Weekly global protein digest: Meatpacker margins, ASF, Tyson, lab-grown meat

Analyst Jim Wyckoff shares an update on global protein news
calendar icon 12 May 2023
clock icon 8 minute read

Weekly USDA beef, pork export sales

Beef: Net sales of 16,600 MT for 2023 were down 18 percent from the previous week, but up 16 percent from the prior 4-week average. Increases were primarily for South Korea (4,400 MT, including decreases of 400 MT), Japan (3,700 MT, including decreases of 400 MT), Canada (3,100 MT, including decreases of 200 MT), Mexico (2,100 MT), and Taiwan (1,000 MT, including decreases of 100 MT). Exports of 14,800 MT were down 22 percent from the previous week and 11 percent from the prior 4-week average. The destinations were primarily to South Korea (4,300 MT), Japan (3,100 MT), China (2,100 MT), Canada (1,300 MT), and Mexico (1,300 MT).

Pork: Net sales of 30,000 MT for 2023 were down 39 percent from the previous week and 28 percent from the prior 4-week average. Increases were primarily for Japan (9,900 MT, including decreases of 100 MT), China (5,600 MT, including decreases of 100 MT), Mexico (5,500 MT, including decreases of 300 MT), the Philippines (1,700 MT), and South Korea (1,300 MT, including decreases of 500 MT). Exports of 36,900 MT were down 4 percent from the previous week and unchanged from the prior 4-week average. The destinations were primarily to Mexico (13,900 MT), Japan (5,600 MT), China (5,400 MT), South Korea (2,700 MT), and Canada (2,000 MT).

Lab-grown meat could be 25 times worse for the climate than beef

That’s unless researchers find ways to overhaul energy-intensive steps in its production, according to the New Scientist. Analysis finds the carbon footprint of cultivated meat is likely to be higher than beef if current production methods are scaled up because they are still highly energy intensive. This is not the first time the issue has been raised as research was published in 2019 which also raised questions about the environmental impacts of lab-grown meat in an item published in the journal Frontiers in Sustainable Food Systems.

Indonesia reports ASF outbreak on islands near Singapore

Indonesia reported an outbreak of African Swine Fever (ASF) on a farm on the Riau Islands located near Singapore, according to the World Organization for Animal Health (WOAH). The outbreak was detected April 1 and confirmed April 28, killing 35,297 pigs on a farm with a herd of 285,034. Indonesian authorities indicated the source of the outbreak is still not known and was initially discovered the Singapore Food Agency in pigs imported from Indonesia.

Tyson Foods cuts 2023 sales outlook

Tyson Foods reported a loss in its second quarter and cut its full-year forecasts for sales due to declining demand, now expecting 2023 sales to be between $53 billion to $54 billion vs their prior outlook sales would be from $55 billion to $57 billion. Tyson said beef prices fell 5.4% and pork prices were down 10.3% in its second quarter, with CEO Donnie King labeling the current protein market as challenging. Beef sales volumes were down 3%, the firm said. Economic concerns by consumers have resulted in meat packers struggling with margins as they have had to increase prices for their products.

China considering pork purchases to support prices

China’s state planner will hold discussions with other departments about a new round of pork purchases for state reserves to support hog prices, it said on Friday. Prices were below 15 yuan ($2.17) per kilogram last month, data from Shanghai JC Intelligence Co. shows, pressured by excess supply. In Cangzhou, Hebei, one of the main hog-trading locations in northern China, hog prices have slumped 44% since last October.

Global food prices end year-long decline

The U.N. Food and Agriculture Organization global food price index inched up 0.8% in April, ending a 12-month string of declines, but was 19.7% below year-ago. The slight monthly increase was led by a strong increase in sugar prices, along with smaller gains in meats, while cereal grains, dairy and vegoils continued to drop. Compared to year-ago, prices were down 6.1% for meat, 15.1% for dairy, 19.8% for cereal grains and 45.3% for sugar, while vegoils dropped 23.0%.

Have you noticed the White House and USDA Sec. Vilsack has been silent lately about their usual haranguing of meatpackers?

Reason: The U.S beef herd has shrunk to its smallest size since 1962. As a result, meatpackers are paying considerably more for the cows they turn into meat, which cuts into their profits. Analysts told Reuters that “the amount of money meatpackers earn buying cattle and converting them into meat fell below $40 per head of cattle in April, after topping $700 per head in May 2020 … On Wednesday, the margins were about $117 per head.” “Packers are scrambling,” Derrell Peel, an Oklahoma State University agricultural economist, told Reuters. “They will likely try to pass on costs to customers, charging more for ground beef and steaks at a time of high inflation, analysts said, but it is still a question whether higher beef prices will ruin consumers’ appetites.”

Weekly USDA dairy report

CME GROUP CASH MARKETS (5/5) BUTTER: Grade AA closed at $2.4450. The weekly average for Grade AA is $2.4210 (+0.0280). CHEESE: Barrels closed at $1.5300 and 40# blocks at $1.6125. The weekly average for barrels is $1.5570 (+0.0220) and blocks, $1.6625 (-0.0080). NONFAT DRY MILK: Grade A closed at $1.1975. The weekly average for Grade A is $1.1855 (+0.0195). DRY WHEY: Extra grade dry whey closed at $0.3275. The weekly average for dry whey is $0.3305 (-0.0110).

BUTTER HIGHLIGHTS: Plenty of cream is available for butter churning. Some eastern and western plants are running full production schedules to keep available cream volumes balanced. Butter manufacturing is busy overall, and inventories are growing in the East. Retail demand is firm throughout the country, and volumes are channeling steadily into contracted sales. Industry sources note that food service demand is less active in the East, while export demand from Canadian purchasers is more active in the West. There are upticks in salted butter demand in the West. This has prompted some manufacturers to shift production schedules from unsalted to salted butter production. Reported cream multiples are, for the most part, unchanged from previous weeks, as more Midwestern multiples into Class IV processing are in the low/mid 1.20s. Bulk butter overages range from 0 to 10 cents above market, across all regions.

CHEESE HIGHLIGHTS: Cheese inventories range from tight to widely available in all regions, depending on cheese variety and end usage. Milk availability is not as variant. There are ample amounts of milk for Class III processing throughout the regions, as spot milk prices range from $11 to $4 under Class III in the upper Midwest. To compare, last year during week 18, spot milk prices ranged from $3 under to $.50 over Class. As inflation has affected restaurant patronage, some cheesemakers who supply that sector of food service say demand has been slower in recent weeks, namely pizza style cheesemakers. Generally, cheese market tones remain under some bearish pressure.

FLUID MILK: Milk output is mixed from region to region, and in some regions, it is mixed from one area to the next. Melting snowpacks and cresting rivers in parts of the West and Midwest have created concerns in areas for crop planting/harvest, transportation delays, and milk output. Bottling orders holding steady in areas where schools are in session through the month, but in areas where schools let out in the upcoming weeks, school milk orders have begun to ebb. Cheesemakers in the Midwest are busy taking on ample amounts of extra spot milk. Condensed skim is readily accessible. Cream continues to move into the churn at a clip, while ice cream and cream cheese producers are a little more subdued regarding ordering in the past week. F.O.B. cream multiples for All Classes range 1.20-1.35 in the East; 1.21-1.30 in the Midwest; and 1.00-1.30 in the West.

DRY PRODUCTS: Low/medium heat nonfat dry milk (NDM) prices were steady to higher in the Central/East, while they were mixed in the West. Market tones, despite long stores of NDM, are getting at least a slight bullish push this week, as demand is not necessarily quiet, and global SMP markets have experienced some stability in recent weeks. Dry buttermilk powder prices increased slightly in the Central/East, while moving lower throughout all points in the West. Clearly, there is a bit of a variance between the West and Midwest/East regions, as western suppliers say demand is lackluster, while supplies are hearty. Dry whole milk prices were steady after last week’s price adjustment, and market tones are noted as quiet. Dry whey prices were lower in all regions this week, as market tones have fallen under some bearish pressure. Shifts away from higher protein blends and into dry whey have raised concerns for dry whey suppliers/ traders. Whey protein concentrate 34% prices were mixed, but generally ticked lower due to the availability of interchangeable loads. Lactose prices continued to tick lower, as stores have increased, and demand for less-than-specific end uses is quiet. Casein prices continued their shift lower, as stocks have reportedly grown in recent weeks, despite somewhat stable demand notes.

ORGANIC DAIRY MARKET NEWS: This week, trade activity has been light to moderate on organic feed corn, while FOB trading moved 54 cents higher. Organic feed soybeans trade activity and demand is seeing a decline. There are limited forward contracts on organic feed corn and soybeans, but organic feed corn markets established a few forward contracts. The organic soybean market is seeing limited spot trading. Trading on all other organic grains was inactive. On another front, the April 2023 retail survey of selected supermarkets in thirty U.S. cities identified the retail prices of organic whole milk in the half gallon container. The prices ranged from $3.99 in multiple cities to $6.54 in Pittsburgh, PA. The simple average price, $4.79, for April 2023 is unchanged from the previous month.

NATIONAL RETAIL REPORT: There was a three percent increase in total conventional dairy ads this week, and no reportable difference in ad totals for organic dairy items. Conventional ice cream in 48 to 64 ounce containers was the most advertised dairy item this week, followed by conventional Greek yogurt in four to six ounce packages. On the organic aisle, half gallon milk was the most advertised item and six to eight ounce shredded cheese ad totals came in second. Ad totals for conventional butter in one pound packages increased by more than double from last week. The weighted average advertised price of conventional one pound butter was $4.01, down from last week's $4.15.

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