Weekly global protein digest: France, US severe HPAI outbreaks tighten egg supplies

Analyst Jim Wyckoff shares highlights from the global protein market.
calendar icon 15 April 2022
clock icon 8 minute read

Eight new HPAI commercial flocks confirmations in US

USDA’s Animal and Plant Health Inspection Service has confirmed new cases of highly pathogenic avian influenza (HPAI) in eight commercial flocks in Nebraska (1,746,853 commercial layer chickens in Dixon County), Minnesota (214,277 commercial layer chickens in Morrison County; 43,286 commercial broiler chickens in Morrison County; 50,000 commercial turkeys in Yellow Medicine County; 38,000 commercial turkeys in Kandiyohi County; and 45,000 commercials turkeys in Morrison County), and Wisconsin (52,000 commercial turkeys in Barron County). This brings the commercial flocks confirmed with HPAI to 121.

Meantime, the severe bird flu outbreaks in the United States and France are tightening global egg supplies and raising prices. Wholesale prices for large eggs in the U.S. Midwest topped $3 per dozen in March and reached the second-highest level ever, up nearly 200% from a year earlier on the spot market, data firm Urner Barry said. Prices remained below the record of $3.09 per dozen set at the beginning of the COVID-19 pandemic. Egg products like liquid whole eggs are at record highs, though, Urner Barry said. In France, wholesale shell egg prices have climbed 69% from last year, French farm office FranceAgriMer said. As a result, consumers could see higher prices for food products made with eggs. The outbreak of war, not just disease, is disrupting supply chains for Middle East buyers.

China’s meat imports plunged in March

China imported 594,000 MT of meat in March, down 42% from last year’s record. Its meat imports during the first three months this year at 1.7 MMT fell 37% from the same period last year. The preliminary data doesn’t give specifics of meat imports by category, but the sharp drop was driven by a significant decline in pork arrivals as domestic pork production has surged as the country aggressively rebuilt its herd after the African swine fever outbreak.

China to buy more pork for reserves

China’s state planner will buy another 40,000 MT of frozen pork for state reserve – its fourth round of stockpiling this year. The move is an effort to support domestic prices, which have fallen sharply. While lower pork prices are helping ease consumer inflation, they are squeezing hog production margins. China has previously purchased 118,000 MT of pork for reserves, though that’s a small fraction of its annual production, which reached 53 MMT last year.

USDA quarterly livestock and poultry report: Brazil to capture greater portion of world trade

Global chicken meat production is forecast virtually unchanged in 2022 at 100.1 million tons as gains by major producers generally offset declines in Ukraine and China. For most countries, higher feed prices are expected to stymie expansion despite forecasted economic recovery buoying modest demand growth. As the leading world exporter, Brazil will increase production substantially to backfill global demand vacated as Ukraine meat exports cease. Similarly, expansion in Turkish production will be fueled by regional demand. Russia's production will grow on increased availability of feed grains, but product will be directed to the domestic market. China's production is forecast lower as pork production continues to rebound and yellow feather broiler production declines due to consumers shifting to online and modern retail channels.

Global chicken meat exports are forecast stagnant in 2022 at nearly 13.4 million tons. Much of the drop in global exportable supplies spurred by the absence of Ukraine will be fulfilled by Brazil which is one of the few major exporters able to service a wide array of markets. Turkey and the United Kingdom will also post trade gains on modest demand growth in their respective regions. Imports by Ukraine, Russia, and Saudi Arabia will decline while modest growth is expected for Iraq, Cuba, the United Kingdom, and Mexico.

U.S. chicken meat production and exports: U.S. production is forecast 1 percent higher in 2022 as relatively high feed grain prices pressure producer returns and elevated retail prices moderate consumer demand. Exports are forecast unchanged at 3.3 million tons. As U.S. exports are largely destined for price sensitive middle- and low-income markets, relatively higher U.S. prices will reduce competitiveness particularly in the second half of the year. While the United States faces restrictions by trading partners due to the current Highly Pathogenic Avian Influenza (HPAI) outbreak, these restrictions are generally limited in geographic scope at a zone, county, or state-level rather than national, thus the impact on shipments to date have been limited.

US pork export sales up, beef down

USDA reported Thursday US pork net sales of 24,000 MT for 2022 were down 42 percent from the previous week and 26 percent from the prior 4-week average. Increases were primarily for Mexico (6,100 MT, including decreases of 500 MT), Japan (5,400 MT, including decreases of 200 MT), China (4,000 MT, including decreases of 200 MT), South Korea (2,600 MT, including decreases of 300 MT), and Australia (1,900 MT). Exports of 31,800 MT were up 10 percent from the previous week and 11 percent from the prior 4-week average. The destinations were primarily to Mexico (14,200 MT), Japan (4,700 MT), China (4,300 MT), South Korea (2,900 MT), and the Dominican Republic (1,100 MT).

US Beef: Net sales of 17,200 MT for 2022 were up 23 percent from the previous week, but down18 percent from the prior 4-week average. Increases were for South Korea (7,500 MT, including decreases of 500 MT), Japan (4,200 MT, including decreases of 600 MT), Canada (1,300 MT, including decreases of 100 MT), Mexico (1,200 MT), and Hong Kong (600 MT). Total net sales of 100 MT for 2022/2023 were for Canada. Exports of 18,600 MT were down 4 percent from the previous week and 24 percent from the prior 4-week average. The destinations were primarily to South Korea (5,800 MT), Japan (4,600 MT), China (3,000 MT), Taiwan (1,400 MT), and Mexico (900 MT).

USDA: Worldwide pork production to rise this year

Global pork production is forecast by USDA at up nearly 3 percent year-over-year in 2022 at 110.5 million tons primarily on higher output in China. Hog inventories in China continued to grow during 2021 and were reported at nearly 450 million head – up 11 percent year-over-year. This should support China pork production in the first half of the year as these animals are marketed. However, currently high input prices and relatively weak pork demand have pressured producer margins, taking a financial toll on hog operations and making it likely that output growth will slow later in the year.

Overall, China pork production is forecast at 51.0 million tons in 2022, 7 percent higher than 2021. In a global context, this will offset tighter supplies in the European Union, where a long-term trend of declining consumption coupled with slowing export demand drove producer margins down last year. This has led the breeding herd to contract by more than 3 percent. Even with continued growth in sow productivity, EU pig supplies will be lower as a result, pushing pork production 2 percent lower year-over-year to 23.2 million tons.

Global exports are expected at 11.7 million tons in 2022, 4 percent lower year over year as contracting China and Philippines imports more than offset growth elsewhere. China imports are forecast to decline 19 percent in 2022 as domestic production continues to grow and consumer demand remains relatively weak. Meanwhile, Philippines imports are forecast down 18 percent due to the expiration of expanded tariff rate quota volumes and lower tariffs. On the other hand, rebounding foodservice business is expected to spur South Korea imports 12 percent higher.

Mexico imports are expected to remain firm, growing 4 percent, as pent-up consumer demand and recovering foodservice business supports consumption. U.S. production and exports: U.S. production is forecast at 12.3 million tons in 2022, 2 percent lower than 2021, as lower hog inventories and farrowing intentions lead to tighter pig supplies for the remainder of the year.

Meanwhile, tight domestic pork supplies and correspondingly high prices will weigh on U.S. exports while lower imports from China will increase competition in other Asian markets. U.S. exports are forecast to decline 6 percent year over year to just under 3.0 million tons.

Global Beef and veal production to rise: USDA

USDA reports global beef and veal production is forecast nearly 1 percent higher in 2022 based on growth in Australia, Brazil, India, and Mexico. High global beef prices will induce more slaughter while greater supplies of cattle and stable carcass weights support the increase in beef production.

Australia production is expected to expand by 12 percent as improved pasture conditions have expedited herd rebuilding over the past year. Meanwhile, greater cattle availability and improved slaughterhouse profitability will drive a 4 percent increase in Brazil beef production. India carabeef production is forecast up 4 percent, thus continuing its recovery and exceeding pre-pandemic levels. Lastly, Mexico is projected to reach record levels of production thanks to the cattle sector’s profitability and rebounding hotel, restaurant, and institutional demand.

Meanwhile, production in Canada, the United States, and European Union are forecast down 3 percent, 1 percent, and 1 percent, respectively. Drought conditions and tight feed availability in Western Canada will accelerate Canada’s herd contraction. U.S. production is anticipated to decrease because of a contracting cattle herd as well. Lastly, unprofitability in the EU cattle sector will lead to lower beef production in 2022.

Global beef and veal exports in 2022 are forecast to increase by 3 percent on firm demand, particularly in East Asia markets. Ample supplies of slaughter-ready cattle and regaining China market access will drive Brazil exports and offset expected declines to Mercosur neighbors. Improved demand from price-sensitive markets will also boost India exports of carabeef to the Middle East and Southeast Asia. Rebounding Australia supplies and firm demand will spur shipments to East Asia and the United States. However, tight cattle supplies in both New Zealand and some Mercosur members (Paraguay, Uruguay, and Argentina) will limit these countries’ exports for 2022.

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