17 November 2023

13 minute read

By: Jim Wyckoff

Europe

South America

North America

Asia

Iowa confirms another HPAI case

Iowa’s department of agriculture confirmed a positive case of highly pathogenic avian influenza (HPAI) in a backyard mixed species flock in Benton County. This is Iowa’s 12^th outbreak of HPAI this fall, covering 10 counties.

Weekly USDA US beef, pork export sales

Beef: US net sales of 8,900 MT for 2023 were down 35 percent from the previous week and 27 percent from the prior 4-week average. Increases were primarily for South Korea (2,900 MT, including decreases of 300 MT), Mexico (1,700 MT, including decreases of 100 MT), China (1,300 MT, including decreases of 100 MT), Japan (800 MT, including decreases of 1,400 MT), and Taiwan (600 MT, including decreases of 100 MT). Net sales of 1,600 MT for 2024 reported for South Korea (1,500 MT), Taiwan (100 MT), and Mexico (100 MT), were offset by reductions for Japan (100 MT). Exports of 13,500 MT were down 7 percent from the previous week and 4 percent from the prior 4-week average. The destinations were primarily to South Korea (3,900 MT), Japan (3,300 MT), China (2,800 MT), Mexico (1,200 MT), and Taiwan (800 MT).

Pork: US net sales of 24,300 MT for 2023 were down 51 percent from the previous week and 30 percent from the prior 4-week average. Increases were primarily for Mexico (8,500 MT, including decreases of 300 MT), Japan (5,400 MT, including decreases of 400 MT), South Korea (2,100 MT, including decreases of 1,200 MT), Colombia (1,700 MT, including decreases of 300 MT), and Honduras (1,400 MT). Net sales of 400 MT for 2024 were reported for South Korea (300 MT) and Colombia (100 MT). Exports of 30,900 MT were down 13 percent from the previous week, but up 5 percent from the prior 4-week average. The destinations were primarily to Mexico (10,500 MT), Japan (4,300 MT), South Korea (3,900 MT), China (3,200 MT), and Colombia (2,400 MT).

Details of USDA ag-related programs extended via House continuing resolution measure

Commodity Programs: The measure would extend commodity support programs through the 2024 crop year for commodities such as wheat, corn, barley, sugarcane, and sugar beets, as well as loan commodities. It would continue to suspend permanent price support authorities for the 2024 crop year or program year, which would otherwise revert most commodity programs to outdated laws from the 1930s and 1940s. The measure would extend the Price Loss Coverage program’s payment amounts through the 2024 crop year. The program pays farmers when crop prices or revenue fall below guaranteed amounts, and covers crops such as corn, wheat, soybeans, and cotton.

Dairy: The measure would extend the Dairy Margin Coverage (DMC) program for dairy producers through Dec. 31, 2024. The Dairy Forward Pricing Program‘s contracts would be extended through Sept. 30, 2027. The program allows milk producers and associations to enter into forward price contracts with milk buyers.

Tyson foods reports sales decline in Q4 2023

Tyson Foods Inc. reported a decline in sales for the fourth quarter and fiscal year 2023, with lower chicken and pork prices and reduced demand for beef. The company's operating income loss in Q4 decreased by 160% to $463 million, while sales for the quarter dropped by 2.9% to $13.35 billion. Tyson's beef segment operating income also declined, with a $323 million loss in Q4, despite a 10.2% increase in average beef prices. The company anticipates an adjusted operating income loss between $400 million and breakeven for fiscal 2024 in the beef segment.

USDA publishes final rule on imports of beef from Paraguay

USDA's Animal and Plant Health Inspection Service (APHIS) published its final rule allowing the import of fresh (chilled or frozen) beef from Paraguay. This decision follows a risk analysis conducted by APHIS at the request of the Paraguayan government. The analysis determined that Paraguay has the capacity to respond effectively to an outbreak of foot-and-mouth disease (FMD), including vaccination of cattle.

APHIS concluded that the overall risk associated with importing fresh beef from Paraguay is low. Additionally, Paraguay possesses the necessary infrastructure and emergency response capabilities to promptly report, contain, and eradicate FMD if an outbreak were to occur. The agency also affirmed that Paraguay can comply with US import restrictions on specific products from affected areas.

This action is set to become final on Dec. 14, allowing for the importation of fresh beef from Paraguay to the United States.

U.S. cattle groups lined up against the proposal. The groups argue that the decision is based on a dated risk analysis and will put US producers at risk. “USDA based their decision to allow beef imports from Paraguay on a deeply flawed risk assessment that uses old data from site visits that were conducted more than nine years ago,” said National Cattlemen’s Beef Association (NCBA) Executive Director of Government Affairs Kent Bacus. “Paraguay has a history of FMD outbreaks, and it is unclear if their inspection system can provide an equivalent level of safety for animal health to prevent a possible FMD outbreak on U.S. soil.” Baucus added, “Paraguay heavily relies on private sector funding for most of its FMD mitigation measures, and USDA did not consider the risk associated with Paraguay’s economic downturn over the last several years.” NCBA contends that the U.S. is using beef market access — long sought by Paraguay — as a bargaining chip in ongoing trade negotiations. “Unfortunately, this is not the first time that a foreign country’s beef access to the United States was a pre-determined outcome and used as a bargaining tool for other U.S. interests,” said Bacus. “While winning friends and allies in South America may be part of the long-term interests of U.S. diplomacy, it should not be done on the backs of U.S. cattle producers or by putting at risk the health and livelihood of the safest and most efficient cattle and beef production system in the world.”

Hong Kong to cull 5,600 pigs on a local hog farm after the discovery of African Swine Fever (ASF)

The authorities plan to clean and disinfect the affected farm, and they will closely monitor other local hog farms to prevent the spread of the disease. The Hong Kong Agriculture, Fisheries and Conservation Department has reassured consumers that there is no need for concern regarding the outbreak, as it will not impact live hog supplies or the functioning of local slaughterhouses. This action is being taken to contain the spread of ASF and safeguard the local pork industry.

U.S. beef exports slump to more than three-year low in September

The U.S. exported 231.5 million lbs. of beef during September, the lowest monthly total since June 2020. Beef shipments dropped 28.0 million lbs. (10.8%) from August and were 47.8 million lbs. (17.1%) below last year. Through the first nine months of the year, the U.S. shipped 2.315 billion lbs. of beef, down 383.7 million lbs. (14.2%) from the same period last year.

U.S. pork exports totaled 512.0 million lbs. in September, down 14.7 million lbs. (2.8%) from August and 4.1 million lbs. (0.8%) less than year-ago. During the first nine months of the year, the U.S. shipped 4.994 billion lbs. of pork, up 331.0 million lbs. (7.1%) from the same period last year.

Weekly USDA dairy report

CME GROUP CASH MARKETS (11/10/2023) BUTTER: Grade AA closed at $2.6000. The weekly average for Grade AA is $2.8010 (-0.3890). CHEESE: Barrels closed at $1.6500 and 40# blocks at $1.6000. The weekly average for barrels is $1.6090 (-0.0490) and blocks, $1.6535 (-0.0365). NONFAT DRY MILK: Grade A closed at $1.2000 The weekly average for Grade A is $1.1850 (-0.0035). DRY WHEY: Extra grade dry whey closed at $0.3975. The weekly average for dry whey is $0.3910 (+0.0185).

BUTTER HIGHLIGHTS: Cream is becoming more available in all regions, and contacts in the Central region report multiples moving below the 1.20 market this week. In the East, butter production is mixed. Some butter makers in the Central region are micro-fixing to prevent inventories from building. Butter production is mixed in the West, as some processors say they have resumed churning, but others say they are waiting until after Thanksgiving to resume butter production. Contacts in the West say butter inventories are satisfactory ahead of the holiday season. Inventories of unsalted butter are more available than salted in the East, despite higher demand for holiday baking in the region. Demand for bulk butter has slowed, particularly from food service customers in the Central region, while retail demand is steady. In the West, retail butter demand is strong to steady. Bulk butter overages range from 3.0 to 10.0 cents over market value.

CHEESE HIGHLIGHTS: In the Northeast, milk is steadily flowing into Class III production facilities. Contacts in the West report somewhat limited spot milk availability. Meanwhile in the Midwest, cheesemakers report an increase in milk offers late last week and over the weekend and relay spot milk prices around $1-over Class. Cheese production is steady in the West and Midwest, though some plant managers in the Midwest report maintenance/downtime this week. Cheese inventories in the Midwest are moving steadily. In the Northeast, contacts report growing cheese inventories. Domestic demand for cheese varies within the region, as contacts report stronger demand from the retail sector than from food service purchasers. Retail and food service sales are steady to moderate in the West, though export demand is said to be moderate to light. For those export markets, contacts in the region cite less than competitive pricing for domestically produced cheese compared to loads manufactured in the European Union/Oceania.

FLUID MILK: Farm level milk production is trending seasonally higher across all regions. Butterfat and protein components in farm milk volumes are showing some improvement. Class I sales of milk are generally steady, although handlers expect a dip in orders as the Thanksgiving holiday/class recess approaches for K-12 and higher education institutions. Production of other holiday-related Class I drinks, such as eggnog, are also drawing upon regional milk supplies. Condensed skim volumes clearing into Class II frozen desserts are generally slowing, but production of holiday-flavored yogurt/pudding items is claiming some of those volumes. Cream volumes clearing into aerated cream or half and half are seasonally steady. Spot cream loads are appearing more frequently across all regions. Various end users are reportedly throttling back on the prices they are willing to pay on a week-to-week basis for spot cream loads. Cream multiples ranges for all Classes are: 1.16-1.30 in the East, 1.15-1.30 in the Midwest, and 1.10-1.36 in the West.

DRY PRODUCTS: Low/medium heat nonfat dry milk prices were mixed, with the range steady in the Central and East but lower in the West. Market participants report NDM is somewhat rangebound as buyers and sellers try to gauge interest for the balance of this year and Q1 of 2023. Production rates are trending seasonally higher as farm milk production rebounds seasonally. High heat prices were also mixed and showing similar rangebound tendencies. Central/East dry buttermilk prices held firm, while West dry buttermilk prices stepped higher at the bottom of the range. Dry buttermilk spot load availability is generally limited. Current dry buttermilk production trends are somewhat mixed as butter producers balance current inventories against upcoming butter demand running through to the yearend holidays. Central and East regions production is light while West dry buttermilk production is trending higher. Prices in all three dry whey ranges continued to show the strength built during the month of October. Dry whey production is steadily inching higher but continues to be impacted by the strength of the WPC markets. Whey protein concentrate 34% prices firmed. Production is mixed as some plant operators opt for pushing liquid whey through to higher whey protein concentrates. Prices for lactose are steady to higher on improving domestic demand. Inventories are less burdensome with some tightness on brand or attribute-specific loads. Prices on the dry whole milk range are steady, supported by holiday-related buying. Current to mid-term production trends are light. Acid and rennet casein prices are unchanged.

INTERNATIONAL DAIRY MARKET NEWS 

WESTERN EUROPEAN OVERVIEW: European milk output has continued its seasonal decline. While milk intakes are at or near the nadir for the milk production year, dairy processors are looking ahead and trying to assure themselves of an adequate milk supply. Dairy contacts from Western Europe suggest that milk volumes have been tight throughout the year, and they do not anticipate volumes to surge into the coming year. The uncertainty of milk supply has prompted a few dairy companies to increase or hold their planned pay price. One large dairy cooperative recently increased their monthly published guaranteed price for November farm milk.

EASTERN EUROPEAN OVERVIEW: According to online resources, August 2023 Ukrainian milk production is 615,000 tons, compared to 710,000 tons in 2022 and 845,000 tons in 2021. The decrease in dairy production mirrors other aspects of Ukrainian agriculture. The rise in the costs of fuel, agrichemicals, and equipment has led to higher production costs. When coupled with lower product prices and loss of market access, there is emerging speculation that many agricultural enterprisers may go bankrupt. According to Ukraine's largest agricultural association, the agricultural sector is unprofitable for the first time in 20 years, and losses to the Ukrainian agricultural sector could amount to more than $3 billion.

OCEANIA OVERVIEW: NEW ZEALAND: At GDT event 343 prices for all commodities other than butter and whole milk powder (WMP) moved higher. Some industry sources suggest the decline in butter prices was unexpected, following the previous event. Some seasonal New Zealand milk price forecasts have, reportedly, moved lower following GDT event 343. The Food and Agricultural Organization (FAO) of the United Nations released the October Dairy Price Index which was up 2.2 percent from September. The organization cited concerns over the impact of El Nino on milk production in Oceania as contributing to this increase. Industry sources in New Zealand report concerns this year's El Nino weather will have a negative impact on milk production.

AUSTRALIA: Milk production data was recently released showing Australian output in September. This data showed total milk production in the country was up 0.5 percent in September compared to a year ago, and production from the start of the season in July through the end of September was up compared to the same time frame in 2022. September milk output was flat to higher in most states, compared to September a year ago, with the only declines reported in Victoria. Recently released export data from Australia for September showed total dairy export volumes this year are down compared to 2022, and total dairy export volumes were down compared to September a year ago. In September total export volumes of SMP and cheese were up compared to September of last year, but year to date export volumes for these commodities remain below 2022 levels.

SOUTH AMERICA OVERVIEW: For multiple years, the La Nina phenomenon related drought wrought havoc through large parts of the continent's key dairy producing countries. With neutral patterns and now El Nino, dairy production has rebounded some, but there have been bumps in the road along the way. According to reports, September milk output in Argentina and Uruguay faltered. Costs of production are, according to numerous reports, a major factor in the limitations put on dairy farmers in key dairy areas, namely Brazil and Uruguay. The aforementioned milk production limits contributed to lighter export volumes out of Argentina. As prices of whole milk powder and skim milk powder rose this report week. Brazil continues to vie for internal production and processing growth, but at this time, Brazilian contacts say they are still contending with limited internal availability and processing capacities. There is some sense in the region that dairy commodity markets may eschew global trends, regardless of their direction, due to localized limits on supply. Right now, regional market tones are slightly uncertain.

NATIONAL RETAIL REPORT: Total conventional dairy ads increased by 89 percent, and organic dairy ads increased by 66 percent. Conventional cheese was the most advertised dairy category. Conventional block cheese, shredded cheese, and sliced cheese in 6–8- ounce packages had weighted average advertised prices of $2.50, $2.63, and $3.16, respectively. Yogurt was the second most advertised dairy commodity. Conventional Greek yogurt in 4–6-ounce containers had a weighted average advertised price of $0.97, down 4 cents from last week. Butter was heavily advertised this week. The current weighted average advertised price for a 1-pound butter package is $4.65, up 67 cents from the prior week. Comparing the current weeks' prices to those of last week, conventional milk in both half gallon and gallon containers went down 22 cents. Conventional milk and organic milk in half gallon containers had weighted average advertised prices of $2.43 and $4.71. This represents an organic premium of $2.28.