2 December 2022

13 minute read

By: Jim Wyckoff

North America

Asia

Weekly USDA US beef, pork exports

Beef: Net sales of 15,400 MT for 2022 primarily for China (7,200 MT, including decreases of 100 MT), Japan (2,600 MT, including decreases of 500 MT), Canada (1,900 MT, including decreases of 100 MT), South Korea (1,700 MT, including decreases of 400 MT), and Mexico (800 MT, including decreases of 100 MT), were offset by reductions for Brazil (100 MT). Net sales of 2,000 MT for 2023 were reported for Mexico (900 MT), Japan (500 MT), China (300 MT), Taiwan (200 MT), and Guatemala (100 MT). Exports of 15,800 MT were primarily to Japan (4,200 MT), South Korea (4,000 MT), China (3,000 MT), Mexico (1,400 MT), and Canada (800 MT).

Pork: Net sales of 20,100 MT for 2022 were primarily for Mexico (11,800 MT, including decreases of 400 MT), Japan (4,000 MT, including decreases of 200 MT), South Korea (1,800 MT, including decreases of 100 MT), the Dominican Republic (900 MT, including decreases of 100 MT), and Canada (500 MT, including decreases of 400 MT). Net sales of 3,800 MT for 2023 were primarily for Canada (1,200 MT), Colombia (1,000 MT), China (500 MT), Honduras (300 MT), and South Korea (200 MT). Exports of 29,700 MT were primarily to Mexico (14,900 MT), China (4,100 MT), Japan (3,000 MT), South Korea (1,900 MT), and Canada (1,800 MT).

China’s sow herd marginally increases in October

China’s sow herd increased 0.4% in October from the month prior to 43.79 million head, according to the country’s ag ministry. The sow herd was 0.7% larger than October 2021.

US- based Kroger, Albertsons CEOs face questions at congressional hearing

The chief executives of two grocery companies faced questions at a congressional hearing about how their proposed merger might alter the competitive landscape and the prices that consumers pay at the store. Lawmakers noted that the proposed deal comes at a time when groceries are taking up more of American families' budgets, with inflation driving up prices of everyday items. Kroger and Albertsons' leaders said combining their companies will help their ability to lower food prices and stay competitive as the industry undergoes dramatic changes. "The best way to compete with mega stores like Walmart and highly capitalized online companies like Amazon will be through a merger with Kroger," Albertsons CEO Vivek Sankaran said at the hearing.

Japan gives final approval for beef trade revision

Japan’s parliament gave final approval to a deal amending a beef safeguard mechanism under the U.S./Japan trade agreement. The change will reduce the probability that U.S. beef could be hit with higher Japanese tariffs, according to the U.S. Trade Representative (USTR). The updated safeguard “will ensure our farmers and ranchers continue to have access to one of the world’s most dynamic markets,” said USTR Katherine Tai. “The protocol represents a foundational pillar of our bilateral trade relationship — and I am grateful to our producers and stakeholders who helped make it possible.” Japan was the second largest U.S. beef market in 2021.

HPAI confirmed in Nebraska commercial egg layer flock

Nebraska announced that the Animal and Plant Health Inspection Service (APHIS) has confirmed highly pathogenic avian influenza (HPAI) in a commercial layer flock with 1.8 million birds in Dixon County. This marked the seventh commercial flock with HPAI in the state and the thirteenth overall operation affected. This puts Nebraska second only to Iowa relative to the number of birds affected at 6.8 million compared with 15.5 million in Iowa.

One product with falling prices: chicken

Prices for chicken breasts in the U.S. have plunged about 70% since the first week of June, according to market-research firm Urner Barry. Wings and tenders have gotten cheaper, too, as poultry companies have increased production while demand from restaurants and supermarkets has remained flat.

Avian flu has wiped out 50.54 million birds in the US this year

It’s the country's deadliest bird flu outbreak in history, USDA data showed. The deaths of chickens, turkeys and other birds represent the worst U.S. animal-health disaster to date.

USDA extends comment period for 45 days on livestock, poultry proposed rule on competition

Based on the Packers and Stockyards Act (P&SA), the comment period ends on Jan. 17, 2023. Several groups and lawmakers have been urging USDA to extend the comment period as the original 60-day-comment-period close of Dec. 2 approached. The National Cattlemen’s Beef Association (NCBA) welcomed the USDA decision, but urged the agency to “tap the brakes” on its entire rulemaking process under the P&SA given that this rule, a prior one filed on the poultry tournament system and a yet-to-be released rule are linked and need to be considered together.

People who like to bake are scouting cheap butter and posting about it on social media

They post pictures of store shelves showing prices. Butter prices reached record highs in September but are expected to come down by the end of the year. That’s because we’ve been eating more butter — consumption rose to 6.5 ponds per person in 2021 from 5.6 pounds in 2015 — and lower supply, according to the Wall Street Journal.

USDA holds food price inflation outlook at lofty levels

The Consumer Price Index (CPI) for all food in 2022 is forecast to rise by 9.5% to 10.5% while food at home (grocery) prices are forecast up 11% to 12% with an increase for food away from home (restaurant) prices of 7% to 8%. Those figures would be the highest for all food since they were up 11% in 1979, for grocery store prices the biggest rise since 1974 when they moved up 12.7%, and the biggest rise in restaurant prices since they increased 9% in 1981.

The CPI for all food increased 0.7% from September 2022 to October 2022, and food prices were 10.9% higher than in October 2021. Grocery store prices were up 0.5% in October compared with September and up 12.4% from year-ago, while restaurant prices were 0.9% higher in October and 8.6% higher than year-ago marks.

Adjustments this month were in several food categories — ranges for seven food categories and one aggregate category were revised upward, while three food price categories were revised downward.

USDA analysis: USDA said the “continuing increases in the Federal funds (interest) rate by the Federal Reserve place downward pressure on prices, and prices for unprocessed agricultural commodities have decreased each month since peaking in May 2022.”

The impact of bird flu cases is being felt relative to egg prices and USDA said the situation needs to be monitored closely with over 50 million birds in 267 flocks in 46 states affected. “Retail egg prices increased 10.1% in October 2022 and reached 43.0% above October 2021 prices,” USDA said. “The ongoing outbreak of highly pathogenic avian influenza (HPAI) reduced the US egg-layer flock, as well as the poultry flock to a lesser extent. This decrease in the poultry flock and spike in HPAI prevalence are expected to increase wholesale and retail egg prices for the coming months.”

USDA also adjusted upward its forecasts for forecast ranges for fats and oils, sugar and sweets, and nonalcoholic beverages. “Economy-wide factors, including ongoing supply-chain issues and energy, transportation, and labor costs, have contributed to increases in prices across food categories,” USDA noted. “However, recent declines in agricultural commodity and energy prices are expected to ease price increases across these categories through the remainder of 2022.” Compared with 2021, USDA sees 2022 prices for fats and oils rising by 18.5% to 19.5%, sugar and sweets are predicted to increase between 10% and 11%, while nonalcoholic beverages prices are predicted to increase between 10.5% and 11.5%.

Areas were USDA trimmed forecasts: Beef and veal prices are now seen rising 5% to 6% versus their October outlook for increases of 5.5% to 6.5%, while dairy product prices are now seen up 11.5% to 12.5% compared with 12% to 13% in their October forecasts. “Beef and veal prices declined by 0.8% in October 2022 and were 3.6% lower than October 2021,” USDA said, noting they were the “only food category to experience a decline year over year.” But that is coming off of large increases in 2020 and 2021.

USDA held with its forecasts for all food prices to rise 3% to 4% in 2023, with increases for grocery store prices of 2.5% to 3.5% and restaurant prices of 4% to 5%. Despite being down sharply from their forecasts for 2022, the levels remain well above the 20-year average for all food prices to rise 2.4%, grocery prices to be up 2% and restaurant prices to increase 2.9%. No food categories are expected to see double-digit-percentage increases in 2023, with flat prices for fresh fruits and vegetables; no food categories are currently forecast to decline from 2022 levels.

Weekly USDA dairy report

CME GROUP CASH MARKETS (11/23) BUTTER: Grade AA closed at $2.9475. The weekly average for Grade AA is $2.9258 (+0.0113). CHEESE: Barrels closed at $1.8175 and 40# blocks at $2.1500. The weekly average for barrels is $1.8217 (-0.1873) and blocks, $2.1833 (-0.0427). NONFAT DRY MILK: Grade A closed at $1.3975. The weekly average for Grade A is $1.4142 (-0.0263). DRY WHEY: Extra grade dry whey closed at $0.4400. The weekly average for dry whey is $0.4400 (N.C.).

BUTTER HIGHLIGHTS: In the Northeast, cream is becoming more available, and contacts note some loads have been freed up amid declines in ice cream production. Contacts in the Central region say spot loads of cream are available at multiples below 1.20 again this week. In the West, more cream is available for sale ahead of Thanksgiving, at lower multiples. Regional stakeholders relay strong demand from Class II processors and butter makers. Some butter makers in all regions say they are making use of cream availability to run active churning schedules this week. Some plants have days off later this week and into the weekend, in the Central region. Food service demands are steady in the Northeast and West, and contacts in these regions say some retail stores are purchasing loads of butter in preparation for the next wave of winter holidays. Some Central region butter makers say they are behind on order fulfillment. Spot butter inventories are tight in the Northeast and West. Bulk butter overages range from 5 to 18 cents above market, across all regions.

CHEESE HIGHLIGHTS: Cheese makers in the Northeast and West say milk is available, allowing them to run busy production schedules. In the Midwest, cheese production varies: some plants are taking advantage of lower spot milk prices to run busy schedules throughout the holiday week, while others are taking a day or two off. Some Midwest cheese makers say spot loads of milk are priced similar to prior weeks, while others relay discounts up to $4.50 under Class. In the Northeast, food service cheese demand is noted to be steady and retail demand is strong. Midwest cheese makers say orders for curd and barrels are slowing, while they are busy fulfilling retail/food service cheddar and Italian style orders. In the West, steady demand is present for retail and export loads of cheese. Meanwhile, food service demand is mixed in the region. Cheese loads are available in the Northeast and West. In the Midwest, cheese availability varies across different varieties.

FLUID MILK: Milk production across most regions of the country is steady or increasing. Eastern region milk production faced a severe snowstorm in the upper portion of the region last week through the weekend that temporarily boosted Class I sales. Conditions are shifting back to normal. Cheesemakers in the Central region are taking advantage of heavier milk discounts this week, as Class I demand edges lower. In the West region, limited tanker availability is delaying some milk deliveries in the Pacific Northwest area of the region. Meanwhile, Class I demand is mostly unchanged in the West. Condensed skim spot availability is improving. Demand for contracted loads is declining in some regions of the country. Cream demand is active as higher production of sour cream, cream cheese, and butter pull on available supplies. Cream multiples, All Classes, for the week are 1.32-1.38, East; 1.18 to 1.27, Central; 1.05 to 1.29 in the West.

DRY PRODUCTS: Low/medium heat nonfat dry milk (NDM) prices are unchanged in the Central and Eastern regions but are generally up in the West. As farm milk production improves in the West, so does production of NDM. Dry buttermilk prices are steady to lower in the East and Central regions. In the West, the price range for dry buttermilk was unchanged this week. Stocks are consistently up throughout the regions, while spot trading is inconsistent. Dry whole milk prices are unchanged, with light trading this shortened holiday week. Dry whey prices differ over the regions. In the East, the price range for dry whey shifted lower, but is unchanged in the Central, whereas mixed in the West. Whey protein concentrate 34% prices are unchanged. Production remains steady and inventories are generally tight. Lactose prices are unchanged. Spot market activity is slow as load consistently moves through contracts. Rennet and acid casein prices are steady.

INTERNATIONAL DAIRY MARKET NEWS

WESTERN EUROPE: For several weeks, weekly milk collections in Germany, France and several other European countries have stabilized thanks to mild fall temperatures. The current milk volumes are now ahead of previous year collections, although the second half of 2021 was noted for its weak milk production. Processors have plenty of milk available for the manufacture of dairy products and dairy ingredients. Industry contacts suggest that without a revitalization of dairy product demand, milk prices may come under some pressure, and processors may need to adjust the price provided to farmers for the milk.

EASTERN EUROPE: The strong pace of Eastern European milk production is continuing into the low point for the seasonal milk production year. Milk production in Poland, Belarus, and the Czech Republic has maintained growth above 2021 for much of the year. Late last week, Ukraine, Russia, Turkey and United Nations representatives were able to reach an agreement to extend the deal that will keep three Black Sea ports open for another 120 days. The deal will allow safe passage for the shipping of grain and fertilizers from Ukraine and Russia, two of the largest grain exporters in the world. Had an agreement not been reached, the deal may have lapsed on November 19.

NEW ZEALAND: In New Zealand, October is typically the month with peak seasonal milk production. However, late into the new season milk production remains in the recovery mode. In spite of record farmgate milk prices, declines in annual milk production have been prompted by dairy farmers who choose exit farming. Meanwhile, New Zealand's dairy farm expense adjusted higher 17 percent year-over-year, with noteworthy rises in fertilizer, fuel prices and interest rates. A positive for New Zealand milk producers was the recent increase in the whole milk powder price at the latest GDT event.

AUSTRALIA: In Australia, contrary to high milk prices and decent weather early in the production season, Australia's milk output lags. The milk production season so far has undergone extended drought, heavy flooding, and farm labor shortages to name a few challenges. Meanwhile, as advances in Australia's share of the global export market erode, caused by stagnation in Australia's milk production, other major milk producing countries are taking advantage of the void. In the interim, the dependence on New Zealand's milk is growing as Australian processors look to make purchases to fill milk shortages, around the uptick in domestic demand for dairy products.

SOUTH AMERICA: Milk output in the region is slowly growing, as spring weather has been generally mild in the dairy centric areas of the region. Dry weather continues to be an issue for crop output and feed quality. Wheat harvest setbacks in Argentina are being reported due namely to dry soil conditions along with intermittent frosts, brought on by La Nina weather patterns. Dairy processing has, as was mentioned, been reported as at least a little smoother than it was in the fall/winter. Prices of skim milk and whole milk powder were unchanged this report week.

US NATIONAL RETAIL REPORT: Total conventional dairy ads decreased 1 percent, while total organic dairy ads increased by 3 percent this week. Conventional ice cream in 48 to 64-ounce containers remained the most advertised dairy product, while appearing in 2 percent more ads this week. There was no change to this item’s weighted average advertised price of $3.51.

US OCTOBER MILK PRODUCTION (NASS): Milk production in the 24 major States during October totaled 18.1 billion pounds, up 1.4 percent from October 2021. September revised production, at 17.5 billion pounds, was up 1.5 percent from September 2021. The September revision represented a decrease of 13 million pounds or 0.1 percent from last month's preliminary production estimate. Production per cow in the 24 major States averaged 2,021 pounds for October, 18 pounds above October 2021. The number of milk cows on farms in the 24 major States was 8.93 million head, 42,000 head more than October 2021, and 1,000 head more than September 2022.