28 April 2023

12 minute read

By: Jim Wyckoff

North America

Asia

Weekly USDA US beef, pork export sales

Beef: Net sales of 9,500 MT for 2023 were down 50 percent from the previous week and 28 percent from the prior 4-week average.

Increases were primarily for Japan (2,400 MT, including decreases of 400 MT), South Korea (2,200 MT, including decreases of 400 MT), Canada (1,600 MT, including decreases of 100 MT), Mexico (500 MT), and China (500 MT, including decreases of 1,300 MT). Exports of 16,000 MT were unchanged from the previous week, but down 3 percent from the prior 4-week average. The destinations were primarily to South Korea (4,100 MT), Japan (3,700 MT), China (3,000 MT), Mexico (1,300 MT), and Taiwan (1,300 MT).

Pork: Net sales of 54,000 MT for 2023--a marketing-year high--were up 50 percent from the previous week and 47 percent from the prior 4-week average. Increases primarily for Mexico (32,400 MT, including decreases of 300 MT), Japan (6,400 MT, including decreases of 3,100 MT), Canada (4,700 MT, including decreases of 400 MT), Colombia (3,100 MT), and China (1,700 MT, including decreases of 300 MT), were offset by reductions for Malaysia (100 MT) and Nicaragua (100 MT). Exports of 38,000 MT--a marketing-year high--were up 11 percent from the previous week and 12 percent from the prior 4-week average. The destinations were primarily to Mexico (14,600 MT), China (6,000 MT), South Korea (4,700 MT), Japan (4,100 MT), and Canada (1,500 MT)

USDA continues to lower food price outlook

USDA now forecasts food prices will rise 6.5% in 2023 (range of 4.9% to 8.2%), down from an expected 7.5% increase last month. The cut came mostly from a lower forecast for food-at-home (grocery store) prices, which are now expected to rise 6.6% (range of 4.4% to 8.8%), down from the 7.8% jump projected last month. USDA trimmed its food-away-from-home (restaurant) forecast to 8.2% (range of 7.3% to 9.0%), down from 8.3% last month.

USDA noted retail egg prices decreased 10.9% in March 2023 following a 6.7% decline in February but remained 36.0% above March 2022 prices. Egg prices are predicted to increase 17.8% in 2023, with a prediction range of 5.1% to 32.9%. The wide forecast range reflects volatility in retail prices caused by the outbreak of highly pathogenic avian influenza.

USDA forecasts prices are predicted to increase for other meats (5.9%), poultry (2.8%), dairy products (4.95), fats and oils (12.8%), processed fruits and vegetables (9.9%), sugar and sweets (10.1 %), cereals and bakery products (11.7%), nonalcoholic beverages (9.9%), and other foods (9.2%).

Beef and veal prices are forecast to decrease 0.5% in 2023 (range of -6.2% to 5.8%), with pork prices predicted to decrease 2.0% (range of -6.8% to 3.3%). Fresh fruits prices are now expected to decrease 0.5% this year (range of -4.3% to 3.7%.

At the farm level, USDA forecasts cattle prices will increase 13.8% (range of 2.5% to 27.2%) and egg prices will jump 24.4% (range of -18.3% to 111.3%), while milk prices will fall 23.9% (range of -37.0% to -6.0%). USDA projects wholesale prices will rise 3.6% for beef (range of -9.3% to 19.4%). Wholesale prices are expected to decline 4.8% for pork (range of -12.9% to 4.7%), 9.8% for poultry (range of -16.8% to -1.8%) and 5.9% for dairy (range of -12.5% to 1.5%).

Consumers are still swallowing price hikes among household essentials

Nestlé, the world’s largest food company, raised average prices nearly 10% in the first quarter, approaching its fastest pace in 30 years, yet it sacrificed only a modest slice of sales volume.

Cargill signals it will take months to shift cleaning at meat plants

The head of Cargill’s meat business said Tuesday that it will take the company several months to cut ties with Packers Sanitation Services Inc. (PSSI) in the wake of PSSI paying $1.5 million in penalties to the U.S. Department of Labor for employing more than 100 teenagers in dangerous jobs at meat packing plants. “We made the decision to terminate the agreements with PSSI,” Hans Kabat told Reuters in an interview. “It’s really important to understand that that will take time.”

Cargill notified PSSI in March it was ending the use of its services at the Dodge City, Kansas, plant and then ended all contracts with the firm. "It will be a while to get the remaining facilities out," Kabat said. "These are challenging issues, and we want to make sure that we understand fully how to manage that —getting the plants cleaned, keeping people safe and still making sure that requirements around employment and age verification are all 100%."

Other meat packers such as JBS USA have also ended contracts with PSSI in the wake of the labor revelations.

USDA unveils plan to declare salmonella contaminant in some uncooked chicken products

USDA’s Food Safety and Inspection Service (FSIS) proposed a determination to declare Salmonella an adulterant in breaded stuffed raw chicken products when they exceed a very low level of Salmonella contamination. FSIS would consider any breaded stuffed raw chicken products that include a chicken component that tested positive for Salmonella at 1 colony forming unit (CFU) per gram prior to stuffing and breading to be adulterated.

FSIS is also proposing to carry out verification procedures, including sampling and testing of the chicken component of breaded stuffed raw chicken products prior to stuffing and breading, to ensure producing establishments control Salmonella in these products.

The National Chicken Council criticized the USDA move, saying the new requirements would cause economic harm to the industry and cited efforts already undertaken to reduce the illnesses linked to the chicken products that can appear to be pre-cooked even though they are not.

Consumer advocates welcomed the USDA action, saying that it will continue to reduce Salmonella illness rates. Once published in the Federal Register, there will be a 60-day comment period.

USDA summary of US dairy production in 2022

USDA reports total cheese production, excluding cottage cheeses, was 14.1 billion pounds, 2.2 percent above 2021 production.

Wisconsin was the leading State with 25.0 percent of the production. Italian varieties, with 5.90 billion pounds was 2.3 percent above 2021 production and accounted for 42.0 percent of total cheese in 2022. Mozzarella accounted for 78.4 percent of the Italian production followed by Parmesan with 8.4 percent and Provolone with 6.5 percent. Wisconsin was the leading State in Italian cheese production with 28.5 percent of the production. American type cheese production was 5.64 billion pounds, 0.4 percent above 2021 and accounted for 40.1 percent of total cheese in 2022. Wisconsin was the leading State in American type cheese production with 18.8 percent of the production. Butter production in the United States during 2022 totaled 2.06 billion pounds, 0.2 percent below 2021. California was the leading state in Butter production with 33.3 percent of the production. 

Dry milk powders (2022 United States production, comparisons in percentage with 2021) 

• Nonfat dry milk, human - 1.97 billion pounds, down 3.8 percent.
• Skim milk powders - 658 million pounds, down 5.7 percent.

Whey products (2022 United States production, comparisons in percentage with 2021) 

• Dry whey, total - 915 million pounds, up 2.6 percent.
• Lactose, human and animal - 1.11 billion pounds, down 0.9 percent.
• Whey protein concentrate, total - 451 million pounds, down 2.7 percent.
• Frozen products (2022 United States production, comparisons in percentage with 2021)
• Ice cream, Regular (total) - 920 million gallons, up 4.5 percent.
• Ice cream, Lowfat (total) - 446 million gallons, down 6.5 percent.
• Sherbet (total) - 29.5 million gallons, down 15.6 percent.
• Frozen Yogurt (total) - 45.6 million gallons, up 12.6 percent.

Inside the struggle to make lab-grown meat

The U.S. lab-grown meat industry got a boost last fall when the FDA for the first time declared cultivated chicken from Upside Foods safe to eat. The company — which is backed by Bill Gates and Richard Branson and the meat giants Tyson and Cargill — can grow small amounts of meat from cells. But making large volumes at low cost is proving much harder, according to Wall Street Journal interviews with current and former employees, industry officials, investors and outside scientists. The WSJ reports that many of Upside’s investors said they were comfortable with their long-term bets on the company. WSJ article: What Exactly Is Cultivated Meat, and When Can We Eat It?

FSIS wants to continue its poultry inspection system information collection

USDA’s Food Safety and Inspection Service (FSIS) is proposing to continue collecting information under the Poultry Products Inspection Act (PPIA) to very that “poultry products are safe, wholesome, and properly labeled and packaged.” The agency is making no changes in the information gathering where the authority to gather the information expires Aug. 31, 2023. This does not alter the reporting requirements for firms under the PPIA. Link to Federal Register notice.

For food price inflation clues, watch India

India’s monsoons are an essential economic indicator for a country that relies on rainfall to feed 1.4 billion people. A poor season can topple governments and threaten global food security. U.S. and Australian forecasts now point to an increased probability of an El Niño episode in 2023. El Niño is a periodic weather event that drives monsoon clouds away from India — and has historically hurt food production. A subpar monsoon is an underappreciated threat to global food security and inflation, writes the Wall Street Journal.

Weekly USDA dairy report

CME GROUP CASH MARKETS (4/21) BUTTER: Grade AA closed at $2.4000. The weekly average for Grade AA is $2.3840 (+0.0345). CHEESE: Barrels closed at $1.5525 and 40# blocks at $1.7500. The weekly average for barrels is $1.5310 (-0.0405) and blocks, $1.7570 (-0.0420). NONFAT DRY MILK: Grade A closed at $1.1650. The weekly average for Grade A is $1.1475 (+0.0065). DRY WHEY: Extra grade dry whey closed at $0.3625. The weekly average for dry whey is $0.3655 (-0.0020).

BUTTER HIGHLIGHTS: Cream volumes are available in the East and West, and some contacts in the West report volumes are outpacing current butter production needs. Cream availability is tightening in the Central region. Cream multiples are trending higher across all regions, and some stakeholders in the Central region anticipate multiples to further increase in the coming weeks. Butter production is strong in the West and East. Some eastern butter makers say they are operating churns seven days a week. In the Central region, churning and micro-fixing are busy, but dependent on buyers’ needs. Spot sales of butter are steady in the Central and West, though contacts in the Central region report softening demand in recent weeks. Loads of butter are available in the Central and West. Contacts in the East report butter inventories vary across manufacturers and different locations. Bulk butter overages range from 0 to 10 cents over market value.

CHEESE HIGHLIGHTS: Milk supplies continue to grow in many areas of the U.S., as bottling demand has begun to ebb ahead of school breaks. This factor has cheesemakers suggesting milk supplies are widely accessible. Spot milk prices in the Midwest ranged from $11 to $4 under Class III, but cheesemakers reported more toward the low end of that range than they have in recent weeks. Cheese production is naturally busy, despite a little more irregular downtime reported this spring. Cheese demand is mixed, but process/barrel cheese is viewed as more available than a number of cheddar and/or Italian varieties. Thus, market prices continued their downslide this week, as the block-over-barrel CME price gap hovers around the $.20 mark.

FLUID MILK: Milk output is strong to steady throughout the country. Parts of the Northeast got frost and freezing overnight, and Arizona had temperatures into the lower 90s, but impacts to milk production were minimal. Transportation is problematic for parts of California, with some areas transporting heavy volumes. Overall demand levels from plants have improved with previously shut plants in the Central Valley area of California up and running again. Class III spot load purchases and sales are reported at $11 to $4 below Class prices. Milk volumes for processing needs are available to meet current demand, as no shortages are being reported. Overall bottling demand has picked up and is steady with educational facilities past scheduled spring breaks. Demand for Class II by ice cream manufacturers is reportedly trending seasonally higher. Demand for Class III and IV is strong to steady. Plenty of condensed skim milk and cream is available, as contacts report a heavy to balanced supply compared to production needs. Cream multiples for all Classes are 1.15 – 1.30 in the East, 1.21 – 1.29 in the Midwest, and 1.00 – 1.27 in the West.

DRY PRODUCTS: As a large industry conference looms, marketers relay some quieter trading on both the seller and buyer side of the dairy powder markets. Some directional tones can shift, as many industry participants plan to meet in person early next week. Low/ medium heat nonfat dry milk (NDM) prices moved lower in the Central region, while prices were mixed in the West. Demand remains in a quieter mode, but there are ample amounts of condensed skim available. Buttermilk powder prices moved lower in most facets this week. Soft demand and generally available supplies are keeping markets in check. Whey powder prices were mixed in the Central and West, while moving up in the East. Despite a lot of milk moving through Class III channels, Midwest marketers continue to relay somewhat firm supplies, although some contacts say supplies are accessible in areas like the Northern Plains and in the West. Lactose prices were steady to lower. Loads moving into feed are keeping prices in the mid $.10s, while food and specialty end users are continuing to pay prices in the upper portion of the range. Whey protein concentrate 34% prices were steady on quieter market activity. Dry whole milk prices were unchanged, as demand is quiet. Rennet and acid casein prices moved lower. More milk availability has led to growths in production in the EU and New Zealand.

ORGANIC DAIRY MARKET NEWS: The Agricultural Marketing Service (AMS) reported February 2023 estimated fluid product sales. The U.S. sale of total organic milk products was 218 million pounds, down 3.2 percent from February 2023, but up 1.0 percent year-to-date. Organic whole milk sales, 106 million pounds, were up 2.2 percent compared to a year earlier and up 6.4 percent year -to-date. Reduced fat milk (2%) sales were 70 million pounds, down 6.1 percent from the previous year and down 2.3 percent year-to-date. Organic flavored whole milk sales, 1 million pounds, decreased 61.6 percent from the previous year and decreased 61.2 percent year-to-date. Federal Milk Market Order 1, in New England, reports utilization of types of organic milk by pool plants. During March 2023, organic whole milk utilization totaled 19.2 million pounds, up from 15.4 million pounds the previous year. Butterfat content, 3.27 percent, is unchanged from a year ago. The utilization of organic reduced fat milk, 18.2 million pounds, increased from 16.2 million pounds a year ago, while March 2023 butterfat content, 1.42 percent, is unchanged from the previous year.

NATIONAL RETAIL REPORT: Total dairy retail advertisements increased on the conventional aisle by 13 percent, while organic ad totals decreased 63 percent from week 15. Conventional ice cream in 48 to 64 ounce containers reigns as the most advertised dairy item this week. Milk in gallon containers was the most advertised organic dairy item, featuring slightly more ads than the half gallon variety. The weighted average advertised price of organic half gallon milk was $4.02, compared to $1.59 for conventional, resulting in an organic premium of $2.43. Notable week to week ad total increases for conventional items this week were half gallon milk and 32 ounce Greek yogurt, which increased 119 and 121 percent, respectively.