Weekly global protein digest: China soymeal prices hit record high, US 2022 outlook

Market analyst Jim Wyckoff shares highlights from this week's activities in the global protein market.
calendar icon 25 February 2022
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USDA annual ag outlook highlights

Following are nuggets from the annual USDA Ag Outlook Conference that began Thursday.

Cattle/Beef: Beef production for 2022 is forecast at 27.38 billion pounds (down 2% vs 2021) with higher weights only partly making up for lower slaughter numbers, with total beef exports of 3.27 billion pounds and imports at 3.37 billion pounds. The 5-area steer price is seen at $137.5 per cwt. in 2021.

Hogs/Pork: Commercial production is seen at 27.38 billion pounds (down 1% from 2021) with lower hog numbers lightly offset by higher carcass weights. Pork exports are seen declining to 6.81 billion pounds with imports at a record 1.31 billion pounds. The national base 51% -52% lean, live equivalent prices is seen at $65 per cwt.

Broilers: Record-large production of 45.49 billion pounds with broiler meat exports seen at a record 7.38 billion pounds after two years of flat exports. National composite wholesale broiler price forecast at $1.13 per pound, up $1.02 per pound in 2021.

Dairy: Milk production is forecast at 227.2 billion pounds, with a reduction in the US cow herd a factor for the growth of just 0.4%. Output per cow is seen up 1.3%. Exports on a fat-basis are seen at 11.0 billion pounds and on skim-solids basis they are forecast at 51.2 billion pounds. The all-milk price forecast is $23.55 per cwt., up $4.86 per cwt. from 2021.

China soymeal prices hit a record high

China’s soymeal prices rallied to a record high on Thursday amid worries over tight supplies in the market even as the government plans to release soybeans from state-owned reserves. Dalian soymeal futures rose 5% to hit 4,064 yuan ($643) per metric ton. Crushers did not build up much inventory before the Lunar New Year holiday because of poor margins and came back from the holiday short-bought on supplies, Zou Honglin, an analyst with the agriculture division of Mysteel in China, told Reuters. Chinese soybean inventories last Friday were 3.017 MMT, down 14.4% from the previous week, and down 33.3% from last year. Soybean meal inventories fell 47.4% from a year ago, to 385,300 MT, according to data from Mysteel.

USDA 2021 Chicken and Eggs Summary

US Average Layers Down 1 Percent: Layers during 2021 averaged 389 million, down 1 percent from the year earlier. The annual average production per layer on hand in 2021 was 285 eggs, unchanged from 2020.

US Egg Production Down 1 Percent: Egg production during the year ending November 30, 2021 totaled 111 billion eggs, down 1 percent from 2020. Table egg production, at 95.6 billion eggs, was down 2 percent from the previous year. Hatching egg production, at 15.2 billion eggs, was up 3 percent from 2020.

US December 1 Chicken Inventory: The total inventory of chickens on hand on December 1, 2021 (excluding commercial broilers) was 523 million birds, up 1 percent from last year.

US Total Value: The total value of all chickens on December 1, 2021 was $3.00 billion, up 16 percent from December 1, 2020. The average value increased from $4.99 per bird on December 1, 2020, to $5.75 per bird on December 1, 2021.

US grocery prices have been rising for months and will keep climbing

New price increases are coming every week and stores are studying how much of these jumps to absorb and how much to pass along to consumers. Overall, however, supplies are ample, supermarket operators and food makers say. Shoppers will find what they are looking for but may have to opt for different brands.

US justice department urged to oppose Sanderson chicken

Sen. Elizabeth Warren, backed by some dozen other U.S. lawmakers, told the Justice Department that a plan to merge chicken producer Sanderson Farms with smaller rival Wayne Farms "raises significant antitrust concerns." Commodities trader Cargill Inc and Continental Grain Co announced in August that they would buy Sanderson Farms SAFM.O, the third largest chicken producer, and combine it with Continental's Wayne in a deal worth some $4.53 billion.

USDA weekly chicken feature highlights

The chicken feature rate and activity index declined; however incentives to purchase slightly increase. The Valentine’s Day holiday pushed seafood, red meat, candies, and flowers to the forefront of this week’s circulars. Whole birds maintain a steady presence in ads; prices are on the rise for bagged and cut-up fryers. White parts see a price increase for wings as well as small pack B/S and split breasts. Dark meats are the only section to increase promotional activity; prices for most items are lower. The freezer aisle is

still well-stocked; tenders and wings are offering the better deals. Prepared foods decrease inventory and offer a price hike for most items. Specialty items hold strong while organics take a break.

Bullish USDA US pork report

USDA’s latest monthly Cold Storage Report showed a smaller-than-normal build in frozen pork stocks during January. Frozen pork inventories at 428.5 million lbs. rose 32.0 million lbs. (8.1%) from December, far less than the five-year average gain of 56.7 million lbs. during January. Pork stocks were 29.0 million lbs. (6.3%) under year-ago and 121.7 million lbs. (22.1%) less than the five-year average. Beef stocks totaled 526.4 million lbs., up 19.3 million lbs. (3.8%) versus December, whereas the five-year average was a 2-million-lb. decline during the month. Beef stocks were 7.1 million lbs. (1.4%) above January 2021 inventories but 14.9 million lbs. (2.9%) under the five-year average.

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