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Jim Wyckoff's weekly global protein digest

1 January 2021, at 12:00am

Jim Wyckoff shares his weekly outlook for the global protein market, including news about bird fly in South Korea, China, Brexit and beef and pork highlights.

Bird flu continues to spread in South Korea

South Korea has confirmed 31 cases of highly pathogenic H5N8 avian flu at local farms as well as 42 cases of bird flu in wild birds since late October. Despite the quick spread, the country’s ag ministry says the domestic market for poultry remains stable and the number of culled birds has only had a limited impact on supply. Since Tuesday, around 9.8 million birds have been culled.

China cuts off imports of poultry from Ireland

China has banned poultry imports from Ireland due to an outbreak of H5N8 bird flu, the customs administration announced late last week. The ban took effect Dec. 25. Much of Europe is dealing with avian flu.

Chinese meat association recommends suppliers should disinfect cold-chain meat products

Chinese meat importers and processors are calling on countries with Covid-19 outbreaks to increase scrutiny of shipments before shipping out meat, noting its detection of the virus on cold chain products “many times.” Gao Guan, a spokesman for the China Meat Association, said, “It should be better to handle this (virus control) at the meats exporting origins, and carry out disinfection at the production plants” as the cost would be lower, and efficiency higher.” The group proposed exporters in Covid-impacted areas should disinfect the outer packaging of products and the inner side of containers before sealing export products. Doing so would ensure food safety and raise consumer confidence about cold-chain products, the meat association said. The World Health Organization continues to say the risk of catching Covid-19 from frozen food is low.

Agricultural details of Brexit agreement

Ambassadors from the 27 members of the European Union approved the EU/U.K. free trade deal Dec. 28. EU governments are expected to formally ratify the agreement. This marks the beginning of the ratification process of the trade deal. The U.K. House of Commons is expected to vote on the agreement on Dec. 30, with the European Parliament to follow in January. The deal will enter into force provisionally on Jan. 1.

Agriculture details of Brexit agreement:

  • Trade of farm goods will benefit from the zero-tariff, zero-quota terms between the two sides. But the lack of an equivalence agreement on phytosanitary rules means shippers will face new hurdles at the border.
  • No tariffs: The lack of levies is “especially important“ for the agriculture and fishing sector, as some meat and dairy products would have faced taxes topping 40% under WTO terms, according to the EU.
  • Extra checks: U.K. agri-food consignments will have to have health certificates and undergo sanitary and phytosanitary controls at member states’ border inspection posts.
  • Both sides will be able to maintain their own sanitary standards going forward.
  • Food and agricultural products entering Northern Ireland from Great Britain will be subject to checks and phytosanitary controls.

U.S. pork sales drop, beef up in latest week

U.S. pork net sales of 7,700 metric tons (MT) reported for 2020 were down 53 percent from the previous week and 73 percent from the prior 4-week average. Increases primarily for Mexico (10,300 MT, including decreases of 900 MT), El Salvador (1,700 MT), China (1,600 MT, including decreases of 4,000 MT), Japan (900 MT, including decreases of 3,000 MT), and Canada (500 MT, including decreases of 400 MT), were offset by reductions primarily for South Korea (4,200 MT), Chile (1,800 MT), and Colombia (700 MT). For 2021, net sales of 46,300 MT were primarily for China (22,700 MT), South Korea (5,800 MT), Japan (4,000 MT), Mexico (3,800 MT), and Colombia (2,100 MT). Exports of 39,400 MT were down 3 percent from the previous week and 1 percent from the prior 4-week average. The destinations were primarily to Mexico (13,400 MT), China (13,300 MT), Japan (4,100 MT), South Korea (2,300 MT), and Canada (1,500 MT).

Beef: U.S. net sales of 14,900 MT reported for 2020 were up noticeably from the previous week and up 82 percent from the prior 4-week average. Increases were primarily for Japan (3,900 MT, including decreases of 1,100 MT), China (3,100 MT, including decreases of 300 MT), South Korea (2,900 MT, including decreases of 200 MT), Mexico (1,500 MT, including decreases of 200 MT), and Canada (900 MT, including decreases of 100 MT). For 2021, net sales of 14,400 MT were primarily for South Korea (9,800 MT), Taiwan (2,300 MT), Japan (700 MT), the Philippines (400 MT), and Canada (300 MT). Exports of 27,600 MT--a market-year high--were up noticeably from the previous week and up 63 percent from the prior 4-week average. The destinations were primarily to Japan (6,900 MT), South Korea (6,200 MT), China (4,400 MT), Mexico (4,300 MT), and Taiwan (1,900 MT).

China to release more pork from its reserves leading up to holiday festivities

China will release more meat from its frozen reserves leading up to its peak Lunar New Year consumption period, Commerce Ministry Spokesman Gao Feng said at a news briefing this week. China sold 20,000 MT of pork from its reserves this week and the same amount the week prior after a hiatus in these sales since September.

Chinese pork prices climb

Between Dec. 21 and Dec. 25, China’s average pork price index across 16 provincial-level regions edged 0.5% higher to 43.16 yuan (roughly $6.60) per kilogram as the country prepares for its Lunar New Year Celebrations. This was down just 1.9% from last year’s elevated level, a 0.6-point narrowing of the discount from the week prior, according to Xinhua. China has actively worked to fuel expansion of its herd after African swine fever, importing pork and other meat to tame food price inflation in the meantime. The country recently indicated it had restored its herd to 90% of pre-pandemic levels, but China’s history of fudging numbers and still-elevated pork prices make more than a few analysts skeptical. In any case, the quality of the herd is likely subpar.

USDA weekly U.S. milk report

FLUID MILK: Class I demand is mixed throughout the country, but expectantly slow regarding school orders. Milk production is moving higher throughout most of the country. Feed quality in the Midwest is helping to bolster higher component values, as well. Notably, there are no shortages of milk for all processing needs. Cheese producers reported spot prices from $3.00 to $8.50 under Class III in the Midwest. Cheesemakers, who have been mostly sated with their own supplies, are beginning to take on more spot milk loads in light of the steeper discounts. Cream availability has grown, also. In the West, some loads were reported at below market. Butter churners say they are full up, as offers are abundant. F.O.B. cream multiples are 1.00-1.15 in the East, 1.00-1.10 in the Midwest, and .95-1.22 in the West.

DRY PRODUCTS: Low/medium heat nonfat dry milk (NDM) prices ticked up on the range in all regions. High heat NDM prices were steady in the Central/East, while pushing higher in the West. Buttermilk powder prices were steady on the shortened trading week. Dry buttermilk market tones are steady to bullish. Dry whole milk prices shifted lower, as manufacturers clear some inventories at the end of the year. Dry whey prices moved higher on the ranges of the Central and East, while Western prices were mixed. Demand is noted as quiet, but the same is being said regarding offers. Whey protein concentrate 34% prices are unchanged during the holiday week. Lactose prices are mixed, but the mostly series moved lower. Acid and rennet casein prices remained steady on the short trading week. ORGANIC

DAIRY MARKET NEWS: The Agricultural Marketing Service (AMS) reports estimated US sales of total organic milk products for October 2020 were 237 million pounds, up 2.8 percent from October 2019, and up 11.1 percent year-to-date. Organic whole milk sales for October 2020, 104 million pounds, were unchanged compared to a year earlier, but up 12.5 percent compared with year-to-date 2019. Reduced fat milk (2%) sales were 83 million pounds, up 11.5 percent from the previous year and up 15.5 percent year-to-date. The December 2020 in-store surveys of selected supermarkets in twenty-nine selected U.S. cities reveal that the retail prices of organic whole milk, in half gallon containers, range $3.14 in Houston, TX, to $5.84 in Pittsburg, PA. The U.S. simple average price, $4.08, increased 3 cents from the November 2020 price.

NATIONAL RETAIL REPORT (DMN): Conventional butter, in onepound packages, was the most advertised dairy item this week, followed by conventional 48 to 64-ounce containers of ice cream and 8-ounce packages of conventional cream cheese. Organic half gallon milk was the most advertised organic dairy item. The national weighted average price for conventional gallon milk is $3.62, compared to $5.99 for organic gallons, resulting in an organic premium of $2.37.