Weekly global protein digest - HPAI cases surge in US, Cold Storage supplies low, dairy report

Analyst Jim Wyckoff shared protein news from around the globe
calendar icon 3 November 2023
clock icon 17 minute read

Weekly USDA export sales for US beef, pork

Beef: Net US sales of 17,100 MT for 2023 were down 2 percent from the previous week, but up 71 percent from the prior 4-week average. Increases were primarily for China (6,600 MT, including decreases of 200 MT), Japan (4,100 MT, including decreases of 300 MT), Taiwan (1,700 MT, including decreases of 100 MT), South Korea (1,500 MT, including decreases of 400 MT), and Canada (1,300 MT). Net sales of 1,700 MT for 2024 were primarily for Japan (1,400 MT) and the Philippines (200 MT). Exports of 14,300 MT were up 4 percent from the previous week, but down 2 percent from the prior 4-week average. The destinations were primarily to South Korea (3,700 MT), Japan (3,200 MT), China (1,900 MT), Mexico (1,400 MT), and Taiwan (900 MT).

Pork: Net US sales of 31,100 MT for 2023 were up 10 percent from the previous week and 1 percent from the prior 4-week average. Increases primarily for Mexico (9,700 MT, including decreases of 200 MT), South Korea (7,300 MT, including decreases of 200 MT), Japan (2,900 MT, including decreases of 200 MT), Colombia (2,500 MT), and Australia (1,700 MT), were offset by reductions for Nicaragua (400 MT). Net sales of 500 MT for 2024 were primarily for South Korea. Exports of 28,800 MT were up 4 percent from the previous week and 5 percent from the prior 4-week average. The destinations were primarily to Mexico (10,400 MT), Japan (3,300 MT), South Korea (3,100 MT), China (2,500 MT), and Colombia (2,200 MT).

US pork producers seek partial ruling in ongoing Question 3 case

Pork producers have requested a Massachusetts federal court to proceed with a partial summary judgment in their challenge to Massachusetts' Question 3 (Q3) and its constitutionality. Question 3, which was voted on in 2016 and became effective on Aug. 23, 2023, prohibits the sale of uncooked whole pork meat that does not meet the state's sow housing requirements.

In July, Triumph Foods filed a lawsuit contesting the law, arguing that discriminatory trade restrictions like Q3 and similar laws affect the ability to establish resilient and reliable food supply chains across the United States. The lawsuit also claimed that such laws harm small businesses, employees, consumers, and government-funded agencies, emphasizing the importance of free and fair interstate commerce.

In May, the U.S. Supreme Court ruled against the National Pork Producers Council (NPPC) and the American Farm Bureau Federation in their challenge of California's Proposition 12 animal confinement law, which shares similarities with Massachusetts' Question 3.

In August, a settlement was reached that allowed pork to move through Massachusetts if it was sold outside the state. Then, in October, a group of 13 attorneys general from various states filed an amicus brief arguing against Question 3. They contended that the law could lead to inconsistent regulations by different states, disrupting national markets and causing significant financial harm to pork producers nationwide.

Of note: California has delayed compliance with Proposition 12 until Dec. 31.

Another HPAI case confirmed in commercial turkey flock in Buena Vista County, Iowa

The Iowa Department of Agriculture and Land Stewardship and USDA’s Animal and Plant Health Inspection Service (APHIS) have confirmed a positive case of highly pathogenic avian influenza (HPAI) in Buena Vista County, Iowa. The affected site is a commercial turkey flock.

US producers embrace USDA's Livestock Risk Protection Program as adoption surges to 5.2 million head

Producers in the US, particularly in the southern states, are increasingly embracing the Livestock Risk Protection Program (LRP), a program aimed at safeguarding ranchers against declining cattle prices, according to an item released by Southern Ag Today. LRP adoption has seen significant growth, with the number of cattle head covered surging from 71,000 in 2017 to 5.2 million by October 2023. In 2022, ranchers insured 3.4 million head, compared to 1.8 million in 2021. Notably, the Southern region has played a substantial role in driving this increased usage, with Texas and Oklahoma insuring 56% and 34% of the total, respectively.

HPAI cases surge in US turkey farms, posing endemic threat

The United States is grappling with a growing challenge of Highly Pathogenic Avian Influenza (HPAI) outbreaks, primarily affecting turkey operations. The USDA's Animal and Plant Health Inspection Service (APHIS) confirmed HPAI in 24 commercial turkey farms across 19 counties in five states: South Dakota, Minnesota, Utah, Iowa, and California. The concerning aspect is that 18 out of these 19 counties had already confirmed infections during the summer of 2023, suggesting the potential for the virus to become endemic in certain areas. As a response to the outbreaks, depopulation measures have been implemented, resulting in the culling of approximately 967,000 commercial turkeys.

China’s hog numbers down from year-ago

China’s sow herd at the end of September totaled 42.4 million head, down 2.8% from last year, the ag ministry said. The pig herd dropped 0.4% to 44.23 million head.

USDA forecasts modest grocery price increase in 2024, returning to near pre-pandemic levels

USDA released its food price forecasts for 2024, indicating a modest increase in grocery prices, nearing pre-pandemic levels. In 2023, food prices are expected to rise by 5.8% compared to 2022, with restaurant prices increasing by 7.1%, and grocery prices by 5.1%. These projections are consistent with the September outlook and represent a 0.1 percentage point decrease from the August forecast.

For 2024, food prices are predicted to rise by 2.1%, with a 1% increase in grocery store prices and a 4.4% increase in restaurant prices. Notably, the expected grocery price increase in 2024 would be the lowest since 2019, when it was 0.9% before the pandemic.

In 2023, price increases are anticipated for several food categories, including beef and veal (3.8%), dairy products (4.0%), fats and oils (8.9%), processed fruits and vegetables (8.5%), and more. The only category USDA expects to decline in 2023 compared with 2022 is pork where a decrease of 0.8% is forecast. However, in 2024, USDA expects declines in prices for categories such as eggs (14.5%), dairy products (0.6%), fresh fruits and vegetables (0.1%), and fresh vegetables (0.5%).

USDA has been adjusting its 2024 food price forecasts monthly. Grocery store price forecasts have remained at a 1.0% rise since July, while overall food price forecasts began at 2.4% for 2024. Restaurant prices were initially projected to increase by 4.5%.

For 2024, USDA expects declines for eggs (14.5%), dairy products (0.6%), fresh fruits and vegetables (0.1%) and fresh vegetables (0.5%). By contrast, those prices are seen rising in 2023 by 0.4% for eggs, 4.0% for dairy products, 0.7% for fresh fruits and vegetables, with fresh vegetables seen up 1.0%.

Of note: External factors, including Federal Reserve monetary policy and geopolitical tensions such as the Russian invasion of Ukraine, could affect these forecasts. High energy prices may particularly impact restaurant food price inflation. While consumers are expected to experience lower increases in 2023 compared to previous years, the forecasts still exceed the 10-year averages for all food, restaurant, and grocery prices. For 2024, the current outlook suggests that all food and grocery prices will be below their 20-year averages, while restaurant prices are expected to remain above that level.

Cold Storage report: beef, pork stocks remain well below average

USDA’s latest Cold Storage Report showed frozen beef stocks climbed more than average during September, largely because the previous month’s figure was revised down 15.1 million pounds. Pork stocks declined last month, whereas there is normally a small buildup in supplies.

Beef stocks at the end of September totaled 420.2 million lbs., up 24.8 million lbs. (6.3%) from August, which was greater than the five-year average increase of 11.1 million lbs. during the month. But beef inventories dropped 105.9 million lbs. (20.1%) from year-ago and were 60.7 million lbs. (12.6%) below the five-year average.

Frozen pork inventories totaled 462.8 million lbs., down 6.5 million lbs. (1.4%) from August, whereas the average over the past five years was a 3.0-million-lb. increase during September. Pork stocks fell 74.3 million lbs. (13.8%) from last year and were 69.4 million lbs. (13.0%) lower than the five-year average. Frozen ham inventories at 149.5 million lbs. dropped 4.8 million lbs. and were 10.0 million lbs. under September 2022. Belly stocks at 29.6 million lbs. declined 7.2 million lbs. during September and were 6.9 million lbs. under year-ago.

Total poultry stocks declined 12.5 million lbs. (1.0%) from August and were virtually unchanged versus September 2022. Chicken breast meat inventories increased 15.5 million lbs. last month to a September record 236.586 million lbs., up 28.7 million lbs. (13.8%) from last year.

USDA report: Food insecurity surges by 30% as pandemic aid wanes, reaching highest levels since 2014

A recent USDA report revealed that more than 44 million Americans experienced food insecurity in the past year, marking the highest number since 2014. This surge in food insecurity occurred simultaneously with the reduction of pandemic assistance measures. Food insecurity is defined as individuals having difficulty obtaining sufficient food due to a lack of resources or money.

Background. The USDA report, based on a December Census Bureau survey, assessed households' ability to afford balanced meals and whether they had to skip or reduce meals due to financial constraints. The report disclosed that this increase in food insecurity is alarming and urged Congress to protect funding for public nutrition programs such as WIC (Women, Infants, and Children) and SNAP (Supplemental Nutrition Assistance Program/food stamps).

USDA Secretary Tom Vilsack expressed concern, stating that these findings are unacceptable, and it highlights the growing problem of food insecurity as the pandemic began to wane in 2022.

Perspective: In the previous report from 2021, 33.8 million people, or 10.4% of the U.S. population, experienced food insecurity, continuing a decade-long trend of improvement. However, last year, the total surged by 30% to 44.2 million people, representing 13.5% of Americans, reaching the highest number since 2014 when 48.1 million people (15.4% of the population) were food-insecure.

Of note: One-fifth of all children (13.4 million) lived in food-insecure households. Approximately 55% of food-insecure households participated in one or more of USDA's largest nutrition programs, including WIC, SNAP, and school lunch.

USDA strengthens animal welfare standards for organic livestock, aims to elevate organic farming practices

USDA is set to implement enhanced animal welfare regulations for organic livestock, offering more consistent and stringent standards for the treatment of animals on organic farms. USDA Secretary Tom Vilsack announced the forthcoming regulation, which is expected to come into effect by the end of the year.

The new rule mandates unlimited outdoor access for animals, aligning with industry norms, and prohibits the use of small enclosed "porches" that some poultry farms have utilized. Additionally, the regulation requires producers to provide sufficient space for cattle, hogs, and poultry to engage in natural behaviors, including standing up, turning around, lying down, fully stretching their limbs, and conducting activities such as rooting for pigs. These requirements set organic farming apart from conventional agriculture, where practices like housing egg-laying hens in "battery" cages and restraining pregnant sows in sow crates are common.

Vilsack highlighted USDA's goal of creating a fairer, more competitive, and transparent food system through this regulation, emphasizing the importance of consistent animal welfare practices in organic production.

The Organic Trade Association (OTA) welcomed the animal welfare rule, stating that it would level the playing field for organic producers and provide consumers with confidence that organic meat, poultry, dairy, and eggs have been produced in humane conditions with ample outdoor access. In 2022, sales of organic food exceeded $60 billion, according to the OTA.

Weekly USDA dairy report

CME GROUP CASH MARKETS (10/27/2023) BUTTER: Grade AA closed at $3.1925. The weekly average for Grade AA is $3.2965 (-0.0905). CHEESE: Barrels closed at $1.6825 and 40# blocks at $1.7300. The weekly average for barrels is $1.7070 (+0.0310) and blocks, $1.7395 (-0.0130). NONFAT DRY MILK: Grade A closed at $1.1975. The weekly average for Grade A is $1.2130 (-0.0145). DRY WHEY: Extra grade dry whey closed at $0.4000. The weekly average for dry whey is $0.3820 (+0.0075).

BUTTER HIGHLIGHTS: Cream availability is increasing in the East and Central regions. Cream is tight in the West, and some butter makers in the region say current prices are causing them to limit their spot purchasing. Retail butter production is strong to steady in the West. Cream multiples are moving lower in the Central region, and butter makers are utilizing cream to run busier schedules. In the East, some processors say they are supplementing contracted loads of cream with spot orders to operate steady production schedules. Retail and food service demands are anticipated to remain steady through the holidays in the East. In the Central region, butter demand is mixed. Food service demand is strong to steady in the West, while retail demand is mixed. Stakeholders in the West say inventories are in good shape for the upcoming 2023 holiday demand. Butter inventories are steady in the East, while salted butter is somewhat tight in the Central region. Bulk butter overages range from 4.0 to 12.0 cents over market value.

CHEESE HIGHLIGHTS: Milk output is increasing in the Northeast, and increased volumes are becoming available for Class III production. Milk availability in the Midwest has, reportedly, not edged lower much in recent weeks. Cheesemakers say Class III milk prices in the Midwest are higher than last year during the same period. In the West, contacts report strong to steady demand for Class III milk and say extra spot loads are somewhat limited. Cheese production is mostly steady in the West. In the Northeast, cheese production is increasing, but plants are operating below capacity as labor shortages persist. Cheese inventories are said to be comfortable and growing in the region. Cheese inventories are comfortable in the West, though some manufacturers note spot availability is decreasing slightly. Midwest cheese inventories range from balanced to tighter, and demand is mixed from one plant to the other. Retail and food service demand for cheese is mostly steady in the West. In the Northeast, food service demand for mozzarella cheese is strong, and cheddar demand is reported as steady to stronger.

FLUID MILK: Milk production trends vary throughout the country. In the upper half of the East region, cool temperatures prompted ideal conditions for cow comfort and improved milk production. Farm level milk production in the Central region is steady. The West region noted steady to higher milk production trends, depending on location. While manufacturing operations appear to be running comfortably, steady Class I demand across the country does limit the volume of milk channeled to manufacturing. Spot milk supplies are somewhat tighter this week. Midwest contacts have spot milk ranging $.25 to $2.00 over Class III. As milk components improve, more cream is available for processing in the East and Midwest, but cream volumes remain tight in the West on good demand. Loads of condensed skim are available in the West. Fall harvesting activities continue in several areas of the country, with some delays noted due to wet field conditions. Cream multiples for all Classes range 1.19-1.36 in the East, 1.23-1.32 in the Midwest, and 1.10-1.38 in the West.

DRY PRODUCTS: Low/medium heat nonfat dry milk (NDM) range prices are higher in the Central/East, while steady to higher in the West. Domestic demand is steady to strong. Spot loads are getting tighter. Mexican buyers eased on their purchases this week. High heat NDM prices moved higher in the West, while holding steady in the Central and East region. Dry buttermilk prices are higher in the West, while only the top of the range shifted higher in the Central/East dry buttermilk market. Inventories are tight in West, but comfortable in all other regions. The top of the dry whole milk price range is higher this week, while the bottom held steady. Contract activity continues to be steady, as spot buying picks up steam, tightening some inventories. The dry whey price ranges firmed across all regions this week. Export demand is improving. The whey protein concentrate 34% (WPC 34%) price range is higher at the bottom, but steady at the top of the price range and the through the mostly series. Spot market demand is stronger. Production is limited. The lactose range price series broadened while the mostly is steady to higher. Domestic interest is good and international interest is notching moderately higher. Contacts report that spot loads are available. Acid casein prices are steady, as rennet casein prices adjusted lower.


WESTERN EUROPEAN OVERVIEW: Western European milk intakes are slowing as parts of the continent approach the low point in the milk production season. Germany and some other northern European countries typically reach their seasonal low milk output levels in November. As milk intake volumes have receded, milk pay prices, which have largely fallen steadily since last December, have slowed their descent. The provisional average milk pay price for September in the EU-27 is 43.54 euros per 100kg, compared to 58.25 euros per 100 kg in December 2022. Although milk pay prices have fallen, spot milk prices have rebounded slightly over the last few months, suggesting a need for milk to make up for lower-than-expected milk harvests in some regions. According to CLAL data made available to USDA, Italian spot milk prices quoted to CCIAA Milan for the week of October 23 are 55.16 to 56.71 €/100 L *** for Italian-sourced unpasteurized milk and 50.52 to 53.10 €/100 L *** for whole pasteurized spot milk sourced from neighboring countries. *** Update to price units for spot milk prices.

EASTERN EUROPEAN OVERVIEW: Milk production in Eastern Europe is trailing off as the seasons change. And like their western counterparts, eastern European farmers have seen milk pay prices steadily decline throughout the year. August milk pay prices in Poland, the Czech Republic, and Hungary are 41.70 €/100 kg, 40.44 €/100 L ***, and 38.55 €/100 kg respectively , according to CLAL data made available to USDA. That said, Poland and the Czech Republic, two of the larger milk suppliers in Eastern Europe, have consistently produced more milk in each month of 2023 compared to 2022. The EU is eager to see what changes may come because of the general elections in Poland last week. Some analysts suggest the new government may take a more centrist view on issues in Europe. Specifically, the EU and Poland representatives may be expected to address the disagreement over the import ban on grain from Ukraine and work on other trade issues with Ukrainian agricultural products. *** Update to Czech Republic milk pay price units.

OCEANIA OVERVIEW: NEW ZEALAND: Recent September 2023 New Zealand milk production reports show a 1.3 percent year-on -year-increase in milk output on a milk solids basis, however, milk output declined 0.4 percent on a tonnage basis. Market sources note a 0.4 percent season-to-date improvement on milk solids basis, compared to the previous season -to-date figures. Further numbers point to a 1.0 percent season-to-date decline on a tonnage basis, compared to the previous milk season. Meanwhile, dairy commodity prices continued to show gains at the recent GDT event 342. Accordingly, some market representatives were inclined to raise their 2023-2024 farmgate milk price forecast to $7.88/kgMS, reflecting the upward movement of dairy commodity prices. On another note, New Zealand's September 2023 year-over-year export figures lost ground for most dairy commodities, on both a volume and value basis, 17.42 percent, and 29.54 percent, respectively. Specifically, China and other Asian countries contributed to the year-over-year downward trend in export volumes of WMP. Exports of SMP, on a volume basis, improved year-over-year, while worth noting is a 66 percent increase in exports to China. Butter export volumes grew 1.88 percent year-over -year, but cheese export volumes dropped 16.52 percent year-over-year for September 2023.

AUSTRALIA: In Australia, a recent strike by dairy workers left some farmers with little alternative but to dump milk even as competition for milk continues to drive farmgate milk prices. The market faces challenges as farmgate milk prices fail to parallel dairy commodity prices alongside returns. While dairy commodity prices generally align with farmgate milk pricing, sources suggest that Australia's farmgate 2023 milk price has not mirrored commodity returns. Some sources project this will have a significant impact on the bulk side of dairy in FY2024. Meanwhile, most of the crop areas of Australia are experiencing dryer than expected conditions. In east Australia, farmers face challenges when it comes to planting summer crops. Wheat harvesting is active in the northern half of the wheat belt but reports also indicated that dry conditions will likely limit the yields for immature winter crops.

SOUTH AMERICA OVERVIEW: Spring flush in the region has come and gone, according to contacts. They say farm milk yields were, in some cases, underwhelming due to the recent drought's longer-term impacts, increases in costs of production, and feed quality/quantity. Still, spring flush has processors reporting generally healthy supplies of farm milk for their utilization. Brazil's move to prompt increased internal milk production and processing continues to keep traders outside of the country both on alert and also seeking out other international trading partners. To further complicate the trading dynamic in the Southern Cone, elections in Argentina are expected to create some changes in tax rates and intercontinental trading relationships, regardless of outcome. As was mentioned, Brazil's internal milk output increases, along with pushes in processing, have slowed recent importing into the country from Argentina and Uruguay, in recent months. Still, those countries' traders say loads are moving internally and to other regions of the globe. Despite a settling in the most current GDT auctions, the international sentiment in the past month regarding dairy powders has generally been viewed as bullish. Prices in South America are steady, as traders say they are somewhat comfortable currently. As spring flush milk output has likely peaked, they are also cognizant that dairy commodity markets will not escape the supply and demand foundation, despite the many complexities of global trading dynamics.

NATIONAL RETAIL REPORT: Total conventional dairy ads increased by 13 percent, and organic dairy ads increased by 31 percent. Conventional ice cream was the second most advertised dairy commodity. Conventional ice cream in 48–64-ounce containers had a weighted average advertised price of $3.75, down 11 cents from last week. Conventional cheese was the most advertised dairy category. Conventional shredded cheese, sliced cheese, and block cheese in 6–8- ounce packages had weighted average advertised prices of $2.40, $2.44, and $2.28, respectively. Conventional yogurt ad numbers increased by 2 percent from last weeks’ numbers. Conventional Greek yogurt in 4–6-ounce containers had a weighted average advertised price of $1.10, down 3 cents from prior week. Comparing the current weeks’ prices to those of last week, the weighted average advertised price for conventional milk in half gallon containers went up 27 cents, while organic milk in half gallon containers went down 24 cents.

Sarah Mikesell


Sarah Mikesell grew up on a five-generation family farming operation in Ohio, USA, where her family still farms. She feels extraordinarily lucky to get to do what she loves - write about livestock and crop agriculture. You can find her on Twitter or LinkedIn.

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