16 December 2022

11 minute read

By: Jim Wyckoff

South America

North America

Asia

Weekly USDA export sales for US beef, pork

Beef: US net sales of 10,900 MT for 2022 primarily for South Korea (4,100 MT, including decreases of 500 MT), Japan (3,700 MT, including decreases of 300 MT), Mexico (1,600 MT, including decreases of 100 MT), Taiwan (800 MT, including decreases of 100 MT), and Canada (700 MT, including decreases of 100 MT), were offset by reductions for China (1,000 MT). Net sales of 2,900 MT for 2023 primarily for Japan (1,100 MT) and Mexico (1,100 MT), were offset by reductions for China (100 MT) and Hong Kong (100 MT). Exports of 16,500 MT were primarily to South Korea (4,900 MT), Japan (4,700 MT), Mexico (1,700 MT), Taiwan (1,400 MT), and China (1,300 MT).

Pork: US net sales of 14,400 MT for 2022 primarily for Mexico (9,600 MT, including decreases of 500 MT), China (2,500 MT, including decreases of 200 MT), Japan (1,600 MT, including decreases of 200 MT), Honduras (500 MT), and Canada (400 MT, including decreases for 400 MT), were offset by reductions primarily for Colombia (400 MT) and South Korea (300 MT). Net sales of 7,700 MT for 2023 primarily for South Korea (4,400 MT), Japan (2,100 MT), the Dominican Republic (600 MT), Colombia (300 MT), and Mexico (300 MT), were offset by reductions for China (200 MT). Exports of 34,200 MT were primarily to Mexico (17,400 MT), China (4,700 MT), Japan (3,200 MT), South Korea (3,000 MT), and Canada (1,700 MT).

USDA plan on allowing fresh beef from Paraguay cleared by OMB

USDA’s proposal to allow imports of fresh (chilled or frozen) beef from Paraguay under certain conditions has been cleared by the Office of Management and Budget (OMB). USDA said that based on a risk analysis, they have “determined that fresh beef can be safely imported from Paraguay, provided certain conditions are met.” USDA said the action would allow fresh beef imports from Paraguay while continuing to protect the U.S. from foot and mouth disease (FMD). The next step is for the proposed rule to be published in the Federal Register with a comment period and then a final rule would also have to be issued before any imports could take place. USDA forwarded the plan to OMB Oct. 14 with the review completed Dec. 12.

China hog futures post worst week on record

China’s most active live hog futures ended the trading week of Dec. 5-9 down more than 9%, their largest weekly decline on record. Heavy slaughter and weak demand put further pressure on spot cash prices, which plunged 17%. The cash hog price plunge came after producers stepped up slaughter volumes in expectation of improving demand toward the end of the year, and after Beijing urged them to ensure stable supplies.

USDA December monthly supply and demand report for proteins

LIVESTOCK, POULTRY, AND DAIRY: The forecast for 2022 red meat and poultry production is raised from last month as higher beef, broiler, and turkey forecasts for the fourth quarter are partly offset by lower pork. Beef production is raised with higher expected cattle slaughter as well as heavier carcass weights. Pork production is lowered on lighter carcass weights. Broiler and turkey production are raised on current slaughter and hatchery data. Egg production is raised slightly on revised third-quarter data. For 2023, the beef forecast is unchanged, with offsetting first and second quarter changes. Broiler production is raised on more rapid expected growth in bird numbers later in the year. Turkey production is lowered for the first half of the year on recent discoveries of Highly Pathogenic Avian Influenza. Egg production is reduced on a slower expected pace of recovery.

Beef imports for 2022 are unchanged, but exports are raised on recent data. Exports are raised for 2023 on expectations of continued momentum to East Asian markets. Pork imports and exports for 2022 are both lowered on recent data. Pork imports for 2023 are lowered slightly, while exports are unchanged. The broiler export forecast for 2022 is raised on recent trade data, while 2023 exports are lowered. Turkey exports are unchanged, but imports are raised for both years on current data and tightness in domestic supplies. Price forecasts for cattle, hogs, and broilers are unchanged for 2022 and 2023. The turkey price forecast for 2022 is lowered on current price data, but the forecast for 2023 is unchanged. Egg price forecasts for 2022 and 2023 are raised on recent prices and expectations of continued firm demand and tight supplies.

The milk production forecast for 2022 is unchanged from last month. The 2023 production forecast is raised slightly with both higher expected cow numbers and slightly more rapid growth in output per cow. Fat and skim-solids basis imports for 2022 are raised, driven by recent trade data and expectations of continued demand for imported cheese and butterfat products. Forecasts for 2023 fat basis and skim-solids basis imports are raised on imports of butter and milk proteins, respectively. Exports on a fat basis for 2022 and 2023 are raised on butter and casein. Exports on a skim-solids basis are raised in 2022 as higher nonfat dry milk (NDM) more than offsets lower lactose. The 2023 forecast is reduced on lower lactose shipments.

For 2022, forecasts for butter and cheese are raised on recent prices and expectations of continued strength in demand, but whey and NDM prices are unchanged. The Class III price is raised on the higher cheese price and the Class IV price is raised on the higher butter price. For 2023, the price forecasts for cheese and butter are raised as demand strength carries into 2023, but prices for NDM and whey are lowered on pressure from international markets. The higher cheese price more than offsets the lower whey price and the Class III price is raised while the Class IV price forecast is lowered, reflecting the lower NDM price. The 2022 all milk price forecast is raised to $25.65 per cwt and the 2023 all milk price is raised to $22.70 per cwt.

Weekly USDA dairy report

CME GROUP CASH MARKETS (12/9) BUTTER: Grade AA closed at $2.8125. The weekly average for Grade AA is $2.8370 (-0.0760). CHEESE: Barrels closed at $1.9500 and 40# blocks at $2.0950. The weekly average for barrels is $1.9375 (+0.0915) and blocks, $2.0925 (-0.0035). NONFAT DRY MILK: Grade A closed at $1.3650. The weekly average for Grade A is $1.3720 (+0.0030). DRY WHEY: Extra grade dry whey closed at $0.4350. The weekly average for dry whey is $0.4445 (-0.0035).

BUTTER HIGHLIGHTS: Across all regions, cream volumes are available. Contacts in the Central region say they anticipate cream to remain available through the end of the year. In the West, cream sellers say demand is softening as they are getting fewer inquiries than in previous weeks. Butter makers are running busy production schedules, though contacts in all regions say production capacity is limited by labor shortages. In the Central region, holiday butter orders have, reportedly, been fulfilled but demand is intact. Contacts in the Northeast report strong demand for butter ahead of the holidays. Demand for butter is steady in the West, as some contacts say they are booking loads of butter to ship in Q1 and Q2 of 2023. Butter inventories are tight or at most steady in the Central region. Some contacts in the Northeast say they would sell more butter if it was available. In the West, spot loads of butter are available, though stakeholders say unsalted inventories are tighter than salted. Bulk butter overages range from 5 to 15 cents above market, across all regions.

CHEESE HIGHLIGHTS: Cheese makers across all regions say milk is available, allowing them to run active production schedules. Plant managers in the Northeast and West report labor shortages and delayed deliveries of production supplies are limiting their abilities to operate full production schedules. In the Midwest, some cheese makers say labor shortages and equipment maintenance are contributing to some down time. Contacts in the region note sales of cheese are seasonally steady, and holiday retail orders have been generally fulfilled. In the Northeast and West, food service and retail demand are steady, though stakeholders say export demand is softening. Spot loads of cheese are available in the Northeast and West. Cheese barrel producers in the Midwest report some extra inventories are available.

FLUID MILK: Milk production across the majority of the country is steady. In portions of the East and West regions, cooler conditions that are supportive of cow comfort are edging milk production volumes slightly higher. As such, manufacturing milk intakes are marginally increasing. Meanwhile, Class I demand is mostly steady. In the East region, vacationers in Florida are helping increase bottling orders, while the Midwest region notes a slight downturn in bottling orders. In general, cream interest remains active as supplies improve leading up to the holiday. Class II use is most active, but spot cream is available across all Classes. This week, cream multiples for all Classes are 1.20 to 1.37, East; 1.18 to 1.27, Central; 1.00 to 1.26 in the West. Condensed skim continues to move steadily to contract customers and surplus supplies for spot market use are increasing.

DRY PRODUCTS: Low/medium heat nonfat dry milk (NDM) prices shifted lower in all regions this week. Demand is quiet, while supplies are generally available. Buttermilk powder markets are following a similar trend to those of NDM, as prices were steady to lower on slowing seasonal demand. Dry whey prices were mixed, but markets are not assured. Export demand is quiet, and market tones are not expected to notably improve until it increases. Whey protein concentrate 34% prices were steady to lower on slow spot trading activity, as markets are divided between brand-preferred volumes and more interchangeable loads. Dry whole milk prices slipped this week, as some contacts say seasonal demand has waned, and at least slightly more spot loads are available. Lactose prices held steady, but availability from some producers is noted as readily accessible. Rennet and acid casein prices were steady, despite some bearish expectations for contractual agreements for next year.

International Dairy Market News

WESTERN EUROPE: Milk production for much of Western Europe is at or just beyond the low point for the year. Dairy industry sources project that milk volumes will trend higher through the remainder of the winter. After a summer of milk output volumes below expectations, year over year monthly milk production has turned positive for a few countries. Industry analysts expect the strong year over year milk growth to continue in 2023. The EU agreed to cap the price of Russian crude oil.

EASTERN EUROPE: According to online dairy industry sources, August 2022 milk production in Ukraine was approximately 711,000 T compared to 845,000 T of milk produced in August 2021. The Russian invasion of Ukraine has disrupted normal dairy business activities, and the recent missile attacks have left numerous dairy processing facilities without power. According to the Ukrainian agricultural ministry, as of December 1st, the 2022 Ukraine grain harvest is approximately 85 percent complete for a total of 41.9 million tons of grain. Ukraine has been able to export 17.2 million tons of grain so far in the 2022/23 grain season, down 31.9 percent compared to grain exports at the same stage of the 2021/22 grain season.

NEW ZEALAND: New Zealand's dairy industry resilience has been tested in recent months. The country has seen slow pasture growth in most dairy regions this milk production season. New Zealand's dairy exports have seen a rise, due to the build-up of inventory caused by Covid-19 and China interruptions in earlier months. Meanwhile, with the weak New Zealand dollar and falloffs from key dairy exporting regions, the industry now expects the country's export revenue to climb 6 percent, to a record high $23.3 billion during the 2022/2023 season.

AUSTRALIA: In Australia, it continues to be a season lagging last year's milk production levels. Rain soaked fields in the Eastern states have impacted the wheat quality, prompting downgraded wheat yields. Market representatives see this as a dilemma that could lead to market flooding of devalued feed grade grain.

SOUTH AMERICA OVERVIEW: Recent seasonal growth in milk production in the Southern Cone has been overshadowed by doubt in regards to potential milk yields for the final month of 2022 and into Q1. The prolonged drought in the Southern Cone, particularly, has put clear stress on crop growth in the region. Last year was a notably slow year for dairy import shipments into Brazil based on a number of factors from currency fluctuations and inflation. The last two quarters of 2022, though, have shown an import activity rebound by the largest country in the region. Trading in the region has slowed near-term, though, as contacts say holidays, recent elections, and worldwide sporting events have kept trading in a somewhat quiet stage.

US RETAIL REPORT: Total conventional dairy ads increased 15 percent, while total organic dairy ads increased by 6 percent this week. Conventional ice cream in 48 to 64-ounce containers continues to lead in the volume of advertised dairy product. Conventional 8-ounce shred packages of cheese appeared in 16 percent more ads this week. Meanwhile, 8-ounce block cheese appeared in 45 percent more ads this week. There were no advertisements for organic cheese in this week’s survey. Conventional yogurt ads increased 25 percent this week, but organic yogurt ads decreased 52 percent this week. The most advertised yogurt item was conventional Greek style yogurt in 4 to 6-ounce containers, appearing in 26 percent more ads this week. Conventional milk ads grew by 83 percent this week, while organic milk ads increased by 88 percent.