29 June 2024

13 minute read

By: Jim Wyckoff

Europe

North America

Asia

USDA to announce H5N1 aid for dairy farmers

USDA will soon announce financial aid for dairy farmers affected by the H5N1 virus through the Emergency Assistance for Livestock, Honeybees and Farm-Raised Fish (ELAP) program. The aid will cover 28 days of milk loss per cow over a 134-day period, based on the monthly all-milk price and expected milk production per cow. Of the 28 days, 21 will be covered at full loss and seven at 50% loss. Eligibility requires a positive test from a federally approved lab and milk production during the period. Details will be shared in public briefings with impacted states on Thursday and Friday.

Slightly bigger US hog herd expected

Analysts expect USDA’s Hogs & Pigs Report this afternoon to show the U.S. hog herd increased 0.8% from year-ago as of June 1 to 74.139 million head. Market hog inventories are expected to be up 1.2%, while the breeding herd is anticipated to be down 2.7%. Analysts expect USDA to report a 0.9% bigger spring pig crop as increased litter size likely offset slightly fewer farrowings. Looking forward, analysts expect farmers to farrow 1.4% and 1.0% fewer sows during summer and fall, respectively. As always, USDA’s revisions to past data will be key.

Weekly USDA US beef, pork export sales

Beef: Net sales of 16,700 MT for 2024 were up 13 percent from the previous week and 17 percent from the prior 4-week average. Increases were primarily for Japan (4,000 MT, including decreases of 300 MT), China (4,000 MT, including decreases of 100 MT), South Korea (3,500 MT, including decreases of 300 MT), Canada (1,300 MT, including decreases of 100 MT), and Mexico (1,100 MT). Exports of 16,400 MT were down 2 percent from the previous week, but up 1 percent from the prior 4-week average. The destinations were primarily to Japan (4,700 MT), South Korea (3,900 MT), China (1,900 MT), Canada (1,600 MT), and Taiwan (1,500 MT).

Pork: Net sales of 39,200 MT for 2024 were up 83 percent from the previous week and 25 percent from the prior 4-week average. Increases primarily for Mexico (20,200 MT, including decreases of 200 MT), Japan (5,900 MT, including decreases of 200 MT), Canada (4,200 MT, including decreases of 600 MT), South Korea (3,900 MT, including decreases of 100 MT), and Australia (3,100 MT, including decreases of 100 MT), were offset by reductions for the Dominican Republic (1,700 MT). Exports of 28,300 MT were down 2 percent from the previous week and 14 percent from the prior 4-week average. The destinations were primarily to Mexico (11,300 MT), Japan (4,100 MT), South Korea (2,700 MT), China (2,600 MT), and Canada (2,000 MT).

2024 US meat, poultry, fish prices expected to rise by 1.8%; pork prices seen up 1.1%

US pork prices have risen 2.6% since May 2023. The other foods category, accounting for 12.2% of food prices, is now forecast to increase by 0.8%, down from 1.3% in May.

US cash cattle fundamentals remain red hot

The average US cash cattle price was a record $194.84 last week, rising $2.29 from the previous week’s high. Over the past two weeks, the cash price has surged $5.92. Wholesale beef prices firmed 25 cents for Choice to $322.64 and $1.96 for Select to $305.07 on Monday. Given hefty packer purchases of cattle recently and next week’s shortened slaughter schedule, cash sources expect prices to be steady at best this week.

H5N1 avian flu confirmed in 121 dairy herds, USDA expects more cases amid heat challenges

The H5N1 avian flu virus has been confirmed in 121 dairy herds, with more expected as testing continues, according to a USDA official. The outbreak, now in its fourth month, poses challenges as summer heat discourages farmworkers from wearing full protective gear.

More cases expected. Julie Gauthier of the USDA’s Animal and Plant Health Inspection Service mentioned in a webinar hosted by the Council for Agricultural Science and Technology that additional cases are anticipated with increased testing. The USDA is promoting a voluntary program for weekly milk sample tests from bulk coolers on dairy farms, allowing farmers to transport lactating cows across state lines without prior testing if the weekly results are negative. Four herds have joined the program since June 3.

USDA also plans to roll out the Emergency Livestock Assistance Program

The Emergency Livestock Assistance Program (ELAP) compensates producers for milk loss due to infection. This program aims to encourage more herds to undergo testing.

Criticism has been directed at USDA for insufficient herd testing and inadequate monitoring of dairy farmworkers. Since March 25, three dairy workers have contracted mild cases of bird flu from cattle in the Texas panhandle.

Jamie Jonker of the National Milk Producers Federation noted that full personal protective equipment (PPE) may not be feasible in the current heat, raising potential worker safety issues. The focus will instead be on protecting the eyes, nose, and mouth, with goggles already recommended in milking parlors. Gloves, masks, face shields, and disposable coveralls are other suggested protective measures. Testing has found high viral counts in raw milk from infected cows, with conjunctivitis being a common symptom among infected workers.

USDA Secretary Tom Vilsack is expected to announce a new livestock competition regulation

Vilsack will speak at an event that will focus on market competition and improving conditions for U.S. producers, featuring Vilsack and U.S. Assistant Attorney General of Antitrust Jonathan Kanter. The Office of Management and Budget recently completed its review of a USDA proposed rule defining unfair practices under the Packers and Stockyards Act. This is part of the Biden administration's broader regulatory efforts in agriculture, particularly targeting the livestock and poultry markets.

Denmark is set to implement a carbon tax on livestock producers

This move is intended to meet its 2030 target of reducing greenhouse gas emissions by 70% from 1990 levels. The tax will be 300 Danish crowns ($43.16) per metric ton of carbon dioxide in 2030, increasing to 750 crowns by 2035. Farmers can receive a 60% income tax deduction, effectively reducing the tax to 120 crowns per metric ton initially, rising to 300 crowns by 2035. Subsidies will also be available to help farmers adjust their operations. This plan, proposed in February and agreed upon by farmers, industry, labor unions, and environmentalists, awaits parliamentary approval but is expected to pass. Farming is Denmark's largest source of carbon dioxide emissions. Other countries have faced resistance to similar taxes from farmers.

Only 18 U.S. farms are currently accepting federal funds to combat the H5N1 avian flu outbreak among dairy herds

The outbreak began three months ago, according to USDA. Eligible farms can receive up to $28,000 over three months if they have an outbreak, and $3,500 is available to other dairy producers to improve biosecurity and test their cows.

The Centers for Disease Control (CDC) reported (link) that over 690 people have been monitored for bird flu due to exposure to infected animals, an increase of 140 in a week. At least 51 people with flu-like symptoms have been tested for bird flu, with three farmworkers contracting mild cases since March 25, when it was confirmed that the virus had spread from birds to dairy cattle. The CDC emphasized that the risk to the general public remains low.

Michigan has the highest enrollment for USDA financial assistance, with 11 farms participating. Other states with enrolled farms include New York (one farm), Iowa (three farms), Colorado (two farms), and Wyoming (one farm). A USDA database (link) shows that H5N1 has been confirmed in 112 herds across 12 states. The recent change in format of the database reported 116 affected herds previously. USDA reported that HPAI has been confirmed in six additional Colorado dairy herds, two in Iowa and one in Idaho, according to Animal and Plant Health Inspection Service (APHIS) updates on June 20 and 21. USDA said that 58 cases have been confirmed in the past 30 days, affecting eight states.

In early May, USDA announced up to $28,000 available for farms with infected herds to cover costs such as protective equipment, veterinary testing, treating infected herds, and strengthening biosecurity practices. Farms without positive tests for bird flu could receive up to $1,500 for biosecurity measures and $2,000 for cow testing.

USDA plans to issue a disaster-aid regulation to compensate farmers for 90% of the value of milk production lost due to the virus and compensate farmers at fair market value for culled cows. Dairy cows infected with bird flu typically develop a fever, lose appetite, and produce less milk but generally recover within a couple of weeks, with a mortality and culling rate of 2% or less.

Iowa reported its 11th case of bird flu among dairy herds on Sunday in Sioux County (link), with two other cases in the same county reported on Friday. Four herds in Kansas, Nebraska, New Mexico, and Texas have enrolled in a voluntary USDA program for weekly testing of milk samples, exempting them from testing lactating cows before interstate shipping.

Since February 2022, USDA has allocated $2.1 billion to address bird flu outbreaks, which have resulted in the deaths of over 97 million birds, primarily egg-laying hens and turkeys.

USDA Cattle on Feed Report slightly negative compared to expectations

USDA estimated there were 11.583 million head of cattle in large US feedlots (1,000-plus) as of June 1, down 7,000 head (0.1%) from year-ago but 152,000 head more than the average pre-report estimate implied. May placements topped year-ago by 4.3%, whereas traders expected a 1.5% decline. Marketings increased 0.2% from last year, slightly less than expected. The data is mildly negative compared to the pre-report estimates, but not enough to have a major market impact.

China seeks to stabilize beef cattle production amid declining prices

China’s ag ministry published new regulations to stabilize the production of beef cattle as the industry faces declining prices and heavy losses. The ministry said it will instruct farms to adjust breeding reasonably, eliminate old and low-yielding cattle as appropriate, optimize herd structure and improve production efficiency. Main beef cattle producing areas should actively seek support from financial institutions, it said. The ministry also called for measures to increase the supply of forage and reduce costs. Local areas should raise grass planting in cultivated land and as well using beaches, abandoned land and saline-alkali land. To strengthen disease prevention, the ministry said it would support large-scale farms to increase biosafety measures and build disease-free communities.

Weekly USDA dairy report

CME GROUP CASH MARKETS (6/21) BUTTER: Grade AA closed at $3.0900. The weekly average for Grade AA is $3.0963 (+0.0023). CHEESE: Barrels closed at $1.9200 and 40# blocks at $1.8450. The weekly average for barrels is $1.9475 (-0.0585) and blocks $1.8681 (-0.0764). NONFAT DRY MILK: Grade A closed at $1.2050. The weekly average for Grade A is $1.1988 (+0.0048). DRY WHEY: Extra grade dry whey closed at $0.4700. The weekly average for dry whey is $0.4775 (+0.0025). BUTTER HIGHLIGHTS: In the West, domestic butter demands for both the retail and food service sectors are steady. For the Central and East regions, no changes in domestic butter demands from the prior week are conveyed for either the retail or food service sectors. Although cream availability continues to tighten at various paces across the nation, butter manufacturers indicate cream volumes remain ample for processing needs. Butter production schedules are mostly steady. That said, a few manufacturers indicate churns will go down for lengthy maintenance projects prior to months end. Some stakeholders say unsalted bulk butter is tight. Bulk butter overages range from 1 to 10 cents above market, across all regions.

CHEESE HIGHLIGHTS: Cheese production schedules are variable throughout the U.S. In the Northeast, steady farm level milk production and lower Class I demand has allowed some cheese manufacturers to run at full capacity. In the Central region, contacts share cheese production is in line with recent weeks. Spot milk prices ranged from $2- to $1-under Class III. For week 25 of 2023, though, the spot milk price range was $11- to $3.50-under Class III. Some cheese processors have shared that they are waiting to purchase spot milk loads until the Independence Day holiday. In the West, cheese production is steady to lighter. Milk volumes have become tighter throughout the region, and some plants reported unexpected downtime. Export cheese demand is steady.

FLUID MILK: Fluid milk and cream production has declined in almost every region this week. Temperatures nearing and reaching 100 degrees, in states across the South and West, are pushing cattle from their comfort zones and decreasing production. In the Northeast, cooler temperatures and better cow comfort have been cited as the primary reason for contacts suggesting that current milk production levels have been higher than anticipated for this time of year. Spot milk loads are finding their way into markets where processors are quickly making use of them. The availability of those loads is getting tighter. In the Midwest, cheesemakers are finding spot milk loads at $2- and $1-under Class III again this week. Some contacts are saying they are waiting for the Independence Day week to look to secure extra loads. Class II, III and IV demands range from strong to steady. Class I demand remains weak in the Northeast but steady across all other regions. Industry participants report condensed skim demand and availability are comparable to recent weeks. Cream availability continues to tighten. Cream multiples for all Classes are 1.15 - 1.40 in the East, 1.20 - 1.38 in the Midwest and 1.05 - 1.30 in the West.

DRY PRODUCTS: Low/medium heat nonfat dry milk (NDM) prices were steady to higher this week. Due to limited availability coinciding with light to steady demand, markets are viewed as rangebound. Dry buttermilk prices were steady to slightly lower nationwide. Current spot trading activity is quiet, as processors are focused primarily on contractual obligations. Dry whole milk prices were steady, as spot load availability is and has been somewhat tight. Dry whey prices were mixed throughout the regions this week. Domestic demand is steady. As high protein concentrate blend markets are firm, whey solids continue to flow into those processing channels. Whey protein concentrate 34% prices were mixed, as domestic demand is noted as steady, while international interests are quieter. Lactose prices were unchanged, as preparations for Q3 contracts are wrapping up. Acid and casein prices slid lower on softening international demand.

INTERNATIONAL DAIRY MARKET NEWS

WEST EUROPE: Milk production in West Europe has been seasonally declining over the last month. In much of Europe, milk production levels have been above those of the previous year. However, cool wet weather has held back production in parts of Europe like the United Kingdom and Ireland. Following the European parliament election held earlier in the month, Europeans are anticipating what the shift to the right may mean for EU agricultural policy and national elections held later in the year.

EAST EUROPE: Milk production continues to expand within East Europe. The EU Council has agreed in principle to the negotiating framework for accession talks with Ukraine and Moldova. Hungary was the last member state to agree to the talks after expressing concerns about the treatment of Hungarian minority groups within Ukraine. The first meetings are set to commence next week.

AUSTRALIA: Dairy Australia recently released export data for Australia showing milk export volumes from July 2023 - April 2024 were down from the same period a year earlier. The April 2024 Production Inputs Monitor from Dairy Australia stated dry conditions persisted throughout May. Dryer soil conditions in dairy producing regions of the country have contributed to increased demand for supplementary feed and higher prices for hay and grain.

NEW ZEALAND: Milk production data from New Zealand for April 2024 was recently released showing total April 2024 production was down on a tonnage basis compared to a year earlier. During April 2024, the total kg of milk solids decreased from the previous year. Recently released data from New Zealand for April showed the number of dairy cows sent to slaughter during the month was up from April 2023.

SOUTH AMERICA: Contacts in some areas of the South American region say weather patterns have become almost contradictory as winter approaches. There are other hurdles confronting regional dairy farmers, according to reports, as prices for feed and more notably, fertilizer, have moved higher in recent months. Areas in Argentina, Uruguay and Brazil (namely the state of Rio Grande do Sul) are still recovering from recent months' flooding. Traders in the region say mid-year market activity has cooled. Some contacts in Argentina and Uruguay relay Brazilian near-term needs are being met, but skim milk and whole milk powder availability is not bountiful. Brazilian importers relay an upcoming push for dry whey and whey protein blends is expected. They are eyeing global markets as well as availability trends from their neighboring trading partners. All that said, current markets are generally steady to quiet as traders are focusing in on Q3/Q4 contracts.

NATIONAL RETAIL REPORT: Conventional dairy ads increased, but organic dairy ads decreased. Cheese was the most advertised dairy commodity. Total conventional cheese ads increased slightly compared to the prior week. Conventional ice cream was heavily represented in dairy ads. The increase in total conventional ice cream ads for this week compared to last week was marginal. No organic ice cream ads were present this week. Yogurt was the third most represented conventional dairy commodity.