Weekly global protein digest: USDA poultry regs coming, bearish US Cold Storage Report, ADM lab-meat venture

Analyst Jim Wyckoff shares an update on the US futures market, government reports and global protein news
calendar icon 27 May 2022
clock icon 6 minute read

Poultry regulations coming from USDA

The Office of Management and Budget (OMB) on Wednesday finished reviewing a proposed rule from USDA’s Agricultural Marketing Service (AMS) on Transparency in Poultry Grower Contracting and Tournaments, and a pre-rule on Poultry Growing Tournament Systems: Fairness and Related Concerns. The proposed rule on poultry grower contracting and tournaments is one of three regulations the Biden administration has promised to pursue. The pre-rule on concerns and fairness in poultry growing tournament systems is a search for alternative solutions to determine whether the benefits of a regulation justify the costs. USDA Secretary Tom Vilsack could unveil the results as he appears today before the Senate Agriculture Committee. He could also unveil new CRP rules at today's hearing. If so, they could involve early out without penalty and earlier field work than current rules provide.

US pork export sales see solid rise; beef down a bit

USDA Thursday reported US pork net sales of 36,700 MT for 2022 were up 52 percent from the previous week and 39 percent from the prior 4-week average. Increases primarily for Mexico (15,100 MT, including decreases of 400 MT), Canada (5,700 MT, including decreases of 400 MT), China (5,300 MT, including decreases of 300 MT), Japan (3,600 MT, including decreases of 100 MT), and Colombia (2,700 MT, including decreases of 100 MT), were offset by reductions for El Salvador (100 MT). Total net sales of 100 MT for 2023 were reported for Australia. Exports of 33,000 MT were up 6 percent from the previous week and 4 percent from the prior 4-week average. The destinations were primarily to Mexico (13,700 MT), China (5,200 MT), Japan (4,700 MT), South Korea (2,900 MT), and Canada (1,600 MT).

US beef net sales of 20,000 MT for 2022 were down 14 percent from the previous week, but up 3 percent from the prior 4-week average. Increases were primarily for Japan (8,400 MT, including decreases of 500 MT), South Korea (3,900 MT, including decreases of 700 MT), China (2,500 MT, including decreases of 100 MT), Hong Kong (1,900 MT, including decreases of 100 MT), and Canada (700 MT, including decreases of 100 MT). Exports of 17,500 MT were down 12 percent from the previous week and 10 percent from the prior 4-week average. The destinations were primarily to Japan (5,200 MT), South Korea (4,500 MT), China (2,500 MT), Taiwan (1,500 MT), and Mexico (1,100 MT).

USDA making $200 million available for new meat processing capacity expansion program

The $200 million will “provide much-needed financing to independent meat and poultry processors to start up and expand operations,” USDA said. The funding will include $25 million for workforce training. The program will provide grants of up to $15 million to qualifying recipients that will use the funding to create a revolving loan fund to finance capacity expansion.

USDA raises food inflation forecasts for fourth consecutive month

USDA raised its food price outlook to 6.5% to 7.5% above year-ago, up from April’s forecast for a rise of 5% to 6%. The midpoint of that range would be the biggest rise in food prices since they jumped 7.8% in 1981. USDA now forecasts food away from home (restaurant) prices will rise 6% to 7% this year, up from its April forecast for a 5.5% to 6.5% increase. That would be the biggest rise in restaurant prices since 1981 when they increased 9%. Food at home (grocery store) prices are now forecast to increase 7% to 8%, up from the April outlook for a 5% to 6% rise. That would be the highest grocery store price rise since 1980 when prices jumped 8.1%.

Bearish meat demand implications in USDA Cold Storage Report

USDA's Cold Storage Report out earlier this week showed beef stocks at the end of April were a record for the month at 531.7 million pounds. While that was down 4.1 million lbs. (0.8%) from March, the five-year average was a 15.5-million-lb. decline during the month. Frozen beef inventories increased 82.9 million lbs. (18.5%) from year-ago and stood 74.1 million lbs. (16.2%) above the five-year average. Pork stocks at 530.2 million lbs. rose 44.3 million lbs. (9.1%) from March, far greater than the five-year average of a 16.4-milllion-lb. increase during the month. Pork stocks rose 73.3 million lbs. (16.0%) from last year but were still 52.7 million lbs. (9.0%) under the five-year average.

China’s pork imports down sharply from year-ago in April

China imported 140,000 MT of pork in April, according to official customs data, the same amount as March but down 67.6% from last year. Through the first four months of this year, China’s pork imports plunged 65.1% from the same period last year to 560,000 MT.

US House Ag panel to consider bill to create special investigator at USDA on competition in livestock industry

The measure would establish an Office of the Special Investigator for Competition Matters at USDA. Opponents say it duplicates authorities at USDA and would potentially bring costly regulations on the industry that they say would further increase food prices. The legislation would establish an Office of the Special Investigator for Competition Matters at USDA with subpoena powers and the ability to file civil lawsuits or take administrative actions against violations of the Packers and Stockyards Act of 1921 by meatpacking companies and live poultry dealers.

Rep. Austin Scott (R-Ga.) said Democrats have wrongly blamed the meatpacking industry for higher meat prices while they have pursued policies that he said raised energy costs that have rippled through the economy.

“It’s a horrible piece of legislation,” Scott said, adding that it showed someone without an agricultural background had written it.

By voice vote, members agreed to an amendment by Rep. Jim Costa, D-Calif., that would require the head of the special investigator office to be a senior career executive rather than a political appointee. Members also by voice vote agreed to an amendment by Rep. Jimmy Panetta, D-Calif., that would require the special investigator to coordinate with the USDA’s general counsel office and with the Packers and Stockyards Division of the Agricultural Marketing Service. The special investigator also would have to notify the U.S. attorney general of any legal action the office takes in a federal district court.

US House Ag panel approves bill to expand meat processing capacity

Congress would create a loan and guarantee program to expand competition in the meat processing industry under a bill approved by the House Agriculture Committee on Tuesday. The bill would authorize up to $20 million a year through 2024 for the loan guarantees. Proponents said the bill would be a permanent version of a $500 million USDA initiative announced last summer. The House Ag Committee approved HR 4140 on a voice vote. It would authorize USDA loan guarantees for projects in rural areas that would expand and diversify the meat processing sector, improve employment or expand markets. In most cases, USDA would not be allowed to make or guarantee a loan of more than $50 million. The limit would be $100 million for cooperatives.

ADM in lab-meat venture

ADM has entered into a joint development agreement with Eat Just to lower its costs of production and tailor its cultured meat products for markets once they receive regulatory approval.

USDA weekly US dairy retail report

Total conventional dairy ads increased by 6 percent from last week, while organic ads fell by 54 percent. Conventional ice cream in 48-64 ounce containers remained the most advertised dairy item, despite appearing in 19 percent less ads. The national weighted average advertised price for this product was down $0.10 to $3.22. Yogurt ads were up by 42 percent for conventional and up 236 percent for organic. Conventional cheese advertisements grew by 15 percent this period, while no organic cheese advertisements were present. The number of conventional milk ads slid 7 percent lower. Organic milk ads numbers fell by 64 percent

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