29 November 2024

12 minute read

By: Jim Wyckoff

South America

North America

Asia

US Thanksgiving costs shift amid falling turkey production

Turkey production in the US is expected to total 205 million this year, a 6% drop from last year and a 17% decline since 2017, according to USDA’s the National Agricultural Statistics Service. With demand for turkey also falling, prices have decreased by 6% from 2023 to about $1.60 per lb., reports the American Farm Bureau Federation (AFBF). Sweet potatoes are more affordable this year, while prices for dinner rolls and cubed stuffing mix have risen. The price of eggs has risen significantly. In total, AFBF says it will cost about $58.08 ($5.80 per person) to feed 10 people, down from $61.17 last year and $64.05 in 2022.

US beef stocks rise more than normal; pork stocks drop more than average in October

USDA’s Cold Storage report showed frozen beef stocks at 431.9 million lbs. at the end of October, up 19.4 million lbs. from September, whereas the five-year average was a 15.5-million-lb. increase during the month. Beef inventories fell 13.8 million lbs. (3.1%) from year-ago and 47.3 million lbs. (9.9%) from the five-year average. Pork stocks totaled 426.0 million lbs., down 32.4 million lbs. from the previous month, which was nearly double the five-year average decline of 16.8 million lbs. during the month. Pork inventories fell 11.9 million lbs. (2.7%) from year-ago and 63.8 million lbs. (13.0%) from the five-year average.

USDA updates food price inflation forecasts for 2024 and 2025

USDA maintained its 2024 food price inflation forecast at 2.3% for all foods, with grocery prices rising 1.2% and restaurant prices increasing 4.1%. Notably, prices for fish, seafood (-1.9%), and dairy (-0.1%) are projected to decline.

For 2025, food price inflation was revised upward to 2.5%, with grocery prices climbing 1.6% and restaurant prices 3.1%. Fresh vegetables are the only grocery item forecast to decline in price (-0.7%).

Egg prices remain volatile, with a 6.2% rise expected in 2024 and a smaller 3.4% increase forecast for 2025.

October saw mixed trends: grocery prices fell in 8 categories but rose in 7 others, with annual declines in fish, pork, and processed fruits and vegetables.

Bottom line: While the overall pace of inflation is easing, consumers continue to face elevated costs, particularly in restaurants and for select grocery categories like sugar, sweets, and fats.

Recall alert expanded for ready-to-eat meat and poultry products

Yu Shang Foods has significantly expanded its recall of ready-to-eat meat and poultry products due to potential Listeria contamination, according to USDA’s Food Safety and Inspection Service (FSIS). Initially recalling 4,500 pounds, the company expanded the recall on Nov. 21 to include 72,240 pounds of products. The affected items, produced before Oct. 28, were flagged after FSIS routine testing and follow-ups confirmed Listeria contamination in both product and environmental samples.

What traders and analysts say about the U.S./Mexico cattle trade issue regarding New World Screwworm/NWS)

• Note: USDA’s Animal and Plant Health Inspection Service (APHIS) today at 4:30 p.m. ET is providing for an update on the New World Screwworm detection in Mexico. APHIS will share any new information that they have learned since yesterday's announcement and will answer questions. They could include:
  
  
• How long will cattle trade from Mexico to the United States be halted?
  — This is the key question on everyone’s mind.
  — It is worth noting that some groups who are dependent on buying Mexican feeder cattle have cautioned that limiting trade could result in retaliatory measures from Mexico buying U.S. beef. If this disease is a legitimate threat (which most think it is), it would not seem that any retaliation from Mexico would be appropriate. But some U.S. feedlot groups are attempting to use that argument as leverage to re-open the border.

• The second key questions is if they can identify the location of the cattle, believed to be south…has there been integration of southern cattle to the north? The NWS was found in a cow in the southern Mexico state of Chiapas, at an inspection checkpoint close to the border with Guatemala.
  
  
• How quickly is it anticipated the NWS will spread? And what is the confidence USDA is able to detect it?
  
  
• Does Mexico have the resources to control and stop the spread of NWS?
  — Are there enough sterile flies, etc?
  
  
• What would the impact be to the U.S. cattle/beef industry if it was found in the U.S.?

• Are the testing protocols that APHIS might implement at the border going to:
  1. Be effective?
  2. Be worth the cost?

• Market impacts: This trade stoppages comes as there are signs of retention in the U.S. cattle herd. Market impact will be first on Dec placements with around 150K-200K that could have crossed the border. Some of the retention could also have been coming from heifers brought in from Mexico, another door that is closed.

Negative USDA Cattle on Feed report

USDA estimated there were 11.986 million head of cattle in large feedlots (1,000-plus head) as of Nov. 1, up 30,000 head (0.3%) from year-ago. Analysts on average expected a 0.1% decline in feedlot inventories. October placements increased 5.3% and marketings rose 4.7% from year-ago levels. All of the categories came in on the negative side of the average pre-report estimates, which could weigh on cattle futures. But we doubt there will be sustained market impacts.

US egg prices spike amid Avian flu and holiday demand

Egg prices have surged by 30% compared to last October, driven by holiday cooking demands and a resurgence of Avian flu. "Your baking, cooking, and entertaining all require extra eggs," said Emily Metz, CEO of the American Egg Board. Since January 2022, avian flu has plagued farmers, with recent outbreaks in key states like Oregon, Utah, and Washington causing a projected loss of 60 million eggs, according to USDA.

USDA extends comment period on cattle market regulation proposal

USDA has extended the comment period for its advance notice of proposed rulemaking on fed cattle market regulations. Public feedback on regulatory options to address price discovery and fairness concerns is now due by Jan. 10, 2025, a 30-day extension from the original deadline. USDA stated that input will shape their approach and potential future regulatory changes.

Bird flu found in raw milk sparks health concerns in California

The H5N1 bird flu virus was detected in a batch of unpasteurized milk sold by Raw Farm in California, prompting a product recall and warnings from health authorities. The milk, marked with a “best by” date of Nov. 27, 2024, has been pulled from store shelves. Health experts have long cautioned against consuming raw milk due to risks of foodborne illnesses, including salmonella and listeria. The recent case follows the first U.S. child bird flu diagnosis and growing concerns as the virus increasingly infects mammals and humans. While pasteurization kills H5N1, rising demand for raw milk, promoted by influencers and wellness advocates, has driven its availability. Authorities advise avoiding contact with raw milk from the affected batch to reduce infection risks.

Brazil, China close to signing pork offal export protocols

Brazil is close to finalizing protocols for exporting pork offal and fish to China, two people familiar with the matter told Reuters. The sources said negotiations for both protocols were advanced and should be completed soon, but declined to give a specific timeframe. A deal could impact exports of U.S. pork products, as China imports around half of all U.S. pork offal shipments.

China widens EU dairy probe

China’s commerce ministry expanded the scope of its anti-subsidy investigation into dairy imports from the European Union to cover additional EU subsidy programs in Denmark, France, Italy and the Netherlands. Despite this broadened scrutiny, the probe remains focused on cheese, milk, and cream products. The addition does not include new dairy products and takes into account the claims made by EU members and consultations with EU representatives, the ministry said. The EU is China’s second largest source of dairy products.

US ground beef recall due to E. coli contamination

Wolverine Packing Co., a Detroit-based firm, has recalled 167,277 pounds of ground beef potentially contaminated with E. coli, the USDA's Food Safety and Inspection Service (FSIS) announced. The recall follows reports of 15 illnesses in Minnesota between Nov. 2 and Nov. 10, linked to ground beef from the company. Testing by Minnesota's Department of Agriculture confirmed the contamination. The affected products, produced on Oct. 22 with a use-by date of Nov. 14, were distributed to restaurants nationwide.

Weekly USDA dairy report

CME GROUP CASH MARKETS (11/22) BUTTER: Grade AA closed at $2.5400. The weekly average for Grade AA is $2.5610 (-0.0595). CHEESE: Barrels closed at $1.6500 and 40# blocks at $1.6450. The weekly average for barrels is $1.7040 (+0.0220) and blocks $1.6945 (+0.0010). NONFAT DRY MILK: Grade A closed at $1.3675. The weekly average for Grade A is $1.3895 (-0.0095). DRY WHEY: Extra grade dry whey closed at $0.6600. The weekly average for dry whey is $0.6455 (+0.0090).

BUTTER HIGHLIGHTS: In the East and Central regions, domestic butter demand is mixed for both the retail and food service sectors. In the West region, near-term domestic butter demand is lighter. Cream volumes are generally readily available across the country. Many butter manufacturers are not purchasing additional loads of cream, as in network and/or contracted volumes of cream are sufficiently accommodating butter churning schedules in many cases. For the East and Central region, stakeholders indicate butter production is steady. For the West region, stakeholders indicate steady retail butter production and lighter bulk butter production. Bulk butter overages range from 1 to 8 cents above market, across all regions.

CHEESE HIGHLIGHTS: Cheese production varies throughout the U.S. In the East region, milk volumes range from steady to tighter. Cheese plant managers relay steady production schedules ahead of Thanksgiving and note inventories are more balanced now than earlier in the year. In the Central region, milk availability remains mixed. Spot milk loads were reported at Class to $4 above Class III. Some cheese plant managers relay slower production schedules as holiday cheese orders have been fulfilled. Contacts in the West region share steady cheese production schedules. Spot milk loads are tighter in the southwest. Contracted cheese demand is steady. Export activity is trending steady to stronger. Price points for domestic cheeses are competitive on an international scale.

FLUID MILK HIGHLIGHTS: Fluid milk production, at the farm level, is mixed across the country, and gets stronger moving east to west. Pockets of the northeast are seeing weaker volumes, while in other portions of the northeast and southeast, milk levels are ticking up in small increments. Elsewhere in the region volumes are steady. Farms in the Central region are seeing gradual seasonal growth in milk production. Farms in the West region are seeing steady or strengthening numbers. California handlers convey milk production is trending slightly higher week to week. Farms in the Pacific Northwest are reporting steady volumes. The remaining states are all reporting stronger numbers. Class I bottling demand is strong throughout the country. Class III demand for milk is strong in the Central and East regions, while the West region is seeing steady demand from cheesemakers. Cream remains amply available in all regions. Demand for cream for Class IV is steady, but demand is increasing for other Classes. Condensed skim availability is mirroring milk in the East region and is looser in the West region. Demand for condensed skim remains steady. Cream multiples for all Classes range 1.20-1.31 in the East, 1.00-1.30 in the Midwest, and 1.00-1.29 in the West.

DRY PRODUCTS HIGHLIGHTS: For the most part, dry dairy ingredients remain in the midst of a bullish tailwind. Low/medium heat nonfat dry milk (NDM) prices were higher in all regions. Limitations on NDM supplies continue to be the cause for recently bolstered markets, as demand notes are steady to quiet. Dry buttermilk prices were steady to higher throughout the country, as contacts say Western supplies are notably tight in recent weeks. Dry whey prices moved higher in the Central region, stable to higher in the West and held unchanged in the East. Dry whey trading activity is quiet due to somewhat snug spot market availability. Lactose prices were steady to higher. Whey protein concentrate 34% prices continued their bullish ascent this week, as demand has continued to strongly overwhelm dwindling supply. Dry whole milk, acid casein and rennet casein prices were all steady this week, as trading outside of contracts is reportedly somewhat quiet on those markets.

INTERNATIONAL DAIRY MARKET NEWS

EUROPE: Milk production remains varied throughout West Europe. In Germany, contacts believe seasonal lows for milk production are on the horizon. In the UK, milk deliveries have been increasing slightly week over week. In Week 45, cream prices in the European Union crept higher. Price movement has been attributed to tight milk availability and high demand for milkfat. According to the UK's Department for Environment, Food and Rural Affairs (DEFRA), the number of confirmed bluetongue cases in the United Kingdom has risen, with confirmed cases in England and Wales. According to the Union of Dairy Enterprises of Ukraine, dairy prices increased by 30 to 40 percent in October 2024 compared to October 2023. New legislation in Russia would standardize terminology for labels on both conventional and organic dairy products. Demand has risen for organic goods over the past several years, and the new legislation would increase protection for organic products and marketing.

OCEANIA: Dairy Australia recently released export data for Australia showing milk export volumes from July 2024 - September 2024 were down from the same time period a year earlier. Farmgate milk pricing in Australia has stayed flat since the start of the production season in July, while the Global Dairy Trade (GDT) index has increased at recent trading events. A dairy processor which operates in Australia and New Zealand indicated that the farmgate milk price in New Zealand recently increased above the Australia farmgate milk price for the first time in over 4 years. Milk production data from New Zealand for October 2024 was recently released showing total October 2024 production was up on a tonnage basis and the total kg of milk solids increased from the previous year. Recently released data from New Zealand for September showed the number of dairy cows sent to slaughter during the month declined from September 2023.

SOUTH AMERICA: The climactic conditions have changed in parts of the South American continent and most of these changes are viewed as beneficial for milk output. Brazilian contacts say recent rains have stymied the long-lasting drought conditions. In Uruguay, contacts say spring weather has been warmer than normal and soil conditions remain dry, but spring rains are expected to help benefit conditions there. Plentiful rainfall in Argentina early in the spring season is giving contacts there bullish expectations as summer approaches. Dairy commodity trading has been subdued in recent weeks. Improved milk availability, despite the aforementioned improvements, has come seasonally late. Marketers say holiday orders are mostly fulfilled and processors are working ahead for Q1 needs. Exporters in multiple South American countries have brought up more importing opportunities into the United States in recent report weeks. As high protein concentration markets are notably tight in the U.S., domestic importers are interested in these opportunities.

US NATIONAL RETAIL REPORT: Total conventional dairy advertisements increased while total organic dairy ads decreased. Conventional ice cream in 48-64-ounce containers was the most advertised dairy product, with a weighted average advertised price down from the week before. Conventional butter in one-pound packages was the third most advertised item overall and had a weighted average advertised price down from the week prior.