13 October 2023

12 minute read

By: Jim Wyckoff

Europe

North America

Asia

Bird flu discovered at Minnesota turkey farm

Minnesota’s first case of highly pathogenic avian influenza (HPAI) was discovered on a turkey farm in Meeker County, state officials announced Wednesday. USDA reported HPAI outbreaks last week at commercial turkey farms in South Dakota and Utah, and a backyard poultry flock in Montana.

US dairy industry remains divided on milk pricing reform amid public hearing

National Milk Producers Federation (NMPF) officials express hope for including additional milk pricing provisions in the upcoming farm bill, as discussions continue during the ongoing public hearing to update Federal Milk Marketing Orders (FMMOs). The hearing, taking place over six weeks in Carmel, Indiana, involves testimony and discussions on 22 milk pricing reform proposals from various dairy and agriculture sector groups.

Of note:

• NMPF and the International Dairy Foods Association (IDFA) are at odds over milk pricing reform during a public hearing to update Federal Milk Marketing Orders (FMMOs).
• NMPF supports shifting back to a formula based on the "higher of" rates paid for Class III and Class IV milk, while IDFA proposes a hybrid approach to the Class I Mover.
• The split between producers and processors persists, with processors opposing anything that would lower producer prices.
• NMPF aims to balance price changes for the benefit of US dairy farmers, but also recognizes the importance of risk management.
• The farm bill's impact on make allowances is being considered, with efforts to require USDA to conduct mandatory plant cost studies every two years.
• The Dairy Margin Coverage (DMC) safety net program is set to lapse at the end of the year, but it's unlikely that Congress will fail to act before this happens.

EFSA recommends preventative bird flu vaccination for vulnerable poultry in high-risk areas to control avian influenza

The European Food Safety Agency (EFSA) issued a recommendation endorsing the preventative vaccination of susceptible poultry against avian influenza in regions with a high risk of human-to-bird transmission, as detailed in a scientific opinion posted on its website. EFSA emphasizes that preventative vaccination represents the optimal strategy for minimizing the number of outbreaks and the duration of epidemics, particularly in high-risk transmission areas.

France recently made headlines as the first European Union (EU) country to initiate a nationwide vaccination effort against avian influenza. According to EFSA's recommendation, when an outbreak occurs, protective vaccination should be carried out within a 3-kilometer (19-mile) radius of the outbreak's location in high-risk transmission areas. However, EFSA underscores that vaccination should be viewed as a complementary measure rather than a replacement for other preventive and control measures, including bird infection monitoring, early detection, biosecurity, and an integrated disease control approach.

Avian influenza vaccination has been met with reluctance by many countries grappling with outbreaks, as it can lead to trade restrictions. Currently, testing cannot differentiate between vaccinated birds and those infected with the virus. EFSA's role, in response to a request from the European Commission, is to provide an overview of existing vaccines and various vaccination efforts. Another opinion from EFSA, addressing surveillance and risk mitigation in vaccinated areas and farms, is anticipated in March 2024.

Genus develops gene-edited pigs resistant to costly swine disease; awaits FDA approval for commercial sale

Animal genetics company Genus has utilized gene editing techniques to develop pigs resistant to porcine reproductive and respiratory syndrome (PRRS), a costly viral disease affecting hogs. Colombia has granted approval for the sale of these gene-edited pigs. Genus, based in Britain, anticipates a decision from the FDA in the first half of 2024, after which it plans to launch the pigs globally in a phased manner, contingent on receiving the necessary regulatory approvals.

These pigs mark the first instance of gene-edited pigs being commercially sold. Genus emphasizes a responsible and transparent approach to this development, working closely with stakeholders in the animal protein value chain.

More market access pushed. Besides the United States, Genus has sought regulatory approval for these pigs in countries such as Canada, China, Japan, Mexico, Brazil, and others.

PRRS imposes significant economic costs on the hog industry in the US and Europe, amounting to an estimated $2 billion annually, according to Genus. To create pigs resistant to PRRS, Genus scientists employed gene editing to remove a specific segment of swine DNA responsible for encoding a protein used by the virus to enter pig cells.

This achievement follows the FDA's approval of a genetically modified pig for both food and human therapeutics in late 2020, which prevents the production of a sugar causing allergic reactions in some individuals. TFDA has also given the green light to fast-growing genetically modified AquAdvantage salmon in 2015 and gene-edited "slick" cattle with short hair, potentially better suited to tolerate hot weather, in 2022.

California Governor Gavin Newsom signs bill into law that bans several food chemicals

The chemicals, including brominated vegetable oil, potassium bromate, propylparaben, and red dye No. 3. This move puts California ahead of the FDA and could inspire other states to take similar actions until the FDA updates its regulations.

Food safety advocates have criticized the FDA for not taking action on these chemicals, particularly red 3, which was found by the FDA decades ago to have carcinogenic properties. Last year, several groups, including the Center for Science in the Public Interest (CSPI), petitioned the FDA to remove red 3 from the list of approved color additives.

CSPI praised California's new law, emphasizing that a known carcinogen is banned in products like lipstick but remains widely used in thousands of foods, including many marketed to children. However, the National Confectioners Association expressed concerns, stating that California's decision undermines consumer confidence and creates confusion around food safety, suggesting that the FDA could prevent this by engaging on the topic.

Smithfield to close North Carolina pork plant but transfer production to another site

Smithfield Foods will close its Charlotte, North Carolina, pork-processing plant and transfer production to its Tar Heel, North Carolina, facility to increase efficiency and better utilize existing capacity. Tyson and Perdue Farms are also shuttering some plants due to declining demand and persistent cost challenges.

US pork exports maintain steady performance, led by strong demand in Mexico, while beef exports show improvement in August

In August, US pork exports remained steady compared to the previous year, with robust demand from Mexico playing a crucial role, according to data from the USDA and the US Meat Export Federation (USMEF). However, the export value dipped slightly. Beef exports, on the other hand, were lower than the substantial totals recorded in August 2022 but showed signs of improvement compared to July.

In detail, August pork exports amounted to 226,519 metric tons (mt), which was on par with the previous year. However, the export value decreased by 1.5% to $649.5 million. Over the first eight months of 2023, pork exports were 11% higher than the same period the previous year, totaling 1.91 million mt and valued at $5.32 billion, representing a 9% increase.

Mexico's significant demand for US pork was highlighted, with USMEF President and CEO Dan Halstrom emphasizing its crucial role in generating revenue for the US pork industry. Moreover, demand for US pork was growing in other Western Hemisphere destinations, and gains were being achieved in various Asia-Pacific markets.

As for beef exports in August, they totaled 109,000 mt, marking a 19% decrease compared to the previous year, which had recorded the second-highest export volume on record. However, there was a 6% increase compared to July. The export value in August was $883.9 million, reflecting a 15% decline year-on-year but a 9% rise compared to July. For the first eight months of the year, beef exports were behind last year's record pace by 12% in volume (881,343 mt) and 19% in value ($6.69 billion).

Halstrom noted that beef exports faced challenges, particularly in large Asian markets where the recovery of the foodservice sector was slow, and consumer confidence remained low due to rising prices and a strong US dollar. Nevertheless, exports to South Korea and Japan improved somewhat after a challenging July. Mexico continued to be a significant bright spot for US beef, and exports to other Western Hemisphere partners in Central and South America, along with the Dominican Republic, gained momentum in August.

Major meatpacking plants in the US shut down due to slipping demand and rising costs, affecting small town economies

Tyson, Perdue Farms, and Smithfield Foods are shuttering their plants across the US due to declining demand and persistent cost challenges. This move is causing economic concerns for small towns where these meatpacking facilities serve as significant employers, customers, and essential contributors to the local tax base, the Wall Street Journal reports.

Tyson is working to assist displaced workers in finding new employment opportunities and highlights its substantial annual economic impact on the communities it serves, estimated at over $27 billion.

Weekly USDA dairy report

CME GROUP CASH MARKETS (10/6/2023) BUTTER: Grade AA closed at $3.5025. The weekly average for Grade AA is $3.4355 (+0.2045). CHEESE: Barrels closed at $1.5775 and 40# blocks at $1.7025. The weekly average for barrels is $1.5530 (+0.0345) and blocks, 1.7015 (-0.0450). NONFAT DRY MILK: Grade A closed at $1.1800. The weekly average for Grade A is $1.1795 (+0.0040). DRY WHEY: Extra grade dry whey closed at $0.2975. The weekly average for dry whey is $0.2900 (-0.0070).

BUTTER HIGHLIGHTS: Cream volumes are tight in the Northeast and West. In the Midwest spot cream availability has firmed, while contacts are reporting multiples starting in the high 1.20s and low 1.30s this week. Contacts in the region are unsure when spot cream will become more available for churning. Butter churning is steady in the East and Central regions. In the West, butter production is mixed. Some butter makers in the region are running strong to steady schedules, while others have downtime but anticipate resuming production later this month. Retail and food service demands for butter are strong in the West, while export interest is moderate to light. In the Central region, contacts say demand for butter is steady. In the East food service butter demand is steady, but retail sales are softening. Some East region supermarkets are offering butter at low retail prices to encourage customers to shop at their stores. Butter prices on the CME reached new highs this week, though some Central region contacts expect a near-term downward correction. Bulk butter overages range from 4.0 to 15.0 cents over market value.

CHEESE HIGHLIGHTS: Milk availability is somewhat tight in the Northeast and contacts in the region note some spot loads of milk are moving at above Class prices. In the Midwest and West, spot availability is generally limited. Some Midwestern contacts say spot milk prices were lower this week, compared to previous weeks, but all reported prices remained above Class III. Cheese production is mixed in the Midwest, as some processors have some downtime in the coming weeks, while others are running active schedules. In the Northeast and West, cheese production is steady. Contacts in the Northeast say cheese inventories remain comfortable, despite recent declines in production. Cheddar cheese demand is outpacing other American-type cheeses in the Northeast. Contacts in the Northeast and West, say cheese demands are steady in both retail and food service markets. Meanwhile, contacts in the West report moderate to light export cheese demand. In the Midwest, cheese demand is mixed.

FLUID MILK: Farm level milk outputs vary throughout the country. Milk outputs are trending flat in the East, where warm temperatures have stalled seasonal increases in milk production. Class I demand is strong and continues to limit the amount of milk available for processing needs. Some contacts relay that milk is being sold at above Class prices. Cream supplies remain tight. In the Midwest, milk and components are increasing gradually. Contacts share that in the Upper Midwest the number of smaller dairy operations, namely those with under 200 head, have dropped significantly in recent months. Cheesemakers report spot milk prices at $0.25-$2 above Class III. Cream supplies remain tight. Milk production remains variable in the West. In California and Arizona milk production is flat, and spot load availability is said to be tight. New Mexico milk outputs are trending lower. Milk production is trending flat in the Pacific Northwest, but spot milk is generally more available than in other parts of the region. In Utah, Colorado, and Idaho, milk handlers share that production is trending flat to slightly higher. Cream is more available in the northern states of the region. FOB cream multiples for all Classes are 1.40-1.48 in the East, 1.26-1.40 in the Midwest, and 1.10-1.36 in the West.

DRY PRODUCTS: The low/medium heat nonfat dry milk price series inched higher in the Central, East, and West on all facets. Condensed skim is generally available, but inventories have tightened due to dryer difficulties and increased demand from customers in Mexico. Dry buttermilk prices held steady in the Central and East, but moved higher across all facets in the West. Inventories are reportedly tightening due to tight cream availability. Dry whole milk prices were unchanged this week, though spot loads are noted to be tight. Dry whey prices moved higher on the bottom of the price range in the Central and West, and higher at both ends of the range in the East. Cheesemakers report minimal changes in production. Whey protein concentrate 34% prices moved higher at the top end of the range, with contacts suggesting that some brand-preferred inventories are tightening. The lactose price range expanded. Contacts report increases in domestic demand. Production of new inventory is steady. Rennet casein prices moved lower this, week while acid casein prices were unchanged. Contacts share that both acid and rennet casein are available for spot market needs.

ORGANIC DAIRY MARKET NEWS: This week, markets for the organic feed corn trade are active on moderate demand. Bushels exchanged 31 cents higher delivered elevator in the spot market. Forward contracts are expected to deliver Q3 2023 through Q3 2024. Organic feed soybean trade activity is light on moderate demand. The spot prices are 25 cents higher delivered elevator with forward contracts set to deliver Q4 2023 through Q2 2024. All other organic grains had no comparable trades. The September 2023 survey of selected retail supermarkets in 30 US cities cited the retail prices of organic whole milk in the half gallon container. Prices ranged from $3.99 in multiple US cities to $6.89 in St. Louis, MO. The September 2023 simple average price of $4.87 posted an increase, compared to $4.85 last month.

NATIONAL RETAIL REPORT: Total conventional dairy advertisements increased by 6 percent, while total organic dairy ads increased by 22 percent. Conventional ice cream in 48-64 ounce containers was the most advertised dairy product, with a weighted average advertised price of $3.65, down from $4.12 last week. Sour cream in 16 ounce containers was the most advertised organic dairy product, appearing in 1081 percent more ads over last week, with a weighted average advertised price of $2.57. Conventional butter in one-pound packages appeared in 90 percent more ads than the week prior and had a weighted average advertised price of $3.87, down 49 cents from last week.