Weekly global protein digest - HPAI, Spain exports, USDA Cattle on Feed Report

Analyst Jim Wyckoff shares protein news from around the world
calendar icon 29 December 2023
clock icon 10 minute read

USDA hogs and pigs report bearish

USDA’s Hogs & Pigs Report last Friday estimated the U.S. hog herd at 74.971 million head as of Dec. 1, up 15,000 head from year-ago, whereas traders expected a 481,000-head decline based on the average pre-report estimate. The market hog inventory increased 221,000 head (0.3%) from year-ago, while the breeding herd declined 205,000 head (3.3%). The data was negative compared to pre-report expectations, though it wasn’t overly bearish. However, the sharp revisions to past data will increase trader skepticism toward these numbers and may cause them to believe USDA’s sampling methodology is consistently undercounting hog numbers.

USDA cattle-on-feed report mildly bearish

USDA’s Cattle on Feed Report estimated the Dec. 1 large feedlot (1,000-plus) head inventory increased 313,000 head (2.7%) from year-ago. Traders expected feedlot supplies to rise 257,000 head (2.2%). November placements of cattle into feedlots declined 1.9%, though traders anticipated a 3.8% decline. November marketings fell 7.4% compared with the expected 6.7% drop. The data is mildly negative compared to pre-report expectations, though we doubt it will have much of lasting market impact.

USDA cold storage report: US pork stocks decline less than normal

USDA’s Cold Storage Report showed pork inventories totaled 416.1 million lbs. at the end of November, down 21.8 million lbs. (5.0%) from October. The five-year average was a 45.2-million-lb. decline during the month. Pork stocks dropped 35.5 million lbs. (7.9%) from year-ago and were 55.1 million lbs. (11.7%) under the five-year average. Beef stocks totaled 454.7 million lbs., up 9.0 million lbs. (2.0%) from October. The five-year average was a 10.4-million-lb. increase during the month. Beef stocks fell 68.6 million lbs. (13.1%) from year-ago and were 49.0 million lbs. (9.7%) less than the five-year average.

Massachusetts seeks dismissal of Q3 animal welfare law challenge

The state of Massachusetts has requested the dismissal of a lawsuit challenging its Question 3 (Q3) animal welfare law. They argue that Triumph Foods' complaint lacks merit as the company cannot demonstrate harm resulting from the related regulations. The Q3 standards, which regulate pork sold in Massachusetts, came into effect on Aug. 24. Triumph Foods claims that Q3 violates the Commerce Clause and other provisions of the U.S. Constitution.

U.S. District Judge William Young previously rejected most of the complaint in October but maintained a claim that the law discriminates against out-of-state producers. Massachusetts, in its motion to dismiss on Dec. 18, pointed out that all Triumph products are sold through Seaboard Foods under a 2004 agreement. State officials argued that Triumph has not proven that Seaboard cannot continue to meet its obligations under the agreement despite Massachusetts' policies. Therefore, they contend that the entire amended complaint should be dismissed for lack of jurisdiction.

USDA reports on Spain’s exports

In 2022, Spain imported $2.2 billion of agricultural and related products from the United States, said USDA in a report. Outside the European Union Member States, the United States was the fifth largest origin of agricultural and related imports. Spain received 74.7 million international tourists in the first ten months of 2023, and it is forecast to reach a record-breaking 86.5 million tourists by the end of the year. This positive situation, along with lower unemployment rates, is boosting consumer incomes. This is partly offset by ongoing price increases, forcing some consumers to tighten their budgets. However, the medium-term income growth is predicted to be reasonable, which will continue to create opportunities for certain consumer-oriented food items, as well as enhance long-term prospects for other products. This report provides guidance to U.S. companies interested in exporting consumer-ready food products to Spain and includes an overview of Spain's economic situation, market structure, and export requirements.

More HPAI finds in Kansas, California, South Dakota

USDA’s Animal and Plant Health Inspection Service (APHIS) has 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 include 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 sees food price inflation at just 1.2% in 2024 for all foods, down from 2.9% in November

That is the smallest rise in food prices since they increased 0.9% in 2017, according to USDA’s Economic Research Service (ERS). Food at home (grocery) prices are now seen falling 0.6% in 2024, down from an outlook for an increase 1.6% in November, and would be the steepest decline in grocery prices since they fell 1.3% in 2016. Prices also decreased in 2017 by 0.2%. Restaurant prices, however, are now expected to increase 4.9%, up from 4.3% in November and the highest forecast since USDA started releasing their 2024 outlook in July.

Weekly USDA dairy report

CME GROUP CASH MARKETS (12/22) BUTTER: Grade AA closed at $2.5400. The weekly average for Grade AA is $2.5795 (+0.0825). CHEESE: Barrels closed at $1.3925 and 40# blocks at $1.3900. The weekly average for barrels is $1.3980 (-0.1030) and blocks, $1.4280 (-0.1460). NONFAT DRY MILK: Grade A closed at $1.1600. The weekly average for Grade A is $1.1605 (-0.0045). DRY WHEY: Extra grade dry whey closed at $0.3800. The weekly average for dry whey is $0.3835 (-0.0105).

BUTTER HIGHLIGHTS: Retail butter demand is mixed, with some stakeholders reporting holiday ordering is largely fulfilled and other stakeholders reporting buyers eagerly seeking to fill remaining holiday needs. Food service demand is solid. Cream supplies for churning are readily available throughout the country. Cream demand is mixed. Butter manufacturers in the western and central regions indicate cream demand is strong to steady, while contacts in the eastern region report steady to lighter cream demand. Butter makers are running active production schedules utilizing increased spot load availability of cream. Manufacturers in the west region indicate availability of bulk and unsalted butter is somewhat looser.

CHEESE HIGHLIGHTS: Milk volumes available for cheese manufacturing remain strong in the Northeast. Plant downtime scheduled for end-of-year holidays will slow production in the coming weeks. Cream cheese demand has been strong for holiday baking, and both cheddar and mozzarella demands are steady. In the Central region, milk is available for cheese processing, but not in as strong supply as in years past. Contacts report some below Class spot milk prices, but suggest flat market and above Class prices are also present. Cheese inventories are balanced in the Midwestern states. Western cheese inventories are comfortable, though spot loads of cheese vary from manufacturer to manufacturer. Contacts share there are strong milk quantities available for production. Retail demand is steady. Foodservice demand is noted to be weaker in the West.

FLUID MILK: Farm level milk production is steady to higher across the nation. In the Northeast, milk outputs are higher. Feed quality remains high and has contributed to stronger milk components. Cream is becoming more available in the region, though contacts note demand has softened ahead of end-of-year holidays. Class I demand is lighter as educational institutions close through the end of the year. In the Central region, fluid milk volumes continue to grow. Farmers share milkfat contents continue to improve due to hearty feed quality. Cheese processors report some prices as low as $5-under Class to $0.25-over Class III. Western milk production is generally steady. Cream is becoming more available at the close of the year. FOB cream multiples for all Classes are 1.00-1.28 in the East, 1.00-1.08 in the Midwest, and 0.80-1.18 in the West.

DRY PRODUCTS: Central and East low/medium heat nonfat dry milk (NDM) prices moved higher at the bottom of the range. Supplies are snug, though light demand has not placed further strain on inventories. NDM markets continue to hover around the $1.20 per pound mark. Plant managers relay some dryers have been down for maintenance, while others are planning more extensive downtime through the end of the year. High heat NDM trading was quiet. In the West, low/medium heat NDM demand is steady, and processors relay varying spot availability. Some contacts share production has been paused until the New Year. Dry buttermilk prices inched higher in the Central and Eastern regions. Churning activity is increasing, and condensed buttermilk inventories are growing. Dry buttermilk prices inched higher at the top of the range in the West, as spot availability remains tight. Drying schedules are reportedly steady. Dry whole milk prices moved higher. Dry whey prices shifted lower in the Central region. Processors note inventories are tight, while brokers relay having dry whey on hand. Dry whey trading activity was slow in the East. Many Class III plants have scheduled downtime for the rest of the year, and liquid whey supplies will wane as a result. In the West, liquid whey volumes are able to match steady to stronger drying schedules. Whey protein concentrate 34% (WPC 34%) prices pushed higher. Demand is strong ahead of end of year holidays. WPC 34% production is lighter, and many processors are focusing on whey protein concentrate 80% and whey protein isolate production. Lactose demand from spot purchasers is strong. Contacts share inventories are tightening, though spot loads are easier to find. Rennet casein prices moved higher, while the acid casein price range was unchanged. Rennet casein production is steady to lighter, though demand is noted to be strong. Acid casein production is reportedly strong in Oceania. I

NTERNATIONAL DAIRY MARKET NEWS: WESTERN EUROPE: As expected, weekly European milk deliveries have taken their seasonal turn upwards. However, depending on the view, milk output in Europe in 2023 has been short of expectations. Summer heat and dry conditions have tampered milk production in France and Italy. Monthly milk production numbers in Germany and the Netherlands have recently fallen below previous year levels. Similarly, monthly EU milk output is also below levels from last year. According to CLAL data made available to USDA, October 2023 EU cows' milk delivered to dairies is estimated at 11,505,000 MT, down 1.6 percent compared to last year. Year-to-date EU cows' milk delivered to dairies through October 2023 is estimated at 122,332,000 MT, an increase of 0.3 percent when compared to January-October 2022 EU milk production. Among some of the top Western EU milk producers, the year-to -date milk deliveries and percentage changes from January-October 2022 are Germany, 27,269,000 MT, +2.0 percent; France, 19,647,000 MT, -2.7 percent; and Netherlands, 11,679,000 MT, +1.7 percent. The provisional October 2023 cows' milk delivered to dairies in the UK was 1,221,600 MT, down 2.6 percent from October 2022. Year-to-date cows' milk deliveries in the UK for January-October 2023, 12,862,000 MT, was 0.3 percent more than total milk deliveries in January-October 2022.

EASTERN EUROPE: Parts of Eastern Europe continue to have steady milk production growth. Industry sources suggest that aside from Ukraine, which is likely to have had lower milk production output because of the conflict, the Commonwealth of Independent States (CIS) have steadily increased milk production through the course of 2023. According to CLAL data made available to USDA, among some of the top Eastern EU milk producers, the year-to-date milk deliveries and percentage changes from January-October 2022 are Poland, 10,895,000 MT, +1.5 percent; Czech Republic, 2,700,000 MT, +1.6 percent; and Hungary, 1,373,000 MT, -4.1 percent.

OCEANIA OVERVIEW: AUSTRALIA: Recently released export data for Australia, showing data through October of 2023 shows exports of butter, butter oil, milk, SMP, WMP, and mixtures were lower from the start of the season in July through October, compared to last year. Meanwhile, exports of cheese, whey products, and other dairy products were higher from July through October of this year, compared to one year ago. NEW ZEALAND: October 2023 New Zealand milk solids reported by DCANZ and NZX are 254.432 million kg, compared to 252.061 million kg one year prior. According to CLAL, New Zealand season-to-date milk production through October 2023 is 7.330 million MT, compared to 7.383 million MT June through October 2023, down 0.72 percent.

SOUTH AMERICA OVERVIEW: Extreme storms in Uruguay and Argentina halted port activity in areas last weekend/early this week. Some Brazilian states continue to deal with extreme drought conditions. All said, farmers in the Southern Cone are facing regionally challenging weather events. As Brazil tries to expand its internal milk production and dairy manufacturing, crop yield expectations continue to slip, as feed costs for dairy farmers are expected to do the opposite moving closer to the summer season.

US NATIONAL RETAIL REPORT: Despite a late-year surge for conventional one-pound butter advertisement totals, conventional 48-to-64- ounce ice cream was the most advertised of all dairy this week. Half gallon organic milk was the most advertised organic item, per usual. Total conventional and organic ad numbers decreased the penultimate week of 2023 by 20 percent and 32 percent, respectively.

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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