Weekly USDA US beef, pork export sales

Beef: Net sales of 22,500 MT for 2024 were up noticeably from the previous week and up 68 percent from the prior 4-week average. Increases were primarily for South Korea (7,900 MT, including decreases of 400 MT), China (6,200 MT, including decreases of 100 MT), Mexico (2,800 MT, including decreases of 100 MT), Japan (2,600 MT, including decreases of 500 MT), and Taiwan (1,000 MT, including decreases of 100 MT). Exports of 17,700 MT--a marketing-year high--were up 42 percent from the previous week and 28 percent from the prior 4-week average. The destinations were primarily to South Korea (4,100 MT), Japan (4,000 MT), China (2,900 MT), Mexico (1,800 MT), and Taiwan (1,400 MT).

Pork: Net sales of 43,400 MT for 2024 were up 55 percent from the previous week and 61 percent from the prior 4-week average. Increases primarily for Mexico (24,000 MT, including decreases of 200 MT), China (7,900 MT, including decreases of 100 MT), Canada (2,900 MT, including decreases of 600 MT), South Korea (2,000 MT, including decreases of 500 MT), and Japan (1,500 MT, including decreases of 1,200 MT), were offset by reductions for Australia (300 MT). Exports of 25,900 MT were down 7 percent from the previous week and 8 percent from the prior 4-week average. The destinations were primarily to Mexico (10,900 MT), Japan (3,800 MT), China (2,600 MT), South Korea (1,800 MT), and Canada (1,600 MT).

Iowa AG leads 22-state coalition to challenge Massachusetts pork law in appeal

lowa Attorney General Brenna Bird led a coalition of 22 states in filing an amicus brief to support an appeal against a district court ruling that upheld Massachusetts’ Question 3 (Q3) law. Question 3 is a Massachusetts law approved by voters in 2016 that sets minimum size requirements for farm animal containment. Similar to California’s Proposition 12, Q3 prohibits the sale of pork from hogs born to sows housed in pens that don’t comply with Massachusetts’ standards. However, Q3 goes a step further by also banning the transportation of non-compliant pork through Massachusetts. The coalition of states argues several points against Q3: 1) They contend Massachusetts is overstepping its authority by effectively regulating farming practices in other states; 2) The attorneys general claim Q3 poses “crippling costs” for farmers and could lead to “skyrocketing prices” for consumers; 3) The ban on transporting non-compliant pork through Massachusetts is seen as a potential disruption to interstate commerce; 4) Bird argues that “Massachusetts does not get to tell Iowans how to raise their pork.”

China’s sow herd contracts

China’s sow herd stood at 40.36 million head at the end of August, down 4.8% from a year earlier, according to the ag ministry. The sow herd was modestly smaller than the 40.41 million head at the end of July.

Several factors appear to be driving this contraction in China's sow herd:
• Low prices: Swine and pork prices have been low, causing losses for producers and leading to herd liquidation.
• Disease issues: Lingering animal diseases, including African swine fever (ASF), have continued to affect the sector, particularly in North China.
• Market oversupply: The aggressive expansion of China's swine herd in 2020-2021 led to production exceeding market demand.
• Producer exits: More small- and medium-sized producers have exited the market due to financial challenges and difficulty obtaining loans.

The contraction in the sow herd is part of larger shifts in China's pork industry:
• Shift to large-scale production: The share of large-scale swine producers versus small- to mid-sized producers is growing significantly.
• Improved efficiency: With fewer inefficient sows, the number of piglets weaned per sow per year has improved.
• Production forecast: Despite the sow herd decline, China is still expected to produce 695 million head of swine in 2024, though this represents a 3% year-on-year decline.

FDA chief warns of bird flu pandemic risk, updates on food labeling efforts

FDA Commissioner Robert Califf raised concerns about the threat of avian influenza, highlighting the significant number of U.S. dairy cattle infected. He warned that a mutation allowing the virus to infect humans could trigger the next pandemic. While current containment measures are focused on farms, Califf emphasized the need for robust surveillance systems.

Meanwhile, he expressed optimism about finalizing new definitions for “healthy” food labels and progressing with front-of-pack labeling initiatives, which he believes will drive industry change.

USDA pig report bearish

USDA’s latest Hogs & Pigs Report estimated the Sept. 1 U.S. hog herd at 76.480 million head, up 347,000 head (0.5%). The breeding herd declined 135,000 head (2.2%) to 6.044 million head. The market hog inventory increased 483,000 head (0.7%). The summer pig crop declined 265,000 head (0.8%) from last year to 35.030 million head, as a 1.7% drop in sow farrowings more than offset a 0.9% increase in the number of pigs per litter. The report data was mostly neutral compared to pre-report expectations, aside from expected near-term market hog inventories. 

Price-supportive frozen US meat stocks data

USDA’s latest Cold Storage Report showed beef stocks declined contra-seasonally during August, while pork stocks rose less than average. Both imply meat demand more than kept pace with supplies last month. Beef stocks totaled 395.2 million lbs. at the end of August, down 7.4 million lbs. from July, whereas the five-year average was a 5.1-million-lb. increase for the month. Pork stocks totaled 453.6 million lbs., up 175,000 lbs.

China taking action to support its struggling cattle farmers due to an oversupply of beef and dairy products

The situation has led to falling prices. The Ministry of Agriculture (MARA) and other agencies have introduced measures to stabilize the beef and dairy industries. These include expanding production, reducing feed costs, offering credit to key farms, and investing in dairy processing. They are also encouraging local governments to issue consumer coupons to boost milk demand. Despite the challenges, no new subsidies or reserve purchases were announced, avoiding incentives for overproduction. The market reacted positively, with dairy company stocks surging. Beijing's focus remains on food security rather than industry profits, and further intervention could occur if farmers continue culling herds.

FDA advances research to ensure dairy safety amid H5N1 outbreak in dairy cattle

The FDA is updating its efforts to safeguard dairy products during the Highly Pathogenic Avian Influenza A (H5N1) outbreak in dairy cattle. Collaborating with academic and federal partners, FDA is conducting research on inactivation methods for H5N1 in fluid milk and cheese production. Key initiatives include thermal and viral inactivation studies, virus viability testing, and exploring genome-edited chickens to reduce avian virus susceptibility. FDA reassured the public that the commercial milk supply remains safe, with ongoing sampling and testing. Further updates are expected in the coming months.

Canada: Livestock and Products Annual

USDA reports the Canadian cattle herd is forecast to sustain the long-term trend of contraction to begin 2025 but will begin to stabilize by year’s end on improved feed pricing and availability. A smaller calf crop will be produced based on 2024 breeding stock but heifer retention should improve if feed conditions continue to remain stable or improve. Higher heifer retention coupled with a smaller calf crop will see lowered beef production and slaughter in 2025. As a percent of production, Canadian beef exports are forecast to remain strong while imports are forecast to soften on weakened consumer demand. The Canadian swine herd is also forecast to remain relatively stable in 2025. Contraction in Eastern Canada will be offset by growth in Western Canada. Slaughter is forecast at one percent above 2024 with increased utilization and small expansion in Western Canada. Imports will lag 2024 as domestic consumption continues to struggle.

Canada: Poultry and Products Annual

USDA says Canadian chicken meat production is forecast to show a modest 2 percent growth in 2025, based on a stable demand, and considering increased imports, especially under the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) tariff rate quota (TRQ). The overall 2025 import TRQ volumes will approach 121,000 metric tons, with the United States expected to maintain more than 80 percent share of total Canadian chicken meat imports. In 2024, as the only country taking advantage of the CPTPP poultry TRQ, Chile emerged as a significant supplier, and is expected to gain additional market share in 2025.

Weekly USDA dairy report

CME GROUP CASH MARKETS (9/27) BUTTER: Grade AA closed at $2.7325. The weekly average for Grade AA is $2.8445 (0.1760). CHEESE: Barrels closed at $2.2975 and 40# blocks at $2.1100. The weekly average for barrels is $2.4520 (-0.1235) and blocks $2.1640 (-0.1030). NONFAT DRY MILK: Grade A closed at $1.3575. The weekly average for Grade A is $1.3725 (-0.0120). DRY WHEY: Extra grade dry whey closed at $0.5975. The weekly average for dry whey is $0.5935 (+0.0025).

BUTTER HIGHLIGHTS: Retail and food service butter demand is steady in the East. For the Central region, butter demand is stronger. In the West region, salted butter demand is steady, while bulk butter demand is lighter. Cream volumes are widely available throughout most of the country. Some plant downtime in the Midwest is noted as contributing to more abundant cream availability. Butter production varies from steady to strong across the nation. Churns are building stocks ahead of Q4 maintenance projects and holiday period demands yet to come. Bulk butter overages range from minus 5 cents to 10 cents above market, across all regions.

CHEESE HIGHLIGHTS: Cheese production remains mixed throughout the country. In the East, limited milk availability has tempered cheese production schedules. Contacts in the region say current cheese price points have dissuaded some customers, and demand is quiet. Cheesemakers in the Central region continue to note extended plant downtime. While milk availability remains tight, plant downtime has freed up some milk volumes to cheesemakers. Spot milk prices ranged from $1.50 below Class to $3.50 above Class. Cheese demand has slowed in the region. In the West, cheese production ranges from steady to stronger. Mozzarella demand is reportedly strong. Overall, spot cheese inventories, namely for barrel cheeses, remain tight.

FLUID MILK HIGHLIGHTS: Farms across the United States are seeing varied volumes of milk production. The NASS August Milk Production report was released last week and listed total milk production in the 24 major states for August was up 0.1 percent from August 2023, but down slightly from the revised July 2024 milk production total. East region milk producers are seeing steady to lighter milk production. The Central region is seeing generally stronger output volumes overall. Steady to stronger fluid numbers are also being reported across most of the West, but Utah processors are reporting tight milk volumes. All regions are experiencing strong Class I demands for seasonal bottling needs. Milk demand from Class II and III is mixed in the East with stronger demand in the Northeast and lighter demand in the Mid-Atlantic region. Demands for all Classes are varied in the West. Processing downtime in the Central region is a factor as some areas have noticed increases in the availability of spot milk in recent weeks. Spot milk prices in the region have been reported from $1.50 under Class III to $3.50 over Class III. Cream is readily available across the country. The All-Class cream multiples range contracted over most of the country this week. Some processors have reported turning away spot cream offers as their storage is full. Condensed skim milk demand and availability are steady in the West region. More spot loads of condensed skim are becoming available in the East. Cream multiples for all Classes are 1.28-1.44 in the East; 1.20-1.34 in the Midwest; and 1.10-1.27 in the West.

DRY PRODUCTS HIGHLIGHTS: Low/medium heat nonfat dry milk (NDM) prices were steady in the West, while steady to higher in the Central and East regions. NDM markets are firm, as recently produced stocks are moving quickly. Dry buttermilk prices were higher in the West, while steady to higher in the Central and East. Domestic demand has perked up in recent weeks. Dry whole milk prices were lower to steady. Dry whey prices were mixed. The Central range dipped slightly on the low end, while East prices moved higher, and West prices were static. Supplies are generally viewed as tight. Whey protein concentrate 34% prices maintained bullish momentum this week at all facets. Lactose prices were steady, as supplies vary based on mesh size. Acid and rennet casein prices were unchanged during the final trading week of the quarter.

INTERNATIONAL DAIRY MARKET NEWS: WESTERN EUROPE: Milk production in parts of West Europe continues to trail off seasonally. However, weekly milk collections vary depending on location. According to industry resources, recent weekly milk collections have been below those of the previous year within Germany but above the previous year in France. That said, industry contacts suggest the milk supply is tight. Milk volumes and milk component levels that are not meeting expectations and the spread of bluetongue disease have created uncertainties about milk supplies over the next few months. Recent news reports state that new cases of bluetongue have been identified in several cattle herds in Sweden and Austria, greatly expanding the range of the disease from the original pockets in north-central Europe.

EASTERN EUROPE: While milk output is seasonally declining across East Europe, and milk collections in July 2024 were largely below those of July 2023, Poland milk collections are reported to have increased 2.7 percent in August compared to August 2023. According to CLAL data made available to USDA, among some of the top East EU milk producers, the year-to-date milk deliveries and percentage changes from January -July 2023 are Poland, 8,064,000 MT, +4.4 percent; Czech Republic, 1,964,000 MT, +2.9 percent; and Hungary, 1,031,000 MT, +4.3 percent.

OCEANIA: AUSTRALIA: The August 2024 Production Inputs Monitor from Dairy Australia stated August was the warmest on record in the country and parts of the Queensland coast had the most rain on record. Western Australia had above average rainfall in August, providing some relief after dry conditions were prevalent in recent months. Drier than normal conditions persisted in Western Australia during August. This continues to affect demand for supplementary feed, keeping prices for hay elevated. Prices for cull cows increased in August, due to strong demand from the U.S. NEW ZEALAND: Milk production data from New Zealand for August 2024 showed total production was up on a tonnage basis compared to a year earlier. During August 2024, the total kg of milk solids increased from the previous year. From the start of the production season in June 2024 through August 2024 milk production on a tonnage basis is up compared to the same time period a year ago, and milk solid production is up from last year. SOUTH AMERICA: Milk output in South America, at or nearing peak season, is under strain according to both contacts and reports. Winter warmth and dryness in the major continental dairy areas have affected output. Contacts are hopeful that spring rain will add come soon, but forecasts are mostly dry and relatively warm near-term. Currently in a neutral weather pattern, chances are that La Nina will return this spring. La Nina patterns historically manifest in dry/ drought conditions in Argentina and parts of Brazil. Wildfires are and have been an ongoing condition in the Mato Grasso, among elsewhere in Brazil.

NATIONAL RETAIL REPORT: The number of conventional and organic dairy ads in the US increased during the week 39 retail ad survey. The most advertised conventional dairy commodity was cheese, as the total number of ads increased from last week. Total ads for organic milk, the most advertised organic dairy product this week, increased from the week 38 survey. While total conventional cheese ads increased this week, the number of organic cheese ads declined. The number of ads for conventional half gallon milk declined in week 39. Meanwhile, organic half gallon milk ad totals increased from the prior week. In the week 39 retail ad survey, the number of conventional and organic ice cream ads increased.