Weekly USDA US beef, pork export sales

Beef: Net US sales of 9,700 MT for 2023 were down 8 percent from the previous week, but up 44 percent from the prior 4-week average. Increases primarily for South Korea (4,200 MT, including decreases of 900 MT), Japan (2,600 MT, including decreases of 600 MT), Mexico (1,100 MT, including decreases of 200 MT), Canada (600 MT), and China (400 MT, including decreases of 700 MT), were offset by reductions for Hong Kong (200 MT). Net sales of 6,400 MT for 2024 were primarily for Japan (3,500 MT), Mexico (1,000 MT), China (800 MT), Hong Kong (300 MT), and Taiwan (300 MT). Exports of 16,900 MT were up 17 percent from the previous week and 20 percent from the prior 4-week average. The destinations were primarily to South Korea (4,600 MT), Japan (3,800 MT), China (2,300 MT), Mexico (2,100 MT), and Canada (1,200 MT).

Export Adjustment: Accumulated exports of beef to unknown destinations of 18 MT were adjusted down 4 MT for week ending October 19th, 3 MT for week ending October 26th, 3 MT for week ending November 2nd, 3 MT for week ending November 9th, 4 MT for November 23rd, and 1 MT for week ending December 7th. These shipments were reported in error.

Pork: Net US sales of 37,500 MT for 2023 were up 33 percent from the previous week and 48 percent from the prior 4-week average. Increases primarily for Mexico (15,900 MT, including decreases of 200 MT), South Korea (7,000 MT, including decreases of 2,400 MT), Canada (3,200 MT, including decreases of 700 MT), Japan (3,000 MT, including decreases of 1,200 MT), and China (2,800 MT, including decreases of 200 MT), were offset by reductions for the Philippines (100 MT), Vietnam (100 MT), and Hong Kong (100 MT). Net sales of 25,500 MT for 2024 were primarily for China (11,000 MT), Mexico (4,700 MT), South Korea (3,400 MT), Japan (2,600 MT), and Australia (900 MT). Exports of 40,500 MT--a marketing-year high--were up 12 percent from the previous week and 26 percent from the prior 4-week average. The destinations were primarily to Mexico (12,500 MT), South Korea (11,900 MT), Japan (3,900 MT), China (3,300 MT), and Canada (2,100 MT).

More HPAI finds in Kansas, California, South Dakota

USDA’s Animal and Plant Health Inspection Service (APHIS) confirmed highly pathogenic avian influenza (HPAI) in additional commercial operations in several states that have already reported cases. Cases confirmed Dec. 18 included Sonoma County, California (497,700 commercial table egg layer birds) and Edmunds County, South Dakota (1,000 birds at a commercial upland game producer). Dec. 19 confirmations announced by APHIS included Muskegon County, Michigan (47,900 commercial turkey meat birds); Rice County, Kansas (800,000 commercial table egg layer birds); and Sonoma County, California (3,500 commercial duck meat birds).

USDA world dairy markets and trade report

Dairy: World Markets and Trade US Export Values Under Pressure in FY2024

FY2023 was a challenging year for US dairy exporters, impacted by sluggish economic growth among importers and increased competition from New Zealand and the EU. However, a slightly weaker US dollar in 2023 helped cushion losses in price competitiveness. Throughout the year, export values of non-fat dry milk (NDM), cheese, and whey remained lackluster, primarily due to weakening demand in China and Southeast Asia. Globally, higher interest rates impacted discretionary spending, particularly affecting dairy consumption, which is not a traditional staple of Asian diets – the most significant growth region for major exporters.

In 2024, US exports are expected to face similar headwinds for much of the year. A combination of factors has impacted demand in key markets in Asia in 2023 and expected to continue into 2024. In 2023, after the end of COVID lockdowns, governments were under pressure to rein in fiscal spending and temper aggregate demand to combat high level of inflation. Central banks have raised interest rates to increase the cost of credit, leading to slowing private business investment for manufacturing exports in markets like the Philippines and Thailand. The resulting slowing of gross domestic product (GDP) and income growth has had spillover effects on discretionary spending.

Consumers have also been grappling with high food inflation, substantial currency depreciation against the US dollar that has also contributed to higher imported food prices, and high energy, all of which have put a dent in consumer purchasing power. In China, the largest import market for dairy products, surplus raw milk production led to government subsidies to stabilize the domestic processing sector and resulted in reduced demand for imports of whole milk powder (mostly from New Zealand) and US NDM. As China doesn’t produce meaningful amounts of higher value products like cheese or butter, surplus raw milk is purchased by dairy processors and converted into milk powder for storage in accordance with the "Fresh Milk Purchase and Sales Contract”.

Forecast declines in China’s swine production are expected to lead to less feed use and therefore, whey. Large inventories of skim and whole milk powder will continue to limit export opportunities for the United States as well. Year-over-year price declines for a number of US dairy products are expected to persist early in 2024, pressuring export values. However, stronger demand for skim products is anticipated in the latter half of the year as US price competitiveness improves. NDM and whey, pivotal for exports, are forecast to see sustained lower prices year over year in the first half of 2024, and volumes are expected to be weak due to soft demand from East and Southeast Asia.

The current WASDE projects average NDM prices at $1.17 per pound in FY2024, 8 percent lower than FY2023 levels. This decline is expected to be most pronounced in the first half of FY2024. Cheese prices are expected to average $1.71 per pound, down 8 percent from FY2023. Expectations for only moderate growth in volumes of shipments and lower expected prices for dairy commodities through much of the year indicate that total dairy export values are forecast to contract in FY2024, most intensely in the first 2 quarters. FY2024 is forecast to resemble much of the monthly data in FY2023, in that signs of growth in some categories are invariably surmounted by declines in others. Gains in export values for cheese and infant formula are projected to be more than offset by declines in skim milk powder, whey, lactose and butter.

In the European Union, a marginal decline in milk production is anticipated, with a decrease of 200,000 tons bringing the total to 144.6 million. A modest improvement in cow productivity is insufficient to counteract additional reductions in the dairy herd. Persistent declines in farmgate milk prices, coupled with consistently high production costs, continue to exert pressure on dairy farmers, particularly in major producing member states such as Germany, France, Spain, and Poland.

The impact is more pronounced among smaller farms that lack the capacity to capitalize on efficiencies of scale or organized negotiating power with processors to drive competition for portions of the milk pool. Notably, producers are also grappling with adherence to environmental regulations. Initiatives such as the Dutch government's nitrogen emissions cap and the Irish government's proposed voluntary payment scheme to incentivize dairy cow slaughter add further complexity. These factors are expected to lead to further market consolidation and closures among smaller producers. However, larger operators are anticipated to maintain herd numbers, thereby slowing the pace of herd reduction in 2024

Highly pathogenic avian influenza (HPAI) infections continue to increase

Data from USDA's Animal and Plant Health Inspection Service (APHIS) up to Dec. 15 shows additional commercial sites affected. Since Dec. 11, HPAI has been confirmed in various locations, including Olmsted County, Minnesota (15,100 commercial turkey breeder hens); Lake County, South Dakota (76,000 commercial turkey meat birds); Rice County, Kansas (700,000 commercial table egg layers); San Joaquin County (6,000 commercial duck breeder birds) and Merced County (183,100 commercial broiler production birds and 1,358,000 commercial table egg layers), California; and Darke County, Ohio (560,000 commercial table egg layers).

In the past 30 days, a total of 62 commercial flocks and 36 backyard flocks have been confirmed with HPAI, impacting a total of 11.08 million birds.

USDA sends two livestock market rules to OMB for review

USDA's Agricultural Marketing Service has submitted two additional proposed rules concerning livestock market matters to the Office of Management and Budget (OMB) for review. The first rule focuses on "Unfair Practices, Undue Preferences, and Harm to Competition Under the Packers and Stockyards Act." It aims to revise regulations under the Packers and Stockyards Act to provide clarity regarding violations of the Act. Furthermore, it seeks to clarify the Act's scope to determine actions or conduct that could be in violation of the Act, even without evidence of harm or likely harm to competition. USDA's position is that the Act should primarily address cases involving harm to competition.

On the poultry front, the second proposed rule deals with "Poultry Grower Payment Systems and Capital Improvement Systems." This rule is designed to address certain problematic practices within poultry grower payment systems and capital improvement programs.

Timing. USDA plans to release the proposed rule on unfair practices in February and the rule concerning poultry growers in January. These rules are part of the Biden administration's commitment to addressing issues within the livestock industry.

Railroad bridge closures at US/Mexico border worry Mexican poultry farmers

The closure of railroad bridges at Eagle Pass and El Paso along the US/Mexican border has raised concerns among Mexican poultry farmers who depend on shipments of feed that typically pass through these bridges. Mexico's National Union of Poultry Producers (UNA) revealed that approximately 25% of Mexico's yellow corn imports from the US and 63% of its soybean paste imports enter Mexico via these two border crossings.

UNA has requested the support of Mexican authorities to intervene and negotiate the reopening of these railway crossings as soon as possible. They have emphasized that the shutdown could potentially impact the production of chicken and eggs in Mexico.

The decision to temporarily close the railroad bridges was made by the US Customs and Border Protection (CBP), citing the need to redirect personnel to assist the US Border Patrol in handling the custody of migrants. CBP has not provided any specific information regarding the duration of the bridge closures.

China’s Nov. pork imports down sharply from year-ago

China imported 90,000 MT of pork during November, unchanged from the previous month but 48.1% less than last year. During the first 11 months of this year, China imported 1.46 MMT of pork, down 6.3% from the same period last year.

Hong Kong suspends some US, Canadian poultry meat imports due to HPAI

Hong Kong suspended imports of poultry meat and products from areas in the US and Canada affected by highly pathogenic avian influenza (HPAI).

EPA proposes new US wastewater rules for meat and poultry processing plants

Such rules could lead to a reduction of 100 million pounds of water pollutants like nitrogen and phosphorus annually. This marks the first update of effluent limitation guidelines for this industry in a generation. The proposed guidelines aim to achieve the maximum feasible reduction in pollution using proven technology, considering economic viability. EPA plans to open the proposed regulations for public comment after their publication in the Federal Register. As part of a court agreement, the EPA is obligated to finalize the standards by August 2025, following a lawsuit filed by environmental law firm Earthjustice during the Trump administration when the EPA had decided against updating the regulations.

Stabenow blocks bill to allow whole milk in US school lunches

Senate Ag Committee Chair Debbie Stabenow (D-Mich.) prevented Sen. Roger Marshall (R-Kan.) from passing the Whole Milk for Healthy Kids Act by unanimous consent in the Senate. This legislation, already approved by the House, aims to allow whole milk back into the school lunch program, reversing a ban that has been in place for over a decade. Stabenow's opposition to the measure is based on her belief that it goes against the Dietary Guidelines for Americans. She had signaled her intent to block the bill before it was brought to the Senate floor. Stabenow emphasized the importance of maintaining school meal standards that are rooted in dietary science, rather than promoting specific food products. She suggested those advocating for the inclusion of whole milk in school meals should participate in USDA’s review of the school meal program rather than having Congress intervene in the process.

Grass-fed beef isn’t more climate-friendly than traditional grain-fed meat

This is largely because of the amount of land needed for grazing, according to a study that could impact policymaking to mitigate agriculture emissions. A study based on reviews of 100 beef production operations across 16 countries reveals that claims of low-carbon beef often overlook a significant factor: the carbon opportunity cost of land use. The research, led by Daniel Blaustein-Rejto, director of food and agriculture at the Breakthrough Institute, examined the carbon footprint of beef production.

Land use is key. The study highlights that to accurately assess the carbon footprint of beef production, land use impacts must be considered. Specifically, the study compared the relative carbon footprint of grass-fed beef, where cattle consume grass and forage, with grain-fed beef produced in feedlots. It found that beef from pasture-finished operations, which rely more on grazing, produces 20% higher greenhouse gas emissions and has a 42% higher carbon footprint than beef from feedlot operations.

This difference arises primarily in the "finishing stage" for cattle, where pasture-finished cattle continue to eat hay and grasses until they reach slaughter weight, while some cattle in feedlot operations are transitioned to a grain-based diet.

The study also emphasizes that grass-fed and other pasture-finished operations can displace native ecosystems and reduce land available for restoration efforts, such as tree planting. Some mitigation measures to reduce emissions include improved grazing management and breeding animals more resistant to disease and heat.

The findings have implications for policy strategies aimed at mitigating emissions from beef production, as beef-related emissions account for a significant portion of global greenhouse gas emissions, ranging from 6% to 14.5% in various estimates.

Agri Stats: Data-driven meatpacker efficiency raises collusion concerns

Agri Stats, an Indiana-based company, is known for its data-driven approach to assist meatpackers in optimizing efficiency and maintaining low prices. They collect and analyze extensive data to provide insights and recommendations to their clients in the meat processing industry. However, the government has raised concerns that the data provided by Agri Stats could potentially enable companies to engage in collusion. According to a Wall Street Journal profile, the company's client list has been substantial, including up to 97% of the US chicken industry, valued at around $60 billion, and 80% of pork processors. This profile highlights the significant role Agri Stats plays in the meat industry's operations and pricing strategies.

Weekly USDA dairy report

BUTTER: Grade AA closed at $2.4900. The weekly average for Grade AA is $2.4970 (-0.1755). CHEESE: Barrels closed at $1.4500 and 40# blocks at $1.5200. The weekly average for barrels is $1.5010 (-0.0770) and blocks, $1.5740 (-0.0235). NONFAT DRY MILK: Grade A closed at $1.1600. The weekly average for Grade A is $1.1650 (-0.0055). DRY WHEY: Extra grade dry whey closed at $0.3950. The weekly average for dry whey is $0.3940 (-0.0045).

BUTTER HIGHLIGHTS: Domestic retail butter demand is strong to steady in the lead up to the winter holidays. Cream supplies for churning remain mixed. Stakeholders in the west and central regions indicate spot loads of cream are more available. However, contacts in the eastern region indicate spot loads of cream for butter churning are tighter than in recent weeks. Butter makers anticipate milk clearing to Class IV to increase in the second half of December. Manufacturers report strong to steady retail production schedules. Some stakeholders indicate spot loads of unsalted butter are somewhat looser. Bulk butter overages range from 1 to 8 cents above market, across all regions.

CHEESE HIGHLIGHTS: Spot milk demand remains strong in the Eastern states. Plant contacts report robust production schedules with inventories growing week over week. Retail demand is strong ahead of end of year holidays. Contacts note mozzarella and cheddar demands are especially strong. Cheesemakers in the Midwest report ample milk availability, with Class III spot milk prices ranging from $4-under to $1-over. Production schedules remain steady. Demand for cheese barrels has softened. In the West, cheese processors have shared their inventories are comfortable. Spot availability is variable, though, as contractual obligations are being fulfilled before the end of the year. Domestic cheese prices have become more competitive with international prices, but industry sources share export demand has not yet picked up in response.

FLUID MILK: In the East and Central regions, milk production is trending higher. In some parts of the West region, milk production is strengthening, but in other areas, farm level milk output is reportedly steady. Contacts in the Central region and in the Northeast report strengthening milk components as feed quality remains high. Milk demands are Class dependent and range from steady to strengthening in the East and West regions. In the Central region, contacts report spot loads of Class III milk are trading from $4 under to $1 over. Stakeholders say they anticipate a decline in spot prices for Class III milk before the end of year holidays. Demand for condensed skim is steady in the West, and contacts in the Central region note condensed skim availability is increasing. Cream volumes are available in all regions. Cream multiple ranges for all Classes are: 1.07-1.28 in the East, 1.18-1.26 in the Midwest, and 1.05- 1.25 in the West.

DRY PRODUCTS: The price ranges for low/medium heat nonfat dry milk (NDM) moved lower in all regions this week. Some contacts in the East note interest from spot market participants has softened somewhat in recent weeks. High heat NDM prices moved lower in the West, but prices held steady in the Central and East regions. Dry buttermilk prices moved higher at the top end of the ranges in all regions, while the bottom of the range in the West slid downwards. Spot availability remains tight. Dry whole milk prices moved higher on the bottom end of the range, amid strong seasonal demand and tight spot inventories. Price movements for dry whey varied by region. Bullish markets for higher whey protein concentrates have caused some manufacturers in the Central and West regions to focus on those commodities, instead of dry whey production. Prices for whey protein concentrate 34% (WPC 34%) moved higher. Contacts note strong demand for WPC 34% and limited production are contributing to lighter warehouse inventories. Lactose prices moved higher at the bottom of the range. Contacts note steady demand, but strong interest for Q1 contracts. Acid and rennet casein prices moved higher at the bottom of the ranges this week.

ORGANIC DAIRY MARKET NEWS: Compared to last week, there were 41 percent more ads for organic dairy products in this week's survey. In order, milk, yogurt, cheese, cottage cheese, and sour cream were the top 5 most advertised organic dairy commodities this week. Total ads for all these products increased compared to week 49. The Foreign Agricultural Service (FAS) releases monthly export data which includes export volumes and values for organic milk categorized as HS-10 code 0401201000. Recently released data for October 2023 indicated organic milk exports were 250,984 liters, up 59 percent from the month prior and up 74 percent from 2022.

NATIONAL RETAIL REPORT: Both conventional and organic dairy ads increased this week. Conventional dairy ads had the larger increase at 79 percent, compared to 41 percent for organic dairy ads. Cheese led the way as the most advertised dairy commodity this week. Ice cream followed the leader as the second most advertised dairy commodity. When comparing the package sizes for conventional ice cream, the 48-64 ounce container size was more heavily advertised. Butter and sour cream, along with yogurt were well represented this week. The weighted average advertised price for conventional 1 pound butter packages increased 6 cents from last week, to $4.30.

DECEMBER SUPPLY AND DEMAND ESTIMATES: The milk production forecast for 2023 is lowered from last month due to slower expected growth in milk per cow. Production in 2024 is lowered due to lower milk cow numbers and reduced milk per cow. The fat basis import forecast for 2023 is raised due to higher imports of cheese. Skim-solids imports are lowered due to fewer shipments of milk protein products. The fat basis export forecast is lowered due to lower butter exports. The skim-solids export forecast is raised due to higher whey product shipments which more than offset lower expected nonfat/skim powder. For 2024, the import forecast is raised on a fat basis, but lowered on a skim-solids basis. Fat basis exports are lowered for 2024 on lower expected butter shipments, while a higher skim-solids basis forecast reflects higher nonfat/skim powder and whey product exports. For 2023, based on recent prices, cheese and butter price forecasts are lowered while the nonfat dry milk (NDM) price is raised. The whey price is unchanged. The Class III and Class IV price forecasts are both lower on lower cheese and butter prices. For 2024, the cheese price forecast is lowered, while butter, NDM, and whey prices are raised. The Class III price forecast is lowered due lower cheese prices. The Class IV price forecast is raised due to higher butter and NDM price forecasts.