $1.5945 (-0.0155) and blocks, $1.8770 (-0.0860). NONFAT DRY MILK: Grade A closed at $1.2450. The weekly average for Grade A is $1.1920 (+0.0280). DRY WHEY: Extra grade dry whey closed at $0.4150. The weekly average for dry whey is $0.3620 (+0.0375).

BUTTER HIGHLIGHTS: Cream is widely available throughout the country, and contacts in the West relay strong demand for cream volumes. Some handlers in the Central region report having some difficulty routing cream haulers in recent weeks. In the East and West, butter makers are running strong production schedules. Some stakeholders in the East say they are churning seven days a week, and most of the butter being produced is being frozen or made to fill contracted retail orders. Butter producers are running busy schedules in the Central region, though contacts report production trends are mixed from churning to micro-fixing, depending on specific customer needs. In the East, retail demand is down compared to this time last year, and food service sales are steady. Spot demand for butter is steady in the East. Central region contacts say food service demand is lacking, and some suggest this may be contributing to some bearishness to butter markets. Spot availability of butter varies throughout the East, as some processors are freezing bulk butter. In the West variance has been reported between unsalted butter, with tight inventories, and salted butter, with more available inventories. Butter inventories have been growing since late 2022, in the Central region. Bulk butter overages range from 0 to 12 cents above the market, across all regions.

CHEESE HIGHLIGHTS: Milk is available for strong cheese production throughout the country, though some plant managers in the Northeast and West relay labor shortages and delayed deliveries of production supplies are limiting some plant managers’ abilities to operate full schedules. Cheese production is busy in the Midwest, and spot loads of milk continue to move at as much as $10 under Class III. Some stakeholders have reported downtime at cheese plants in the upper Midwest this week, for various reasons. Demand for cheese is steady in the Northeast, but sales of mozzarella cheese to pizza makers are softening. In the West, retail demand is steady while food service and export sales are softening. Some stakeholders say lower prices being offered by cheese sellers in Europe are having a negative impact on export demand. Demand for cheese varies in the Midwest. Some cheesemakers relay strong orders, while barrel makers are concerned with growing inventories amid slowing spot sales and lighter contractual buying compared to previous years. Spot loads of cheese are available for purchasing in the Northeast and West. Contacts in the West say barrel inventories are larger than blocks.

FLUID MILK: In the Northeast, wintery conditions are causing some transportation delays, but milk production levels continue to progress. And more broadly, East region’s Class I bottling demand is strong, but has not disrupted active manufacturing as milk supply levels remain adequate for the production needs of most Classes. In the Midwest, the anticipation of very cold temperatures could break the trend of steady increases in milk production. Milk loads moving to bottling have been steady, on good demand. Meanwhile, the level of available milk in the region has pressured Class III spot milk prices as much as $10 under Class. Out West, farm milk levels in most states of the region are steady to light. But in California, milk production levels are noted heavier in some areas, supporting adjustments to spot milk to an under-Class pricing. Demand for all Classes is unchanged. Worth noting, cream suppliers in the East are seeking to transport surplus cream to other regions as supplies are readily available. The same can be said concerning cream availability levels in the Midwest and West regions, as butter makers in all regions cash in on deals. F.O.B. cream multiples for all Classes are 1.17-1.27 in the East; 1.09-1.27 in the Midwest; 0.95-1.21 in the West. Condensed skim demand is active in the West and East, with steady contract and spot sales. ilk (NDM) spot prices have eased as markets remain bearish. Increasing interest from Mexico could lift some of the downhill pressure on NDM prices. Condensed skim supplies are heavy, keeping dryers running. Dry buttermilk prices decreased in the East, Central, and West regions. Inventories are sufficient and building, while demand from spot buyers is light. The dry whole milk price is unchanged this week. Spot sale activity has been sluggish. Dry whey markets adjusted lower in both the West and East regions, while limited buyer/seller activity in the Central region maintained the previous week’s prices. Steady dry whey production adds to manufacturers’ stocks. Whey protein concentrate 34% prices are trending lower. Market demand is mostly quiet. This week, lactose prices held steady on the range. Some processors are looking to clear heavy inventory, as buyers look ahead to lower pricing. Production is steady to lower. Rennet casein prices are steady, but acid casein prices are lower.

International Dairy Market News

EUROPEAN DAIRY MARKET OVERVIEW: WESTERN EUROPE: As the weather shifts, so too does the weekly milk production seen across Western Europe. Industry sources suggest after a mild start to the year and strong milk production, a bit of cold weather has slowed the seasonal increase of milk production. That said, 2023 milk production is starting out at a pace above 2022 and 2021. Feedstocks are better than expected; fall rains and pastures recovered well; and mild temperatures through the early stages of the winter have all helped stimulate good cow conditions and strong milk flows in Western Europe.

EASTERN EUROPE: As dairy commodity prices fall across much of Europe, the impacts are being felt in Eastern Europe as well. According to online sources, Ukraine may reduce butter exports into surrounding countries. Due in part to policies to reduce trade barriers between the EU and Ukraine, Ukrainian butter exports increased by 29 percent. However, because of reduced production and lower inventories within Ukraine and higher local prices for butter and other commodities, exporters are finding it better to sell the butter and other milk fats within the country.

OCEANIA DAIRY MARKET OVERVIEW: NEW ZEALAND: With the release of New Zealand's December milk production report, milk collections were slightly lower than the previous year. Season to date production is 2.1% below the same period last year at the end of December 2022. Overall, there were 353 farm sales in the three months ended December 2022. Meanwhile the milk price forecast has eased 33 cents/ kgMS from the previous forecast, as a large New Zealand dairy cooperative is expected to lower its milk price. The underlying basis cited for the revision is unfavorable pasture quality effect on projected milk production.

AUSTRALIA: Australia continues to battle quite a bit of moisture as persistent rainfall proves challenging in some regions of the country, supporting the narrative to expect a drop in seasonal milk output, which tracks to fall below initial production forecasts. Meanwhile, Australia exports continue to encounter sluggish dairy demand in key market as buyers taper purchases to smaller volumes and their immediate needs, well aware of softening prices. On the domestic side, dairy consumers are paying more, but buying less as retail sales have declined for butter and cheese, but sales are rising for bottled milk.

SOUTH AMERICA DAIRY MARKET OVERVIEW: The La Nina weather system and its expected shift into neutral climactic patterns in the next month(s) continue to be the topics du jour for contacts from a number of Southern Cone countries. For many producers, though, precipitation cannot come soon enough. Contacts in Uruguay, Brazil and Argentina have all expressed concerns about their respective dairy producing areas. Feed costs remain a real concern, and as long as the drought continues to keep soil dry in the region, these elevated costs are expected to continue.

NATIONAL RETAIL REPORT: For the week beginning Jan. 30, 2023, Dairy Market News will transition to a new system for the collection of dairy retail survey data. The system includes additional packaging sizes and an updated retail store list. As a result of the transition, there may be variations between the store counts and prices listed for dairy items published in the last week and last year columns when comparing to previously published data. This week, conventional ice cream in 48-to-64- ounce containers was the most advertised dairy item. The national weighted average price is $3.70, up 12 cents from last week. As a category, ice cream ads comprised 23 percent of conventional dairy ads in this week’s survey. Butter ads made up 8 percent of all conventional dairy ads and 3 percent of all organic dairy ads. The weighted average advertised price for conventional 1-pound butter is $4.37, compared to $6.53 for organic 1- pound butter.

DECEMBER AGRICULTURAL PRICES HIGHLIGHTS (NASS): The All Milk price received by farmers was $24.70 in December, up $3.00 from December 2021. The alfalfa hay price was $269.00 in December, up $52.00 from December 2021. The corn price was $6.58 in December, up 1.11 from December 2021. The soybean price was $14.40 in December, up $1.90 from December 2021. The milk-feed price ratio was 1.84 in December, down 0.12 from December 2021. The index of prices received by farmers for dairy products during the month of December 2022 was down 4.5 to 122.9. Compared to December 2021, the index was up 14.9 points (13.8 percent). The index of prices paid by farmers for commodities and services, interest, taxes, and wage rates in December 2022 was 137.1 unchanged from November. Compared with December 2021, the index was up 12.0 points (9.6 percent).

JANUARY MILK COW INVENTORY SUMMARY (NASS): The number of milk cows in the United States as of January 1, 2023, totaled 9.40 million head, was up slightly from the previous year. Milk cow replacement heifers totaled 4.34 million head, down 2.0 percent from the previous year. The percentage of milk cow replacement heifers compared to milk cows on January 1, 2023, was 46.1, down 1.2 percent from the previous year. Milk cow replacement heifers expected to calve during the year totaled 2.77 million head, down 3 percent from the previous year.

Sarah Mikesell


Sarah Mikesell grew up on a five-generation family farming operation in Ohio, USA, where her family still farms. She feels extraordinarily lucky to get to do what she loves - write about livestock and crop agriculture. You can find her on Twitter or LinkedIn.

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