Weekly global protein digest: EU share of chicken, beef, pork exports to decline in 2024, HPAI & Smithfield

Livestock analyst Jim Wyckoff shares protein news from around the globe
calendar icon 20 October 2023
clock icon 18 minute read

Smithfield prepares for U.S. stock listing

Smithfield Foods’ Chinese owner WH Group is working with banks to take the U.S.-based pork producer public again in the U.S., the Wall Street Journal reported, citing people familiar with the matter. “The company regularly evaluates relisting Smithfield’s stock in the U.S., but there is no time-table for it,” WH Group said in an emailed statement to Reuters. Other major meat companies, like Brazil’s JBS, are also considering U.S. listings amid challenging conditions in the industry.

HPAI detected in fourth commercial US turkey operation, raising concerns

The highly pathogenic avian influenza (HPAI) cases have increased to four in commercial turkey operations this month. USDA is expected to officially announce that a commercial turkey flock in Meeker County, Minnesota, consisting of 140,000 birds, has been confirmed to have HPAI. The Minnesota Board of Animal Health confirmed the detection on Oct. 11, following the initiation of quarantine on Oct. 8. Prior to this, the USDA's Animal and Plant Health and Inspection Service (APHIS) had already confirmed HPAI in three other turkey operations earlier in the month. These cases involved 47,300 birds in Jerauld County, South Dakota, and two flocks in Sanpete County, Utah, with a total population of 141,800 birds. The spread of HPAI in commercial turkey operations is raising concerns in the poultry industry.

USDA advances final rule on updates to bioengineered foods list to OMB review

USDA’s Agricultural Marketing Service (AMS) forwarded the final rule regarding the 2020 annual update to the list of bioengineered foods to the Office of Management and Budget (OMB) for review. Earlier this year, AMS indicated its intention to consider comments on proposed updates to the list and publish a final rule in response to recommended amendments as part of the National Bioengineered Food Disclosure Standard. The anticipated timeline was for the final rule to be released in June 2023.

China lifts FMD ban on some Russian regions

China lifted a ban on foot and mouth disease (FMD) for sheep, cattle and pigs in 22 Russian regions. China’s ag ministry says livestock and their products from these regions that comply with Chinese laws are allowed to enter the country.

China pork imports plunge vs. year-ago in September

China imported 110,000 MT of pork during September, equal to the amount it brought in during August but 31.7% less than last year. Pork imports through the first nine months of this year totaled 1.27 MMT, up 4.4% from the same period last year.

China’s Q3 pork output soars

China’s pork output in the third quarter rose 4.8% from year-ago to 12.69 MMT, the highest for the quarter in at least a decade. Pork output in the first nine months of this year rose 3.6% from the same period last year to 43.01 MMT. China’s hog herd rose to 442.29 million head at the end of September, up 7.12 million head (1.6%) from the previous quarter, but down 0.4% from last year.

Weekly USDA beef, pork exports sales

Beef: Net sales of 400 MT for 2023--a marketing-year low--were down 95 percent from the previous week and 97 percent from the prior 4-week average. Increases were primarily for South Korea (2,800 MT, including decreases of 400 MT), Japan (1,500 MT, including decreases of 500 MT), Hong Kong (100 MT, including decreases of 100 MT), the Netherlands (100 MT), and Peru (100 MT). Net sales of 200 MT for 2024 were reported for South Korea (100 MT) and Canada (100 MT). Exports of 13,700 MT were down 12 percent from the previous week and 11 percent from the prior 4-week average. The destinations were primarily to Japan (3,600 MT), South Korea (3,100 MT), China (2,300 MT), Mexico (1,200 MT), and Canada (1,100 MT).

Pork: Net sales of 30,700 MT for 2023 up 46 percent from the previous week and 10 percent from the prior 4-week average. Increases were primarily for Mexico (9,100 MT, including decreases of 200 MT), Japan (6,200 MT, including decreases of 300 MT), South Korea (4,000 MT, including decreases of 400 MT), China (2,000 MT, including decreases of 100 MT), and Colombia (1,900 MT, including decreases of 100 MT). Total net sales of 900 MT for 2024 were for South Korea. Exports of 25,800 MT were down 8 percent from the previous week and from the prior 4-week average. The destinations were primarily to Mexico (8,700 MT), Japan (3,800 MT), China (2,800 MT), South Korea (2,200 MT), and Canada (2,100 MT).

USDA Livestock, Dairy, and Poultry Outlook: October 2023

Early 2023 Hog And Cattle Weights Lagged Behind Same-Period Weights of 2022 Live weights of both hogs and cattle ran below year-earlier weights for the early part of 2023. Hog live weights averaged 284.9 pounds through the week ending July 8, 2023 (week 27), compared with 287.3 pounds over the same period in 2022, an average difference of 2.41 pounds. Lower weights this year were likely attributable to producer losses derived largely from high feed costs and low hog prices due to weak demand for pork. Live cattle weights averaged 1,370 pounds through May 20, 2023 (week 20), 16.25 pounds less than weights over the same period last year. Lower weights over this period are attributable to numerous factors, among them, more heifers, with lower weights in the slaughter mix due to ongoing drought conditions that discouraged retention of heifers for breeding. In addition, feedlot performance was likely affected by adverse weather conditions early in 2023, resulting in lower rates of gain. Hog weights largely achieved year-earlier levels in mid-July due primarily to lower feed costs and stronger pork demand. Beginning in mid-May, average cattle weights averaged near 2023 levels, likely as feed costs declined and feedlot performance improved.

Beef/Cattle: The production outlook is raised slightly from last month, while price forecasts are lowered. Second-half 2023 production is forecast to increase from last month, raising the annual forecast to 26.976 billion pounds. This is based on higher-expected cow slaughter for the rest of the year that more than offsets a slower-than-expected pace of fed cattle marketing in the third quarter. The outlook for 2024 production is raised to 25.275 billion pounds on an anticipated increase in fed cattle marketings that more than offset a slight pullback on expected weights in the first half of the year. Cattle price forecasts for 2023 and 2024 are lower on recent price data and lower packer margins. Based on August trade data, U.S. beef imports are raised in second half 2023 and in 2024. However, beef exports are projected to decline further in 2023 and 2024 than forecast last month on stronger competition for Asian markets. Sheep/Lamb: Forecast imports for the last two quarters of 2023 are 15 million pounds lower than the forecasts in the September report. The annual lamb and mutton import forecast for 2024 is 10 million pounds lower. Price forecasts for the fourth quarter of 2023 and all of 2024 have been increased by $10 per hundredweight (cwt) due to high lamb prices in the third quarter of 2023.

Dairy: The all-milk price forecasts for 2023 and 2024 have been raised to $20.70 and $20.55 per cwt, respectively, due to higher forecasts for butter and NDM prices. The wholesale cheese price forecasts are lowered for 2023 and 2024 due to large stocks, while dry whey price forecasts remained unchanged. The milk production forecast for 2023 has been raised from last month on expectations of slightly improved cow productivity, while the forecast for 2024 is unchanged. Export forecasts for 2023 and 2024 are reduced due to soft demand from international markets and competitive international prices.

Pork/Hogs: USDA’s September Quarterly Hogs and Pigs reported a small increase in market hogs, a modest decline in the breeding inventory, and across-the-board reductions in farrowings —both actual (June–August) and producers’ intentions for September–November and December–February. The June–August litter rate was record high at 11.61 pigs per litter. New information from the September report suggests that 2023 hog prices will likely average about $60 per hundredweight (cwt) this year on a total pork production increase of about 1.1 percent. In 2024, hog prices are forecast to average about $61 per cwt on a total pork production increase of 2.2 percent.

Poultry/Eggs: Projected broiler production is adjusted down in this year and next based on recent production and hatchery data. Exports are adjusted up in 2023 based on recent data, but pulled down in 2024 to reflect lower expected production. Broiler import projections are adjusted up slightly on the strength of shipments from Chile. Broiler prices are adjusted up in the fourth quarter of 2023 and in 2024. Total table egg production in 2023 is unchanged, while 2024 production is adjusted up slightly. Projected hatching-egg production is reduced on lowered broiler production expectations. Wholesale prices for eggs are adjusted down in 2023 and 2024 on recent data. Expectations for both imports and exports of eggs and egg products are also lowered on recent data. Turkey production projections are reduced from last month on lower weights and recent placement data. Projected imports are lowered in 2023. Projected turkey exports are increased in 2023 and 2024 on the strength of recent shipments. Projected turkey prices are adjusted down in 2023 and 2024 on recent price trends.

USDA sends final rule on livestock markets to OMB, aims to promote ‘inclusive competition’

USDA submitted a final rule titled “Inclusive Competition and Market Integrity Under the Packers and Stockyards Act” to the Office of Management and Budget (OMB). This rule encompasses “proposed revisions” to regulations under the Packers and Stockyards Act (PSA), with the objective of promoting inclusive competition and market integrity within the livestock, meats, poultry and live poultry markets. The Agricultural Marketing Service has clarified that the rule includes “supplemental amendments” aimed at defining conduct that USDA considers “unfair, preferential, unjustly discriminatory, or deceptive, and a violation of the PSA.” It also seeks to clarify criteria and types of conduct that would be viewed as “unduly or unreasonably preferential, advantageous, prejudicial, or disadvantageous, and violations of the Act, including retaliatory practices that interfere with lawful communications, assertion of rights, and associational participation.” Notably, USDA has another final rule related to transparency in poultry grower contracting and tournaments currently under review at OMB. Despite scheduled meetings concluding by late September, it remains uncertain when either rule will be published, as the recently submitted rule was originally targeted for finalization in September.

Iowa joins pork producers in legal challenge against Massachusetts pork sale restrictions

Iowa has entered the legal fray by challenging a recently enacted Massachusetts law that prohibits the sale of pork not meeting specific hog-confinement standards, according to the Iowa Capital Dispatch. This legal action comes as part of an ongoing dispute involving pork producers, including Triumph Foods, who have sued the Massachusetts attorney general over the Prevention of Farm Animal Cruelty Act.

Key points:

  • Massachusetts' Prevention of Farm Animal Cruelty Act restricts the sale and transportation of pork within the state, imposing strict hog-confinement standards.
  • The law goes beyond California's similar legislation by also banning the transport of non-compliant pork through Massachusetts to other states.
  • The law aims to prevent animal cruelty and improve food safety but has faced opposition from pork producers, who argue that the confinement standards are inconsistent with industry practices and could impose costly burdens.
  • Iowa, the leading pork producer and exporter in the United States, filed an amicus brief supporting the pork producers' challenge. The brief emphasizes the potential negative economic impact on the state's pork industry.
  • The amicus brief argues that the Massachusetts law sets a dangerous precedent by allowing states to disrupt markets based on political agendas and asserts that the law violates the U.S. Constitution's commerce clause and import-export clause.
  • Lawyers for Massachusetts contend that some of these legal arguments have been rejected in previous court cases, including a Supreme Court ruling involving California's similar legislation.

Bottom line: The legal battle centers on whether states have the authority to enact laws affecting interstate commerce, potentially impacting the pork industry and the sale of pork products across state lines.

USDA Livestock and Poultry: World Markets and Trade

EU pork, beef, and chicken meat exports are forecast to account for 15 percent of global exports, marking a significant decline from 20 percent in 2019. In comparison, total Brazil pork, beef, and chicken meat exports are forecast to increase from 20 percent to 26 percent during the same period, while the United States is expected to remain virtually unchanged at 22 percent. COVID-19 induced changes to meat consumption, elevated input costs, animal diseases, and increased regulatory burdens have reshaped animal production among major producers. This is particularly true for the EU, where total pork, beef, and chicken meat production fell 2 percent from 2019 through 2022 and is anticipated to decline another 2 percent in 2023 and 1 percent in 2024. EU veterinary medicine regulations as well as forthcoming animal welfare legislation have created uncertainty for producers, disincentivized investment, and increased production costs.

PORK: In 2024, EU pork exports are expected to decline 25 percent compared to 2019 and account for 15 percent of production, down from 19 percent in 2019. In addition to growing regulatory burdens, EU swine producers continue to face challenges controlling the impact of African swine fever, which has led to reductions in the swine herd and limited exports to some markets. As production contracts, the share intended for domestic consumption has grown at the expense of exports.

BEEF: Like pork, EU beef production has been negatively impacted by growing regulatory requirements and is forecast to decline 8 percent between 2019 and 2024. While the percent of production exported is only expected to decline from 10 percent to 9 percent over the same period, both exports and production continue fall.

CHICKEN: EU chicken production is forecast to grow 2 percent from 2019 through 2024. However, exports as a percent of production are forecast at 16 percent in 2024, down from 20 percent in 2019. Highly Pathogenic Avian Influenza (HPAI) has constrained production growth and hence exportable supplies. HPAI-related trade restrictions have curtailed exports.

Details on Pork: Global production in 2024 is forecast virtually unchanged year over year at 115.5 million tons as lower production in the EU and China is mostly offset by larger production in Brazil, Vietnam, and the United States. EU pork production is forecast 2 percent lower year over year to 21.2 million tons. The EU sow herd continued to decline in 2023 and is forecast at 10.3 million head in 2024, down 1 percent. Feed prices have moderated and sector profitability improved in 2023. However, weak domestic demand and the lack of new export markets to replace China are expected to lead to industry restructuring in 2024 as producers seek to align production with lower total demand. China production is forecast 1 percent lower as weak domestic demand has led to large industry losses through most of 2023, encouraging producers to reduce production. Brazil production is forecast 5 percent higher year over year as hog prices reflect growth in a number of export markets, including Mexico, Singapore, and the Dominican Republic and input costs are expected to decline, leading to improved producer margins.

Vietnam production is forecast to increase 5 percent to 3.7 million tons on recovering domestic demand as a result of economic recovery following COVID-19 and efficiency gains from industry investment and consolidation. Global exports are forecast to increase 2 percent to 10.4 million tons in 2024 as Brazil exports continue to gain market share from EU and U.S. pork products, particularly in Japan, and Mexico. United Kingdom exports are forecast to increase 9 percent as lower input prices and higher pig prices are expected to lead to greater supplies available for export to the EU and China. Global pork imports are forecast to increase by 1 percent in 2024 with increases from Hong Kong,

China, and Japan more than offsetting lower imports from Taiwan and the United Kingdom. U.S. production and exports: U.S. production is forecast 2 percent higher in 2024 to 12.7 million tons on a strong increase to pigs per litter and falling feed costs. U.S. exports are forecast to increase 3 percent in 2024 on strong demand from Canada, the Philippines, and South Korea as well as gaining market share from the EU in China and Australia.

Weekly USDA dairy report

CME GROUP CASH MARKETS (10/13/2023) BUTTER: Grade AA closed at $3.3600. The weekly average for Grade AA is $3.4430 (+0.0075). CHEESE: Barrels closed at $1.6450 and 40# blocks at $1.7000. The weekly average for barrels is $1.6190 (+0.0660) and blocks, 1.7015 (N.C.). NONFAT DRY MILK: Grade A closed at $1.2200. The weekly average for Grade A is $1.2050 (+0.0255). DRY WHEY: Extra grade dry whey closed at $0.3350. The weekly average for dry whey is $0.3185 (+0.0285).

BUTTER HIGHLIGHTS: Cream volumes are slim in the Northeast and Central regions, though contacts in the latter region say cream offers are growing this week. Contacts in the West report increasing cream availability, though cream remains somewhat tight overall. Butter production is mixed in the West. Regional butter makers say retail production is strong to steady, but bulk butter output is steady to lighter. In the Northeast, butter makers say they are utilizing contracted cream loads to keep churns running. Central region butter production is generally unchanged from last week, and demand is somewhat steady. Some contacts in the region are concerned that butter orders will decline when holiday pipelines are filled up. In the East, contacts say retail butter demand is softening. Demand for butter from retail and food service customers is steady in the West, but contacts note bulk butter sales have been lighter recently. Bulk butter inventories are somewhat tight in the West, as butter makers are focusing their production on retail butter output. Bulk butter overages range from 4.0 to 11.0 cents over market value.

CHEESE HIGHLIGHTS: Milk output is increasing in the Northeast, and contacts report more volumes are becoming available for cheese production. In the Midwest, milk production is trending higher, but contacts report spot loads remain somewhat limited. Spot loads of milk are trading in the Midwest at or near $1 over Class III. Demand for Class III milk is strong in the West, and cheesemakers in the region say extra spot loads of milk are limited. Cheese production in the region is steady. Contacts in the Midwest report steady to lower cheese production this week, as some plants are down for scheduled maintenance. In the Northeast, cheese production schedules are steady to stronger, despite persistent labor issues. Cheese inventories are growing in the Northeast, while holding steady in the Midwest. Meanwhile in the West, some cheesemakers say inventories are declining slightly. Retail and food service cheese demands are strong in the Northeast and steady in the West. Contacts in the Midwest report health demand for cheese.

FLUID MILK: Milk production varies throughout the country. In the Midwest, contacts report milk volumes would typically be sufficient to keep processors near capacity at this time of year, though this is not the case this year. Some contacts in the region postulate that farm closures this year, or simple supply and demand realities, are playing into current regional milk availability. Demand for Class I milk is noted as strong or steady within each region. Cheesemakers in the Northeast say increasing regional milk production is enabling them to run increased production schedules, but Class III demands continue to outpace production. Cream volumes remain tight in the East. Midwestern contacts report increased cream availability this week, and some suggest the region is nearing the seasonal point where volumes shift from tight to available. In the West, cream remains tight, but contacts say volumes are more available in the northern reaches of the region. Cream multiples are 1.38 – 1.46 in the East, 1.26 – 1.36 in the Midwest, and 1.09 – 1.35 in the West.

DRY PRODUCTS: Prices for low/medium heat nonfat dry milk (NDM) have been somewhat bullish throughout all regions this week. Contacts in the Central and West regions note steady to stronger demand for low/medium heat NDM from buyers in Mexico recently. High heat NDM prices moved higher in the West, while holding steady in the other regions. Prices for dry buttermilk moved higher in the Central and East regions, while only the bottom of the West buttermilk price range moved higher. The top of the price range for dry whole milk moved higher this week, while the bottom held steady. Contacts in each region note dry buttermilk inventories are growing tighter. When compared to last week, prices received for dry whey were steady or higher this week. Contacts report strengthening demand for dry whey. Some dry whey manufacturers say bullish market tones for higher whey protein concentrates are causing them to shift production towards those commodities. This factor and an uptick in demand are also having an impact on the whey protein concentrate 34 % market, pushing prices at the bottom of the range higher. Lactose demand is picking up, and prices moved higher at the bottom of the range this week as well. Prices for acid and rennet casein were unchanged this week.


WESTERN EUROPEAN OVERVIEW: In Western Europe, weekly milk intakes are still declining seasonally but are fast approaching the nadir of the milk production season. Although milk output volumes will begin to increase soon, market participants are uncertain of how much milk may be available to processors in the coming months. This uncertainty has kept spot milk prices above current milk pay prices. The European Commission released their short-term outlook, autumn addition. In the report, dairy analysts expect milk production to increase 0.3 percent for 2023 and predict 2024 milk production to remain stable.

EASTERN EUROPEAN OVERVIEW: Milk production in Eastern Europe, although seasonally decreasing, has remained strong within parts of the region. For the 2023/24 grain shipment season that began in July, Ukraine has shipped 6.2 million tons of grain versus the 7.5 million tons shipped the previous season. Market participants suggest that blockages of the Black Sea ports and the ability to ship limited volumes of grain through smaller Danube River ports and western land crossings have reduced shipments.

OCEANIA OVERVIEW: NEW ZEALAND: In New Zealand, a major milk co-operative has raised the milk price forecast for 2023- 2024 to the delight of local dairy farmers, who have previously experienced constant reductions in the milk price. On the demand side, market representatives attribute the increase in the milk price forecast to a jump in demand, which some suggest is prompted by the El Nino outlook.

AUSTRALIA: In Australia, as seasonally low milk output continues to challenge the country, sources note that Victoria had a successful milk production year, while producing 63 percent of Australia's milk during 2022-2023. Victoria also led Australia dairy exports, valued at $2.5 billion. The Australia dairy industry could face another El Nino, creating drier conditions that may affect local feed supplies. Current projections from industry representatives, apart from the El Nino risk, point to average yields and moderate declines in feed prices.

SOUTH AMERICA OVERVIEW: Seasonal milk production is improving throughout the region. Spring flush is on the horizon if not already occurring in some localities. For the first time in the 2020s, there is not a full-on drought in key dairy basins on the continent. That said, the drought effects are still being felt in Argentina, as recovery continues for farmers in that country. In general, contacts concur that milk production is expected to continue to pick up in earnest when compared to previous years.

NATIONAL RETAIL REPORT: This week, there is a 55 percent decrease in total conventional dairy ads, but ad totals for surveyed organic dairy items grew 13 percent. Cheese posted the highest number of ads for total conventional dairy commodities. In the organic sector.

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