20 September 2024

16 minute read

By: Jim Wyckoff

Europe

North America

Weekly USDA US beef, pork export sales

Beef: Net US sales of 15,500 MT for 2024 were up 36 percent from the previous week and 2 percent from the prior 4-week average. Increases were primarily for South Korea (3,700 MT, including decreases of 400 MT), China (3,000 MT, including decreases of 100 MT), Japan (2,900 MT, including decreases of 500 MT), Canada (1,500 MT), and Mexico (1,400 MT, including decreases of 100 MT). Total net sales of 800 MT for 2025 were for Japan. Exports of 16,400 MT were up 39 percent from the previous week and 22 percent from the prior 4-week average. The destinations were primarily to South Korea (4,400 MT), Japan (3,800 MT), China (2,700 MT), Mexico (1,500 MT), and Taiwan (900 MT).

Pork: Net US sales of 29,000 MT for 2024 were down 3 percent from the previous week, but up 3 percent from the prior 4-week average. Increases were primarily for Japan (7,900 MT, including decreases of 300 MT), Mexico (5,700 MT, including decreases of 500 MT), Colombia (3,300 MT, including decreases of 100 MT), Canada (3,200 MT, including decreases of 600 MT), and South Korea (1,900 MT, including decreases of 1,100 MT). Net sales of 100 MT for 2025 resulting in increases for Australia (200 MT), were offset by reductions for the Dominican Republic (100 MT). Exports of 31,400 MT were up 22 percent from the previous week and 12 percent from the prior 4-week average. The destinations were primarily to Mexico (12,600 MT), Japan (4,600 MT), China (3,800 MT), South Korea (2,400 MT), and Colombia (2,000 MT).

US port strike would impact livestock/meat

The majority of soybean and grain exports from the Gulf or East Coast would not be impacted by a potential dock workers’ strike amid negotiations between the International Longshoremen’s Association (ILA) and the United States Maritime Alliance (USMX). Bulk grain export facilities typically operate with different labor arrangements, such as their own employees or different labor unions. However, the strike would impact exports such as soybeans, soymeal and other agricultural products exported via containers and indirectly affect grain producers through disruptions in the livestock industry. East and Gulf Coast ports accounted for 44% of U.S. waterborne pork exports and 29% of waterborne beef exports in the first half of this year. New York/New Jersey, Wilmington and Charleston were the largest East/Gulf ports for pork exports and Houston was the largest for beef.

China’s pork imports jump in August but still below year-ago

China imported 200,000 MT of pork in August, up sharply from only 90,000 MT in July but still 2.3% below year-ago. Through the first eight months of this year, China imported 1.5 MMT of pork, down 23.1% from the same period last year.

FDA finds milk in some "dairy-free" dark chocolate products, urges caution for allergy sufferers

The FDA, alongside state agencies from Pennsylvania and Michigan, has released results from a 2022-2023 sampling of "dairy-free" dark chocolate and chocolate-containing products. Of 210 samples tested, 13 were found to contain milk, with one testing at a hazardous level of 1,083 ppm. The milk contamination was traced to a supplier of dark chocolate rather than manufacturing issues. In response, two manufacturers removed "dairy-free" labels, while a third agreed to do so pending further investigation. The FDA urges consumers with milk allergies to contact manufacturers for detailed product information and will continue monitoring for unintended milk in "dairy-free" labeled products.

USDA annual report on European Union livestock industry

EU Beef and Pork Production Will Peak This Year

Cattle and Beef – EU Beef Production Is Forecast to Temporarily Increase in 2024. Herd Size and Calf Crop: Due to a dim economic outlook and mounting regulations, the EU herd size and calf crop are forecast to shrink for the ninth successive year in 2025. The cut is forecast to take place in mainly Western Europe. In Central Europe, both the dairy and beef cow herds are stabilizing combined with a concentration and commercialization of the sector.

Slaughter and Trade: This year, slaughter is forecast to accelerate caused by relatively high prices for steer and cow carcasses. Another factor in mainly Western Europe is the outbreaks of the Bluetongue Virus (type BTV-3) and Epizootic Hemorrhagic Disease (EHD). Due to a smaller herd size and calf crop, slaughter is projected to decline next year. EU cattle exports are dropping because of significantly lower shipments to Turkey.

Beef Production: A hike ikn slaughter and elevated carcass weights are forecast to increase EU beef production by 2.2 percent in 2024. Assuming stable weights at slaughter, EU beef production is projected to decline by 1.5 percent in 2025.

Beef Domestic Sales and Trade: Despite the increased production, the EU beef market remains tight, as imports continue to shrink, and exports surge. The EU’s main export market for cattle, Turkey, is shifting from importing cattle to importing beef. As a result, beef exports are forecast to increase by more than ten percent this year and remain at a relatively high level next year.

Swine and Pork – Similar to Beef, Pork Production Will Temporarily Recover in 2024.

Herd Size and Pig Crop: In 2023, EU piglet production reached a record low, while feed prices fell, and the demand for piglets rose. Record piglet prices tempted breeders to expand their sow stock during 2023. Because of the larger sow herd at the start of this year, the pig crop will rebound in 2024. This cycle is anticipated to reach a new record low in 2025.

Slaughter and Trade: In line with the pig crop trend, slaughter is forecast to increase by 0.9 percent this year and anticipated to fall by 1.7 percent next year. The trade of live swine plays a minor role in the total swine balance of EU.

Pork Production: This year, EU pork production is reinforced by higher weights at slaughter. EU pork production is forecast to increase by 2.0 in 2024 and decline by 1.7 in 2025. An additional volume of pork is mainly projected to be produced in Spain, destined for exports to EU and third country markets, and in Central Europe, most consumed domestically.

Pork Domestic Sales and Trade: EU Pork consumption is slightly increasing in Central and Southern Europe. However, both domestic consumption and exports will not be able to absorb the increased supply. The oversupply of pork is anticipated to increase competition and lower prices. These lower prices could improve the competitiveness of EU pork at the global market.

California's Proposition 12, which went into full effect on Jan. 1, 2024, has had several significant impacts

Implementation and enforcement. Proposition 12 requires farm owners, operators, and distributors of covered farm animals (egg-laying hens, commercial breeding pigs, and veal calves) to provide more humane living conditions. Key aspects of implementation include:

• Covered entities must register with the California Department of Food and Agriculture and undergo on-site inspections.
  
• The law applies to both in-state and out-of-state entities selling products in California.
•  Violations are considered misdemeanors with fines up to $1,000.

Economic impact on consumers. The law has led to increased prices for affected animal products in California:

•  Egg prices have risen by an estimated $0.25 to $0.73 per dozen. This translates to an annual loss for consumers of $223 million to $664 million for eggs alone.
  
•  Pork prices are estimated to have increase dby about 25 cents per pound.
  
•  Overall, consumers are expected to pay $1.1 million more for regulated egg and pork products in the first year.

Impact on producers. The law has created challenges and opportunities for producers:

•  Pork producers face significant costs to comply, with an estimated $3.5 million investment needed to retrofit pens on an average farm.
  
•  Some producers view Prop 12 as opening a new market, while others resist California dictating production methods.
  
•  The law may lead to consolidation in the pork industry and a potential shrinking of the national hog herd.

Legal and political implications. Proposition 12 has faced legal challenges and sparked political debates:
 

• The U.S. Supreme Court upheld the law in May 2023, rejecting claims that it violated the dormant Commerce Clause.
  
•  Some industry groups continue to oppose the law, pushing for federal legislation to ban state-level confinement standards.
  
•  The Biden administration has expressed concerns about potential "chaos" in the pork industry due to the law.

Broader impact. Proposition 12 has influenced animal welfare policies beyond California:

• Several other states, including Massachusetts, Arizona, Colorado, and Ohio, have passed similar laws addressing farm animal confinement.
  
• The law has sparked discussions about potential federal grants to help producers comply with the new standards.

USDA annual report on poultry industry

Driven by strong internal demand, EU chicken meat production is expected to grow in 2024 and 2025. In 2025, Poland will remain the largest EU chicken meat producer, accounting for more than 22 percent of all EU production. Fueled by both domestic and export demand, Polish chicken production continues to grow, benefiting from lower feed costs and reduced competition from Ukraine.

The EU chicken industry generally operates on a short two to three-month production cycle which is very reactive to market conditions and external events. USDA forecasts are therefore based on assumptions and information that are available at the time of publication. EU chicken meat trade surplus is expected to increase in 2024 and 2025 as imports are declining and exports are regaining lost ground. The UK is expected to become the largest supplier of poultry meat to the EU. UK and EU poultry traders are adapting to post-Brexit conditions, complying with EU veterinary rules and other requirements.

The UK maintains a competitive advantage in shipping fresh/chilled chicken meat to the EU, while importing less expensive Ukrainian chicken meat at zero duty. EU imports of Brazilian chicken meat remain constrained by ongoing sanitary restrictions that apply to certain export facilities. While EU chicken meat imports from Ukraine have doubled since 2022, Ukrainian exporters now face increasing constraints with EU regulations and export licenses. Several trade bans related to Highly pathogenic avian influenza (HPAI) have been lifted or have been amended to reflect regionalization. This will propel growth of EU exports in 2024.

The UK remains the largest customer of EU chicken meat. Exports of low-priced frozen cuts (mostly dark meat) and mechanically deboned chicken meat to sub-Sahara Africa are expected to increase Despite food inflation and higher energy costs, EU chicken meat consumption is expected to remain strong in 2024 and 2025. Convenient to use and less expensive relative to other animal protein, chicken meat is the animal protein of choice.

EU chicken consumption is increasing in line with demographic growth. Consumption is also slowly increasing on a per capita consumption basis. While premium production schemes like organic, free range, and GMO-free fed chicken have gained a lot of support throughout the EU, consumption of less expensive chicken meat cuts is growing at a much faster rate compared to more premium products like breasts and whole birds.

China’s sow herd contracts 5.4%

China’s sow herd stood at 40.41 million head at the end of July, down 5.4% from last year, the agricultural ministry said.

US dairy industry bets big on cheese amid rising consumption

Bloomberg reports cheese consumption in the US has surged, with Americans now eating 42 pounds per capita annually, more than doubling since the government began keeping track in 1975. Dairy producers are investing billions in cheese production, anticipating continued demand. Companies like Great Lakes Cheese and Sargento Foods are expanding capacity, while low-carb diets and pandemic-induced home cooking have boosted cheese’s popularity. However, experts warn of potential oversupply as diet trends shift, though U.S. exports continue to grow. The industry remains hopeful that other dairy products will help balance any excess.

H5N1 bird flu detected in eight California dairy herds, USDA confirms

The H5N1 bird flu virus has been found in eight dairy herds in California, according to USDA Deputy Undersecretary Eric Deeble. Cattle from the first three herds tested positive for the same variant detected in other states, with tests on the remaining five herds to be completed this week. All herds have been quarantined. Additionally, a Missouri individual previously hospitalized with avian influenza has recovered. Health officials also announced a campaign to inoculate farmworkers against seasonal flu starting in October.

US 9th Circuit weighs EPA's CAFO regulation approach in key legal battle

The US 9th Circuit Court heard arguments in a lawsuit filed by Food and Water Watch, seeking to compel the EPA to reconsider its denial of a 2017 petition for stricter water pollution regulations at concentrated animal feeding operations (CAFOs). Environmental groups challenge the EPA's 2023 decision to deny a petition for stricter regulations, arguing that the agency is neglecting its duty to control CAFO pollution. The EPA defends its stance, prioritizing further studies before regulatory changes. Agricultural industry groups, citing a 2005 court decision, support the EPA's current approach. The outcome could reshape CAFO regulation, with implications for environmental protection and the agricultural sector.

Of note: Senior Judge Jay Bybee called the situation “awkward,” suggesting the court may defer to the EPA’s ongoing evaluations. The lawsuit highlights concerns over the nearly 10,000 unpermitted CAFOs allegedly discharging pollutants into waterways. A decision may take up to a year.

Weekly USDA dairy report

BUTTER: Grade AA closed at $3.1300. The weekly average for Grade AA is $3.1510 (-0.0084). CHEESE: Barrels closed at $2.4850 and 40# blocks at $2.2750. The weekly average for barrels is $2.3860 (+0.1272) and blocks $2.2890 (+0.0527). NONFAT DRY MILK: Grade A closed at $1.3925. The weekly average for Grade A is $1.3920 (+0.0370). DRY WHEY: Extra grade dry whey closed at $0.6050. The weekly average for dry whey is $0.5930 (+0.0205).

BUTTER HIGHLIGHTS: For the West, domestic butter demand varies from strong to steady. In the Central, domestic butter demand is strong with week-to-week momentum continuing. In the East, domestic butter demand is weaker. Export demand is moderate to weak. Cream volumes are tighter to varying degrees throughout the country. However, butter manufacturers indicate cream availability is ample for production needs. Butter makers convey production schedules are strong or steady in the West, and lighter in the Central and East regions. Unsalted butter spot loads are looser for some parts of the country. Bulk butter overages range from minus 5 to 10 cents above market, across all regions.

CHEESE HIGHLIGHTS: Contacts continue to share steady to lighter cheese production schedules throughout the U.S. In the East, milk availability remains tight, namely as Class I bottling orders draw upon milk supplies available for Class III manufacturers. Demand for cheese from buyers is steady to stronger in the region. In the Central region, milk availability remains tight. Spot milk prices range from $1 to $4 over Class III prices. Some Central region retail cheddar and Italian style cheese manufacturers relay active production schedules to keep inventories on hand. In the West, cheese manufacturers relay steady production. Demand from spot purchasers is steady. Cheese barrel inventories are tightening in the region.

FLUID MILK: Seasonal trends continue to influence milk production in most of the United States. Contacts in the Southeast and Central states note milk levels are lower than last month, but component levels are improving. The Northeast and Mid-Atlantic states are experiencing steady production at the farm level. Farms in the West are seeing slightly stronger milk volumes in all but Arizona where numbers are holding steady. Class I demand for milk is strong nationwide as school bottling orders pour in. Spot milk prices reached $4-over Class III this week. The heavier Class I processing is creating some additional spot cream volumes for the market. Down the line, Class III and IV end users are soaking up available cream as processors ramp up cream cheese and butter production for the coming baking season. Scattered spot loads of cream are finding end users as some loads travel from the West to other regions. Class II and IV milk demands are steady in the West. Processors say milk volumes ae meeting manufacturing needs. Condensed skim availability is tighter across the country as Class I bottling demand holds strong. Cream multiples for all Classes are 1.23- 1.45 in the East, 1.22-1.35 in the Midwest, and 1.10-1.30 in the West.

DRY PRODUCTS: Most dairy powders are in the midst of a bullish push. Low/medium heat nonfat dry milk (NDM) prices moved up throughout the country. Contacts say limited supplies and steady demand have propelled market prices higher. Dry buttermilk prices were an exception to the rule this week, as prices held steady. Interests for dry buttermilk are expected to perk up during Q4 trading, but contacts note a rangebound quality at the moment. Dry whole milk prices moved higher again, due to tight availability. Dry whey prices were steady or higher nationwide. Seasonal milk limitations have kept Class III processing in check while high protein concentrate markets are pushing more whey solids into those channels. Whey protein 34% prices pushed higher, bolstered by bullish NDM markets. Lactose prices were steady, but spot trading is active. Acid casein prices increased, while rennet casein prices were unchanged during week 37.

INTERNATIONAL DAIRY MARKET NEWS

WEST EUROPE: Weekly milk collections continue to show a seasonal slide in volumes, and component levels are still lower than typical. In addition, dairy contacts in the northern regions of West Europe suggest the spread of bluetongue disease is having a marked impact on milk output. Bluetongue disease is a viral disease impacting domestic and wild ruminants and is transmitted by biting midges (gnats). It has a high mortality rate within sheep populations. And although less lethal in cattle, infected dairy cows suffer health and fertility issues that lead to reduced milk production, sometimes lasting up to 2 to 3 months. In some cases, farmers choose to ship the affected cows for slaughter rather than wait for the animal to fully recover. The disease does not pose a threat to human health or food safety. In parts of the United Kingdom, France, Belgium, the Netherlands, and Germany, where the disease is present, restricted zones are created to limit the movement of livestock and genetic products. Vaccines for the disease became available at the end of April 2024, but there is some question about the efficacy of the vaccines. In addition, cattle inoculation rates are much lower than sheep inoculation rates. Farmers are hoping a colder than average winter may be the best treatment, eliminating the midges and preventing the disease from reappearing next spring.

EAST EUROPE: Like elsewhere in Europe, milk collections in East Europe are seasonally decreasing. In some parts of East Europe, drought conditions have reduced crop, pasture and ultimately milk production. According to the European Commission, parts of Poland, the southern Baltic region, Greece, most of the Balkans, Ukraine and southern Russia were under drought warning conditions at the mid-point of August. Higher than average temperatures and lack of moisture have reduced crop and forage volumes.

OCEANIA: AUSTRALIA: According to Dairy Australia, July 2024 milk production was up from July 2023, while June 2024 packaged milk sales were down from June 2023. Packaged milk sales from the start of the season in July 2023 through June 2024 were up compared to the same time period a year earlier.

NEW ZEALAND: A group in New Zealand, which forecasts dairy prices, decreased the forecasted milk price for the 2024/2025 season, following GDT event 363. The group stated declining prices for WMP futures have had a negative impact on forecasted milk prices. They further noted strengthening futures prices for other commodities, noting butter, have reduced the downward pressure from WMP. A New Zealand dairy cooperative recently announced July 2024 milk production was up from a year earlier. From the start of the milk production season in June 2024 through July 2024, milk production within the cooperative's network in the country was up compared to the same time period a year earlier.

SOUTH AMERICA: This time last year, reports were suggesting a "banner year" in farm milk output in Brazil and generally strengthening milk output in the Southern Cone. This year, the sentiment has changed. Contacts say farm milk output, in some areas, is as much as five percent less than it was this time last year. As is common on the continent, weather conditions vary widely. Contacts in Uruguay say wet early season weather has turned into warmer, and mostly dryer, conditions in recent weeks. In Mato Grosso, the "breadbasket" of Brazil, droughts and wildfires caused delays in the latter stages of the safrinha corn harvest and summer corn planting. Wildfires have also become a larger concern in Mato Grosso and other Brazilian states.

NATIONAL RETAIL REPORT: Total conventional dairy advertisements decreased by 13 percent while total organic dairy ads increased by 38 percent. Conventional ice cream in 48-64- ounce containers was the most advertised dairy product, with a weighted average advertised price of $4.38, up from $4.00 the week before. Conventional butter in one-pound packages had a weighted average advertised price of $4.74, up from $4.48 the week prior.