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Weekly global protein digest: $560 million in US livestock aid, US dairy retail report

13 May 2022
Jim Wyckoff Commentary -  TheCropSite

Analyst Jim Wyckoff shares an update on global protein news.

Better week for US pork, beef export sales

USDA Thursday reported US pork net export sales of 26,300 MT for 2022 were up 10 percent from the previous week and 14 percent from the prior 4-week average. Increases were primarily for Mexico (9,600 MT, including decreases of 700 MT), China (4,700 MT, including decreases of 300 MT), South Korea (3,800 MT, including decreases of 700 MT), Japan (3,000 MT, including decreases of 200 MT), and Colombia (2,600 MT). Exports of 33,100 MT--a marketing-year high--were up 3 percent from the previous week and 9 percent from the prior 4-week average. The destinations were primarily to Mexico (14,600 MT), China (4,300 MT), South Korea (4,000 MT), Japan (3,900 MT), and Colombia (1,500 MT).

US beef net export sales of 28,400 MT for 2022--a marketing-year high--were up 95 percent from the previous week and from the prior 4-week average. Increases were primarily for South Korea (12,000 MT, including decreases of 700 MT), Japan (7,200 MT, including decreases of 500 MT), Mexico (3,600 MT), Canada (1,100 MT), and Indonesia (900 MT). Exports of 19,700 MT were down 3 percent from the previous week, but up 2 percent from the prior 4-week average. The destinations were primarily to South Korea (6,000 MT), Japan (5,800 MT), China (2,500 MT), Taiwan (1,300 MT), and Mexico (1,200 MT).

USDA Secretary Vilsack reveals $560 million in livestock aid

Vilsack said a smaller second round of payments is planned for livestock producers for those not covered under USDA’s Livestock Forage Disaster Program or other aid efforts. Sen. John Hoeven (R-N.D.) told Vilsack the payment rate for calves under 250 lbs. is too low and not reflective of costs under the Livestock Indemnity Program. Hoeven also said some coverage is needed for animals that get sick and die later — delayed losses. Vilsack told him, “We’re focusing on those two issues” — timeliness and “taking a look at payment rates.” Vilsack says it’s “challenging” because USDA needs to tie livestock aid with what is done for crops. His agency is also looking at ways to “potentially provide for more production information” for “better understanding of how to value livestock at various times depending on the disaster, depending on the weight.”

A topic that wasn’t addressed at the hearing but should have been: Farmers are confused when USDA sends them a check because they are unclear what it is for and how it was calculated. USDA should clearly identify what the payment is for and how it was calculated. Someone who farms crops and raises livestock can’t know for sure whether they received a payment for livestock losses or crop losses. And they can’t know if the calculation is right because it currently doesn’t indicate anywhere.

California Proposition 12 update

Environmental and animal rights groups are pressuring the Biden administration to weigh in on a California Prop 12 case the Supreme Court has decided to hear. Today, the Sierra Club, Humane Society, and Center for Biological Diversity are running an ad in the Washington Post calling for the Biden administration to publicly oppose a legal challenge from the pork industry and Farm Bureau to a ballot measure passed in California that prevents intensive confinement of chickens and pigs.

Some US ranchers, farm groups urge Senate to amend legislation to bring transparency to cattle markets

Ranchers are saying the legislation doesn’t go far enough to deal with industry consolidation. The bipartisan bill would divide the country into regions and task USDA with deciding, for each one, the minimum share of cattle that a packer must buy through the cash market.

Tyson Foods Inc. reports soaring profit

The company raised prices for beef, chicken and pork, citing higher costs. The company said it increased prices for beef by an average 23.8% over the three months ended April 2, while its chicken prices increased 14.4% and 10.8% for pork. Tyson said its cost of goods sold increased by 15% over the quarter as the company paid more for animal feed, freight and labor expenses. Tyson Chief Executive Officer Donnie King said Tyson’s price increases are consistent with inflation. “We do not ask the customer to pay for our inefficiencies,” King said on a call with reporters. “We are asking customers to pay for inflation we see throughout the supply chain.”

More HPAI funds sought

Funding to combat highly pathogenic avian influenza, which has hit 291 domestic flocks and killed 37.5 million birds, should be a high priority when Congress sets the USDA budget for fiscal year 2023, said 10 senators in a letter.

China’s meat imports plunge in April

China imported 592,000 MT of meat in April, down nearly 36% from last year. China’s preliminary trade data doesn’t break down meat imports by category, but the sharp reduction was due to significantly lower pork arrivals. Through the first four months of this year, imports at nearly 2.3 MMT also fell 36% from the same period last year.

US pork group asks SEC for more time to review climate reporting proposal

National Pork Producer Council (NPPC) officials met last week with senior leadership from the Securities and Exchange Commission (SEC) on the agency’s proposed regulations mandating that publicly traded companies report on their carbon emissions and other climate-related information, including not only their direct greenhouse gas emissions but the GHGs from partner companies, suppliers and distributors throughout the supply chain.

NPPC raised concerns, including the proposal’s potential to expose farmers and ranchers to the risk of litigation and lead to further concentration in and integration of the pork industry.

In late March, the SEC voted 3-1 to advance the rule but provided only a 39-day comment period on the more than 500-page proposal. The deadline for filing comments on the proposed rule is May 20. NPPC signed onto a letter from 120 agricultural groups sent to SEC Secretary Vanessa Countryman asking for an additional 180 days to review and comment on the regulation, which company with experience in environmental, social and governance reporting estimated would cost companies $6.7 billion over the next three years.

USDA’s weekly dairy report

CME GROUP CASH MARKETS (5/6) BUTTER: Grade AA closed at $2.6400. The weekly average for Grade AA is $2.6475 (+0.0010). CHEESE: Barrels closed at $2.3800 and 40# blocks at $2.3500. The weekly average for barrels is $2.3380 (-0.0160) and blocks, $2.3485 (- 0.0210). NONFAT DRY MILK: Grade A closed at $1.7400. The weekly average for Grade A is $1.7350 (-0.0020). DRY WHEY: Extra grade dry whey closed at $0.5850. The weekly average for dry whey is $0.5895 (+0.0005).

CHEESE HIGHLIGHTS: Cheese producers report that staffing shortages and supply chain snags are affecting production throughout the country. Milk is available and contacts in the Midwest report that spot prices are around $2 under Class III. Cheesemakers in the Northeast say that demand is good in both retail and food service markets. Higher market prices in the Midwest have not deterred purchasers, as demand remains robust in the region. In the West, educational purchasing has, reportedly, begun to slow as summer breaks are approaching. Contacts in the Northeast and West report that strong export demand is present. Spot inventories are available in the West, while Midwest contacts say that any loads that become available are moving quickly.

BUTTER HIGHLIGHTS: Cream inventories vary throughout the country. Contact say that cream is available in the West, while inventories are mixed in the Northeast, and slimming in the Central region. Ice cream makers are purchasing loads of cream as they increase producing in preparation for the summer. Butter production varies in the Northeast but has remained steady in the West. Demand for butter is mixed. Stakeholders in the Northeast are concerned that higher grocery store prices for butter may be causing some customers to consider alternatives to butter. Recent news suggests that customers may not switch to alternatives as there is a global shortage of some plant-based fats. Contacts in the Central region say that a seasonal decline in demand is allowing them to focus on building inventories for summer/fall. Bulk butter overages range from 5 to 15 cents above market, across all regions.

FLUID MILK: Milk production in the Central and Northeastern regions are seasonally growing. Improving cow comfort temperatures are promoting milk output, but a wet spring in the upper Midwest has some farmers reporting increases in somatic cell counts. They also relay increasing milkfat/protein levels. Arizona temperatures are seasonally increasing, as producers there are relaying downticks in production. Class I sales are steady to declining, due to upcoming school breaks. Labor and hauler shortages, both on the farm and at the processor level, continue to be reported nationwide. Cheesemakers in the Midwest reported spot prices from $3 under to $.50 over Class. Cheese producers were very active on the spot milk market this week, reporting more spot milk purchases this week than any other week in 2022. Cream is starting to show signs of tighter availability in the Midwest and East. Western cream supplies remain generally available, as multiples ticked lower on the bottom of the range. F.O.B. cream multiples are 1.32-1.40 in the East, 1.24-1.31 in the Midwest, and 1.00 -1.28 in the West.

DRY PRODUCTS: Low/medium heat nonfat dry milk (NDM) prices moved lower nationwide. Availability has grown in recent weeks, as market tones are less settled than they have been throughout most of the year. Dry buttermilk prices moved higher on continued reports of limited availability. Western prices for dry buttermilk reached $2.05/lb, the highest price reported since 2007. Dry whole milk prices were unchanged on very limited production/availability. Dry whey prices moved lower in nearly every facet, nationwide. Producers say offers in the mid-$.60s are losing the traction they had just a few weeks ago. Stronger milk pulls from cheese producers are spawning growing sweet whey availability. Lactose prices were unchanged on limited demand and somewhat quiet markets. Whey protein concentrate 34% prices moved higher on the mostly series. There remains demand for brand-preferred WPC 34%, while demand for other loads is less than rigorous in light of shakier market tones. Casein prices are unchanged, but contacts still view the market outlook as bullish, on tight availability and steady demand.

ORGANIC DAIRY MARKET NEWS: This week, total organic dairy retail store ads withdrew 58 percent. The most advertised item, organic milk, saw retail ads decline 14 percent, while capturing 77 percent of total organic ads by commodity. Organic milk gallon containers replaced half-gallon containers with the highest volume of retail ads, up 10 percent week-over-week, as retail store ads for half gallon organic milk decreased 32 percent. The national advertised weighted average price for organic milk gallon containers, $6.26, is 11 cents above the previous week’s retail price. The organic gallon milk national weighted average price, when compared to the conventional gallon milk national weighted average advertised price, $3.93, represents a $2.33 organic premium.

US dairy weekly retail report

Spring sprang in the organic dairy retail sector. Total conventional dairy advertisements increased 9 percent, while organic ads added 102 percent week to week. Conventional ice cream in 48-to-64-ounce options maintained the top spot over all other dairy ads, while 32 ounce yogurt ads, which nearly trebled in ad volumes this week, was the most advertised organic dairy item. Conventional butter in 16-ounce quantities dipped by 17 percent, while the weighted average advertised price was $.22 more than last week’s $4.08.

TheCattleSite News Desk

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