30 September 2023

10 minute read

By: Jim Wyckoff

Europe

North America

Asia

Weekly USDA US beef, pork export sales

Beef: US net sales of 17,700 MT for 2023 were up 29 percent from the previous week and 42 percent from the prior 4-week average. Increases were primarily for Japan (3,900 MT, including decreases of 900 MT), South Korea (3,500 MT, including decreases of 300 MT), China (3,200 MT, including decreases of 100 MT), Canada (2,400 MT), and Mexico (1,300 MT, including decreases of 100 MT). Net sales of 200 MT for 2024 were reported for Taiwan (100 MT) and Japan (100 MT). Exports of 15,200 MT were unchanged from the previous week, but down 3 percent from the prior 4-week average. The destinations were primarily to Japan (3,800 MT), South Korea (3,600 MT), China (1,800 MT), Mexico (1,700 MT), and Canada (1,300 MT).

Pork: US net sales of 27,400 MT for 2023 were down 9 percent from the previous week and 6 percent from the prior 4-week average. Increases primarily for Mexico (11,600 MT, including decreases of 200 MT), Japan (4,500 MT, including decreases of 300 MT), South Korea (3,900 MT, including decreases of 100 MT), Colombia (1,900 MT), and China (1,500 MT, including decreases of 100 MT), were offset by reductions for Vietnam (200 MT). Exports of 30,000 MT were up 17 percent from the previous week and 11 percent from the prior 4-week average. The destinations were primarily to Mexico (12,800 MT), China (3,600 MT), Japan (3,400 MT), South Korea (3,200 MT), and Canada (2,200 MT).

USDA Hogs and Pigs Report out Thursday afternoon

USDA’s Hogs & Pigs Report at 2:00 p.m. central time is expected to show the hog herd down 0.8% from last year as of Sept. 1. Market hogs are expected to decline 0.7%, while the breeding herd is anticipated to be 1.3% smaller. Analysts expect summer farrowings to come in 3.4% smaller than last year, while fall and winter farrowing intentions are anticipated to be down 3.5% and 2.1%, respectively. Also key will be revisions to past data, which are likely after summer slaughter consistently ran above levels implied in the June report.

China’s sow herd declines

China’s sow herd totaled 42.41 million head at the end of August, according to the country’s ag ministry, down 0.7% from July and 1.9% smaller than last year. Hog slaughter surged 22.1% from year-ago in August.

Grocery inflation expected to decline as retail pork prices drop

USDA's monthly Food Price Outlook reveals that after an 11.4% increase in grocery prices last year, retail pork prices are set to decline by 1.1% this year, contributing to an overall grocery inflation rate of 5.1%. The report anticipates a more moderate 1.6% inflation rate for groceries in the coming year. While prices for most groceries are expected to rise, the largest increases are forecasted for sugar and sweets, as well as fats and oils, both with a 9.4% increase. This represents a decrease in the number of food categories with price increases exceeding 9% compared to previous reports, with pork being the only category expected to see a price decline. USDA has consistently adjusted its grocery price inflation forecasts downward throughout the year, with August being the exception when it predicted a 5.2% increase.

US beef, pork stocks climb less than normal in August

USDA’s Cold Storage Report showed beef stocks at the end of August at 421.6 million lbs., up 11.2 million lbs. (2.7%) from July, which was slightly less than the average increase of 11.5 million lbs. over the past five years. Beef inventories fell 92.2 million lbs. (17.9%) from the August 2022 record for the month and were 48.2 million lbs. (10.3%) less than the five-year average. Pork stocks totaled 471.1 million lbs., up 327,000 lbs. from July. The five-year average was a 10.7-million-lb. increase during the month. Pork inventories fell 71.5 million lbs. (13.2%) from last year and were 58.1 million lbs. (11.0%) less than the five-year average.

A pig’s heart was transplanted into a man

It’s only the second time the groundbreaking surgery has ever been performed. University of Maryland doctors said that a Navy veteran who had been facing death from heart failure was talking and laughing after receiving the genetically modified heart two days before. The same team performed the surgery the first time about a year ago on a different patient who lived for two months afterward. These efforts at animal-to-human transplants come amid a shortage of human organs for patients who need them.

Labor Dept. investigates Perdue Farms and Tyson Foods over migrant children's employment in meat plants

The U.S. Labor Department has initiated an investigation into poultry giants Perdue Farms and Tyson Foods following a report that revealed some of their contractors employed migrant children to perform cleaning tasks in meat-processing plants. The investigation comes after an article published in the New York Times magazine disclosed that migrant children were working overnight shifts at these companies' plants.

Both Perdue and Tyson have expressed their willingness to cooperate with the federal investigation and have asserted that they were unaware of children working in their plants. They emphasized that cleaning services in their facilities are outsourced to sanitation firms.

The Labor Department's inquiry targets a Tyson plant and a separate Perdue plant, both located in Virginia. The agency is exploring the possibility of holding these companies responsible for their contractors' labor practices, based on the principle of joint employment.

David Weil, former administrator of the Labor Department's Wage and Hour Division during the Obama administration, noted that there is precedent for holding companies accountable for their contractors' labor violations. This investigation raises questions about child labor practices and the enforcement of regulations in the meat-processing industry, potentially leading to consequences for major players in the sector.

China to auction beef, mutton stocks

China will auction 6,700 MT of frozen beef and mutton on Sept. 26, the Huashang Reserve Commodity Management Center said.

U.S. cattle feedlot inventories continue to shrink

USDA estimated in the Cattle on Feed Report there were 11.094 million head of cattle in large feedlots (1,000-plus head) as of Sept. 1, down 248,000 head (2.2%) from year-ago but 71,000 head more than the average pre-report estimate implied. Placements fell 5.1%, while marketings dropped 6.0% from year-ago levels during August. All three of the categories came in a little on the negative side of the average pre-report estimates. But the report data is far from bearish as it showed a decline in feedlot inventories for a 12th consecutive month – a trend that will continue given shrinking U.S. calf supplies.

Weekly USDA dairy report

CME GROUP CASH MARKETS (9/22) BUTTER: Grade AA closed at $3.0000. The weekly average for Grade AA is $2.8750 (+0.1480). CHEESE: Barrels closed at $1.6000 and 40# blocks at $1.7800. The weekly average for barrels is $1.6310 (-0.1855) and blocks, 1.8220 (-0.0790). NONFAT DRY MILK: Grade A closed at $1.1700. The weekly average for Grade A is $1.1380 (+0.0305). DRY WHEY: Extra grade dry whey closed at $0.3025. The weekly average for dry whey is $0.2900 (-0.0075).

BUTTER HIGHLIGHTS: Cream supplies are tight in the Northeast, as demand is outpacing supply in the region. Butter makers in the Northeast are largely relying on contracted loads for production. In the Central region, butter makers say there are some cream loads available for churning this week. In the West, cream volumes vary somewhat, but butter makers say cream is tight in the region. Butter production is mixed in the West, as some processors say they are running busy schedules which are only limited by current cream availability. Meanwhile, others in the region report churning less bulk butter than anticipated. Demand for butter is strong to steady in retail and food service markets in the West. Contacts in the East relay increasing demand for butter ahead of the holiday baking season. In the Central region, food service demand is steady, while retail demand is mixed. Earlier this week, butter prices on the CME moved to the highest point they have been this year, and some contacts in the Central region suggest $3/lb butter prices are a possibility.

CHEESE HIGHLIGHTS: Milk available for cheesemaking is somewhat snug in the Northeast and Midwest, as Class I processors continue to pull on volumes. Some cheesemakers in the Midwest say they have room for more milk, but spot loads are unavailable, and spot loads that are being traded in the region are at above-Class prices. In the West, cheesemakers say milk volumes are in good balance with production, though some processors are unable to obtain additional spot loads of milk to run desired production schedules. Cheesemakers in the Northeast say limited milk availability and labor obstacles are limiting their production schedules. Some Midwest cheesemakers are scheduling more downtime weekly due to recent declines in milk availability. In the Midwest, cheese demand varies. Contacts report seasonally busy curd sales, while barrel demand is steady to busier. Retail and food service demands for cheese in the West are strong to steady, but export demand is more moderate. Contacts in the Northeast note the strongest demand for cheddar among American-type cheeses. Mozzarella cheese is in high demand in the Northeast due to steady food service demand.

FLUID MILK: Farm level milk outputs vary across the country. Temperatures have begun to drop throughout the eastern states. Despite cooler temperatures and reduced humidity, contacts have not reported strong increases in farm level milk production. Bottling orders are strong and continue to draw upon volumes available for other local processing needs. Cream supplies remain tight. Weather conditions have improved in the Midwest, but milk availability has not changed drastically. Milk volumes clearing into Class I operations are drawing upon volumes previously available for processing. Some cheese contacts relay that they were looking to take on additional spot loads of milk, but there were none to be had despite above Class III offers. Cream supplies freed up somewhat mid to late week. Contacts in California suggest that September 2023 milk production is slated to be below both August 2023 and September 2022 recorded volumes. In Arizona, weather conditions continue to be adverse to cow comfort, while conditions and outputs in New Mexico, Oregon, and Washington are improving. In Utah, Colorado, and Idaho, milk production is seasonally lower. FOB cream multiples for all Classes are 1.38-1.49 in the East, 1.24-1.40 in the Midwest, and 1.10-1.35 in the West.

DRY PRODUCTS: The low/medium heat nonfat dry milk price series inched higher in the West, and the bottom of the price range moved higher in the Central and East. Condensed skim availability continues to be affected by Class I pulls, limiting amounts available for drying. Demands for low/medium heat and high heat nonfat dry milk are steady. Dry buttermilk prices held steady in the Central and East, but moved higher on all facets in the West. Inventories are reportedly tightening and may remain tight for the remainder of the year. Dry whole milk prices were unchanged this week, though production is mainly to fulfill contractual obligations. Dry whey prices moved lower on the bottom of the price range in the Central region and were unchanged in the West. Prices moved higher in the Northeast. Production of dry whey is mixed, as Class I pulls in some areas continue to limit the amount of milk available for cheesemaking. The whey protein concentrate 34% price series was mixed, with contacts suggesting that inventories are waning, and production of new inventory is steady to lighter. The lactose price range contracted. Contacts report mixed demand for lactose, and inventories are lower than they have been in recent months. Rennet casein prices were unchanged, but acid casein prices moved lower this week. Both acid and rennet casein are available for spot market needs.

ORGANIC DAIRY MARKET NEWS: According to the Agricultural Marketing Service (AMS), July 2023 U.S. sale of total organic milk products was 230 million pounds, up 0.7 percent from the previous year, but down 1.7 percent year-to-date. Organic whole milk sales, 116 million pounds, rose 7.3 percent compared to a year earlier, while increasing 3.6 percent year-to-date. Reduced fat milk (2%) sales were 77 million pounds, increasing 2.3 percent from the previous year, but declining 3.9 percent year-to-date. Organic flavored whole milk sales, 1 million pounds, decreased 42.3 percent from the previous year and declined 57.4 percent year-to-date. Meanwhile, total organic dairy advertisements grew 103 percent compared to the previous week's retail survey ad number. Milk advertisements make up the largest percentage of total organic dairy advertisements by commodities at 37 percent. Organic yogurt and cheese followed, having 26 and 14 percent of total ads, respectively.

US NATIONAL RETAIL REPORT: The total number of conventional dairy ads grew by 2 percent this week. Meanwhile, total organic dairy ads more than doubled this week, growing by 103 percent. The most advertised conventional dairy item in this week’s survey was ice cream in 48-to-64-ounce containers, while appearing in 6 percent more ads than last week. The number of ads for conventional milk in gallon-sized containers, the most advertised conventional milk product this week, were up 42 percent this week and had a weighted average advertised price of $3.13. Organic milk in the same size container had a weighted average advertised price of $5.99.