Weekly global protein digest: world livestock trade, US egg prices, plus China, China, China

Analyst Jim Wyckoff shares an update on the USDA reports and global protein news
calendar icon 20 January 2023
clock icon 12 minute read

USDA Secretary Tom Vilsack may have to focus on egg prices

Consumer Price Index (CPI) data for December indicated that the overall rate of price increased faced by Americans continued to ease, but things like egg price still rose 11.1% from November and are up 59.9% above year-ago levels. The outbreak of highly pathogenic avian influenza (HPAI) has been a key factor, reducing the U.S. egg laying flock as infections have hit that portion of the industry hard. National Economic Council (NEC) Director Brian Deese told CNBC that there has been “real progress” on inflation but said that there is more work to be done, including on “short-term issues like egg prices.” Some 13.4% of the average monthly layer flock in 2022 was destroyed due to HPAI infections. “Lower-than-usual shell egg inventories near the end of the year, combined with increased demand stemming from the holiday baking season, resulted in several successive weeks of record-high egg prices,’ USDA says. Wholesale egg prices were expected to decline as the industry rebuilds its hen inventory, adds the Economic Research Service. in 2021, fell in the final week of 2022.

China’s December pork imports largest since November 2021

China imported 200,000 MT of pork in December, up 20,000 MT (11.1%) from November and 20.1% greater than last year. For 2022, China imported 1.76 MMT of pork, down 52.6% from the previous year.

China to buy pork for state reserves after holiday

China will organize purchases of pork for state reserves after the Lunar New Year holiday, an ag ministry official said.

China’s sow herd above ‘reasonable’ level

China’s sow herd at the end of 2022 was slightly higher than a reasonable level at nearly 44 million head, an ag ministry official said. “We... hope that the majority of farms will stabilize the number of high-quality reproductive sows and take early measures to deal with the downward price of pigs,” the official said. The official also said China’s hog slaughter increased 18.3% from November and 7.3% from last year in December.

China’s 2022 pork production hits eight-year high

China’s pork production increased 4.6% last year to the highest since 2014, official data showed. Pork output reached 55.41 million MMT in 2022, up from 52.96 MMT in 2021 and the highest since 56.71 MMT eight years ago. Pork production totaled 13.91 MMT during the final quarter of last year. China’s beef output increased 3% to 7.18 MMT in 2022, the data also showed, while poultry production rose 2.6% to 24.43 MMT and lamb and mutton output increased 2% to 5.25 MMT.

China’s meat imports continue to climb

China imported 700,000 MT of meat in December, up 30,000 MT (4.5%) from November and 7.7% greater than last year. China’s preliminary data doesn’t break down meat imports by category, but the steady increase since late summer has been due to higher pork imports. For 2022, China imported 7.4 MMT of meat, down 21.0% from the previous year.

USDA reports on world livestock and poultry trade

USDA says despite the challenges of the current wave of COVID-19 infections in China, the import forecasts of beef and pork in 2023 are revised up and are now forecast higher year-on-year. However, chicken meat imports are forecast marginally lower. The upward revisions for China red meat import forecasts are partially derived from higher estimates for 2022 as fourth quarter shipments were stronger than expected.

For 2023, projected economic recovery as well as the anticipated revival of the hotel, restaurant, and institutional (HRI) sector support expanding consumption and red meat imports. Despite an upward revision for China pork production in 2023 from the October forecast, domestic supplies are virtually unchanged year on year and are unlikely to fully meet rebounding consumption.

Beef imports are expected to grow in 2023, but the pace of shipments will slow as importers have product in cold storage that needs to enter the market before they will invest in additional purchases. China chicken meat imports are revised lower to pre-pandemic levels. Lower pork prices are expected to lower consumer demand for chicken meat. However, chicken meat imports account for only about 4 percent of consumption. Global beef production for 2023 is virtually unchanged from the October forecast at 59.2 million tons.

Global beef carcass prices have eased entering 2023 — except for the United States. Nevertheless, carcass prices among major exporters are still relatively high when compared to pre-pandemic levels, suggesting limited supplies and firm demand from key markets. Global beef exports for 2023 are virtually unchanged from the October forecast at 12.2 million tons.

China imports are raised given the lifting of COVID-19 restrictions which will strengthen HRI demand. Australia and Brazil are expected to gain market share due to lower exportable supplies in the United States, Uruguay, and Argentina. U.S. imports are also raised as lower U.S beef production supports additional imports from Brazil and Australia.

Global pork production for 2023 is revised up 3 percent from the October forecast to 114.0 million tons on higher output in China. Pork demand is expected to strengthen in China due to recently lifted COVID-19 restrictions.

Production forecasts remain largely unchanged for other countries. Global pork exports for 2023 are forecast 2 percent higher from the October forecast to 10.7 million tons as EU, Brazil, and U.S. exports are up on stronger than anticipated demand from key Asia markets. Upward revisions in China and Philippines imports will more than offset a decline in the United States. Philippines imports are forecast higher as reduced import tariffs for pork are extended through 2023. African swine fever continues to stifle Philippines production, boosting demand for imports.

Global chicken meat production for 2023 is virtually unchanged from the October forecast at 102.9 million tons as upward revisions for United Kingdom, Thailand, and Mexico offset a decrease for Brazil. United Kingdom production continues its expansion on strong demand despite labor issues, higher input costs, and recent outbreaks of highly pathogenic avian influenza (HPAI). Lower production costs for feed and genetics will spur Thailand production. Brazil is revised lower on weaker foreign demand, particularly from China.

Global chicken meat exports for 2023 are revised 1 percent lower from the October forecast to 14.0 million tons. Weaker China, EU, South Africa, and UK demand will primarily impact Brazil, the world’s leading exporter. While Brazil shipments are forecast lower compared to the October forecast, volumes are still expected to reach a historical level. Competitive pricing, the absence of HPAI, and diverse product offerings will enable Brazil’s reduction in shipments to China to be largely offset by other markets.

USDA January monthly supply and demand report: Protein

LIVESTOCK, POULTRY, AND DAIRY: Red meat and poultry production for 2022 is lowered from last month as higher broiler and turkey production in the fourth quarter is more than offset by lower beef and pork. Changes reflect November production data and preliminary estimates of slaughter numbers and weights for December. Egg production is lowered slightly based on production and flock data.

For 2023, the beef forecast is raised with higher expected slaughter of steers and heifers, as well as cows and bulls. This increase is slightly offset by lower carcass weights. USDA’s Cattle report, which will be released January 31, will provide an indication of the number of cattle available for placement during 2023 as well as producer intentions for retaining heifers for addition to the breeding herd.

Pork production is raised reflecting pig crop data for the second half of 2022 and producer intentions for sow farrowing in the first half of 2023. Broiler production is reduced for the first quarter based on recent hatchery data. Turkey production is raised for the first quarter based on hatchery data. Egg production is reduced on a slower expected pace of recovery.

Beef export estimates for 2022 are lowered and imports are unchanged on recent trade data. For 2023, beef imports are raised, largely on higher expected imports from Brazil, but the export forecast is unchanged. Pork imports for 2022 are lowered, but exports are unchanged. For 2023, pork imports are lowered, but exports are raised. Broiler exports in 2022 are raised on recent trade data, while 2023 exports are lowered. Turkey exports are lowered for both 2022 and 2023. Price estimates for 2022 are adjusted to reflect December data.

For 2023, cattle prices are raised on expected strength in demand for fed cattle. Hog prices are raised in the middle quarters of 2023 reflecting demand strength. Broiler prices are projected lower as weaker prices in late 2022 are expected to carry over into 2023. Turkey and egg prices for 2023 are raised on recent prices and expectations of continued firm demand and tight supplies.

Milk production for 2022 is lowered from last month with lower expected milk per cow. The 2023 production forecast is lowered with a smaller expected average cow inventory for the year; output per cow is unchanged from last month. USDA’s Cattle report, which will be released January 31, will provide an indication of producer intentions for retaining dairy heifers for addition to the breeding herd. Driven by recent trade data, fat basis imports for 2022 are unchanged with offsetting changes for a number of products, but skim-solids basis imports are raised on expected WASDE-632-5 demand for milk proteins. Strength in milk protein demand is expected to carry into 2023 and the forecast for skim-solids imports is also raised. Fat basis imports for 2023 are unchanged.

Exports on a fat basis for 2022 are raised, largely on butter and cheese with stronger expected butter exports supporting an increased forecast for 2023. Exports on a skim-solids basis are raised in 2022 on stronger cheese and lactose shipments. The 2023 forecast is raised on stronger skim milk powder exports. For 2022, product and Class price estimates are adjusted to reflect reported prices. For 2023, the price forecasts for all components are lower with expectations of weak domestic demand and price pressure in international markets. Forecasts for Class III and Class IV prices are lowered. The 2022 all milk price forecast is lowered to $25.55 per cwt and the 2023 all milk price is lowered to $21.60 per cwt.

USDA weekly dairy report

CME GROUP CASH MARKETS (1/13) BUTTER: Grade AA closed at $2.4250. The weekly average for Grade AA is $2.4270 (+0.0464). CHEESE: Barrels closed at $1.7075 and 40# blocks at $2.0000. The weekly average for barrels is $1.7715 (+0.0452) and blocks, $2.1300 (+0.1287). NONFAT DRY MILK: Grade A closed at $1.2550. The weekly average for Grade A is $1.2795 (-0.0274). DRY WHEY: Extra grade dry whey closed at $0.3325. The weekly average for dry whey is $0.3570 (-0.0518).

BUTTER HIGHLIGHTS: Cream remains abundant throughout the country, and contacts in the West report volumes are being offered at below flat market multiples this week. Meanwhile in the Northeast, some stakeholders say multiples are moving higher. Butter makers are utilizing available cream to run active production schedules. In the East and Central regions, butter makers are focusing their production on upcoming spring holiday demand. Demand for butter is steady to higher in the West, as purchasers are booking contracted loads for Q1 of 2023. In the East, demand remains subdued following the end of year holidays. Retail buyers in the Central region are focusing on buying what is necessary, though food service demand is gradually increasing. Spot butter inventories are limited, in the West, and unsalted butter is tighter than salted. In the East, stakeholders say butter inventories are seasonally light to comfortable. Bulk butter overages range from 3 to 15 cents above the market, across all regions.

CHEESE HIGHLIGHTS: National Milk Day was January 11th and, fittingly, cheesemakers across all regions reported plentiful volumes for production. In the Midwest, contacts report some firmer sub-Class prices than last week’s $7 under, though milk remains available as low as $10 under Class. In the Northeast and West, cheesemakers are using available volumes of milk to run busy production schedules. Some plant managers in these two regions say labor shortages and delayed deliveries of production supplies are preventing them from operating at or near capacity. In the Northeast food service demand is steady and strong demand is present from retail customers who are replenishing their stocks following the recent holidays. Contacts in the West report steady to lighter demand from both retail and food service customers. In the Midwest, some cheesemakers report current bullish market swings are not reflective of recent demand tones, as sales have softened in recent weeks. In the Northeast and West, stakeholders say cheese is available for spot purchasing. In the Midwest, cheese inventories are expected to grow, and some process cheesemakers are concerned about near term inventory growth.

FLUID MILK: Milk output is stable to incrementally higher this week in most areas of the nation. California has experienced notable rainfall this week, but disruptions at the farm and processing level were somewhat minimal at midweek. Bottling orders have steadied after the return-to-school bump of the previous weeks. Cheese and other types of balancing plant contacts say milk is widely available for all uses. Discounted milk spots in the Midwest were reported as low as $10 under Class for the third week in a row. Condensed skim availability is noted as steady to increasing. Near term, contacts expect condensed skim to be generally available. Cream is widely available, despite some reportedly slight increases in multiples week to week. Class II manufacturers are not as busy as some contacts expected them to be. Contacts say there are some upcoming seasonal specialties, particularly for soft serve manufacturers, that could create more interest from the ice cream sector for cream loads. F.O.B. cream multiples are 1.10-1.20 in the East, 1.10-1.24 in the Midwest, and .90- 1.20 in the West.

DRY PRODUCTS: Generally, most dairy powder commodity markets are under some bearish pressure this week. Low/medium heat nonfat dry milk (NDM) prices slid lower in all regions this week. Demand has yet to pick up, while production continues on apace, with plentiful condensed skim availability. Dry buttermilk prices shifted lower in all regions. Buttermilk inventories are overshadowing demand. Dry whole milk prices also decreased, although most drying is based on contractual commitments. Dry whey prices were mixed, as regional price ranges contracted this week. Southeast Asia’s limited purchasing continues to promote a bearish undertone across the whey complex. Whey protein concentrate 34% prices moved lower, as a result of the aforementioned market bear. Lactose prices were steady to lower, as some processors have plentiful stocks. Casein prices were unchanged, as contacts’ expectations of potentially lower prices in Q1 have yet to be realized.

ORGANIC DAIRY MARKET NEWS: The Agricultural Marketing Service (AMS) reported November 2022 estimated fluid product sales. The U.S. sale of total organic milk products was 230 million pounds, down 4.9 percent from November 2021, and down 1.2 percent year-to-date. Organic whole milk sales, 111 million pounds, were down 1.9 percent compared to a year earlier, but up 2.7 percent year-to-date. Reduced fat milk (2%) sales were 76 million pounds, down 6.3 percent from the previous year and down 2.8 percent year-to -date. Organic flavored whole milk sales, 1 million pounds, decreased 72.6 percent from the previous year and decreased 15.4 percent year-to -date.

NATIONAL RETAIL REPORT: Total conventional dairy ads decreased by 17 percent this week, but total organic dairy ads increased by 82 percent this week. Packages of conventional 8-ounce block cheese were the most represented dairy product advertised, with a weighted average advertised price of $2.56, up 7 cents from last week. Conventional butter appeared in 67 percent more ads this week, with a weighted average advertised price of $3.93, down 47 cents from last week.

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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