Weekly global protein digest – HPAI outbreak in US, Mexico watching AI in dairy cows, lab-grown ‘meat’

Weekly USDA US beef, pork export sales

Beef: Net sales of 18,700 MT for 2024 were up 48 percent from the previous week and 53 percent from the prior 4-week average. Increases were primarily for South Korea (6,100 MT, including decreases of 400 MT), Japan (5,000 MT, including decreases of 500 MT), Canada (1,700 MT), Taiwan (1,500 MT, including decreases of 100 MT), and Mexico (1,400 MT, including decreases of 200 MT). Exports of 13,300 MT were down 5 percent from the previous week and 12 percent from the prior 4-week average. The destinations were primarily to South Korea (3,800 MT), Japan (3,300 MT), China (2,500 MT), Mexico (1,100 MT), and Taiwan (1,000 MT).

Pork: Net sales of 28,700 MT for 2024 were down 48 percent from the previous week and 24 percent from the prior 4-week average. Increases primarily for Mexico (23,000 MT, including decreases of 500 MT), South Korea (3,000 MT, including decreases of 200 MT), Canada (1,200 MT, including decreases of 600 MT), Costa Rica (1,000 MT), and China (800 MT, including decreases of 100 MT), were offset by reductions for Australia (3,900 MT) and Japan (600 MT). Exports of 34,900 MT were up 2 percent from the previous week and 5 percent from the prior 4-week average. The destinations were primarily to Mexico (11,600 MT), South Korea (5,900 MT), Japan (4,600 MT), China (3,600 MT), and Canada (2,000 MT). 

US beef tariff quota filled as Brazil steps up exports

The US quota for low-tariff beef imports for this year was filled by the end of February, marking the quickest for that to happen since 2020. Brazil and Japan were swift in claiming their shares as suppliers. With the quota filled, imports for the remainder of the year will now be subjected to a 26.4% tariff. High-priced Japanese wagyu is expected to encounter difficulties in the U.S. market, even with a weakened yen. After the quota was filled last year on May 2, exports rapidly declined, suggesting a potential decrease in Japanese beef exports from March this year. 

Largest egg producer in US, Cal-Maine Foods Inc., culls approximately 3.6% of its flock due to an outbreak of avian flu

The move comes at one of its facilities in Texas. This outbreak has resulted in the destruction of nearly 1.6 million laying hens and 337,000 pullets (or young hens), leading to the temporary cessation of production at the affected plant. Cal-Maine said it is trying to secure production at other plants to minimize disruption. The company’s shares experienced a significant decline, dropping by as much as 6.1% initially before rebounding.

This incident marks the most significant avian flu outbreak in the United States since Dec. 7, when 2.6 million birds were culled at an egg farm in Ohio due to the virus. Cal-Maine had also reported an outbreak at another facility in Kansas in December, affecting 684,000 hens.

The current outbreak raises concerns as highly pathogenic flu is also spreading in dairy cattle herds, including in Texas. This situation could potentially impact the broader food chain. The company is collaborating with authorities and industry groups to minimize the risk of future outbreaks. However, it reassures consumers that properly handled and cooked eggs are safe, and no eggs have been recalled because of this outbreak.

Texas Agriculture Commissioner Sid Miller said the state’s agriculture department would continue to monitor and provide guidance to producers and consumers, adding that safety measures and pasteurization ensure that dairy products remain unaffected by bird flu.

Cal-Maine said it is dedicated to robust biosecurity programs. “There is no known risk related to [highly pathogenic avian influenza] associated with eggs that are currently in the market and no eggs have been recalled,” Cal-Maine said. It added it’s working with federal, state, and local government officials and certain industry groups to lessen the risk of future outbreaks.

Despite the challenges posed by the outbreak, Cal-Maine announced strong fiscal third-quarter earnings, with earnings of $3 a share on revenue of $703 million. Analysts expected earnings of $2.45 and revenue of $692 million. The upbeat earnings were attributed to robust consumer demand, which led to record egg sales by volume. Despite the temporary disruption caused by the outbreak, the price of eggs has remained relatively stable, with last week’s cost at $2.47 per dozen, significantly lower than the record high observed in December 2022.

Senior Biden administration officials briefed congressional committees and leadership on bird flu, as the disease struck an egg facility in Texas on Tuesday. Briefing were reps from FDA, CDC, Administration for Strategic Preparedness and Response and USDA. 

Mexico is taking ‘preventative measures’ in wake of U.S. HPAI outbreak in dairy cattle

Mexico’s agriculture ministry on Tuesday said it is taking preventative measures to increase surveillance and reinforce inspections of U.S. livestock imports after highly pathogenic avian influenza (HPAI) was found in dairy cattle. The Mexico-United States Commission for Prevention of Foot-and-Mouth Disease and other Animal Exotic Diseases (CPA) will visit livestock farms to take samples for lab analysis, a statement by Mexico’s agriculture ministry said. Officials from Mexico’s agriculture sanitation authority Senasica will also increase surveillance of cattle entering the country for any sign of respiratory distress.

Beef and pork exports boost corn and soybean industries in US: Study

The Beef and pork exports have a significant impact on the corn and soybean industries in the United States, according to a study conducted by The Juday Group and released by the U.S. Meat Export Federation (USMEF). In 2023, beef and pork exports amounted to $18.1 billion, contributing substantially to the value of corn and soybeans nationally and on a state level in leading corn and soybean-producing states. 

According to the study:

• Nationally, beef and pork exports contributed an estimated total economic impact of 14.6% per bushel to the value of corn and 13.9% per bushel to soybeans in 2023.
• Beef and pork exports accounted for 512.7 million bushels of U.S. corn usage, with a market value of $3.05 billion.
• Beef and pork exports also contributed to the usage of distiller’s dried grains with solubles (DDGS), totaling 3.07 million tonnes and equating to $671.62 million.
• Pork exports accounted for 96.8 million bushels of U.S. soybean usage, valued at $1.36 billion.

These exports had a significant economic impact, contributing to the overall value of corn and soybeans in the market. Additionally, the quality of U.S. corn and soybeans as feed inputs was highlighted as a key differentiator for U.S. red meat in international markets, emphasizing the importance of sustainable production practices and feed processing efficiencies.

A person in Texas was diagnosed with bird flu, the second human case linked to infected dairy cattle in recent weeks. The patient’s only symptom was eye inflammation, and they are being treated oseltamivir, the antiviral drug sold by Roche as Tamiflu. The risk to the general public is considered low, but close contact with infected birds or animals increases the risk of infection.

The virus has spread among dairy herds in Texas, Kansas, Michigan, Idaho, and New Mexico, suggesting potential cow-to-cow transmission.

There are concerns among epidemiologists about the virus evolving to spread more easily among humans, although there is currently no evidence of this. USDA has not identified changes to the virus that would make it more transmissible to humans.

Texas officials are providing guidance to affected dairies on minimizing exposure and monitoring for flu-like symptoms among workers.

USDA Pig Report: Negative compared to expectations

USDA’s Hogs & Pigs Report last Thursday showed nearly all categories above the average pre-report estimates. USDA estimated the March 1 hog herd up 0.6% from year-ago, with the market hog inventory 0.8% bigger while the breeding herd declined 2.1%. The winter pig crop increased 1.9%. While winter farrowings declined 2.6%, litter size jumped 4.6% to a record 11.53 head. 

Focus of the debate in food industry is shifting from plant-based products to lab-grown meat

Several US states (including Alabama, Arizona, Florida and Tennessee) consider legislation to outlaw this protein source. Arguments in favor of the ban cite safety concerns and the impact on traditional ranching, while opponents view such measures as protectionist and advocate for consumer choice.

Lab-grown meat, produced using cells from living animals in bioreactors, has attracted significant investment from startups and traditional producers like Cargill and Tyson. While some argue that it offers environmental benefits and addresses sustainability challenges, others raise questions about its acceptance by consumers, nutritional equivalence, environmental impact, and safety standards.

Groups sue FDA over ractopamine use in farm animals

Several organizations including the Animal Legal Defense Fund, Center for Biological Diversity, Center for Food Safety, and Food Animal Concerns Trust have filed a lawsuit against the U.S. Food and Drug Administration (FDA) demanding a response to their rulemaking petitions regarding the use of ractopamine in farm animals. Ractopamine is a feed additive approved for use in pigs and beef cattle in the U.S. but is banned in many international markets due to concerns about its effects on human health and the environment. The plaintiffs seek a substantive response to their petitions, which urge for the reduction or elimination of ractopamine in farmed animals. They argue that the FDA’s failure to provide final decisions on these petitions violates the Administrative Procedure Act, which requires federal agencies to decide on rulemaking petitions within a reasonable period.

The groups cite evidence linking ractopamine to various health and environmental issues, including heart and respiratory problems in meat consumers and farm workers, increased risk of pathogen contagion, and environmental pollution through seepage and runoff into water sources.

Despite previous legal challenges to the approval of ractopamine, which were largely dismissed on procedural grounds, the organizations are pushing for action from the FDA to address what they see as significant risks associated with the use of this feed additive.

Some major U.S. pork producers, including Hormel Foods, Tyson Fresh Meats, JBS USA, and Smithfield Foods, have voluntarily stopped using ractopamine in pig diets, potentially to expand export opportunities to markets where the additive is banned. 

USDA Secretary Tom Vilsack assured consumers the US milk supply is safe

Also, there is no risk of a milk shortage relative to HPAI in some dairy cattle. All U.S. dairy farms are required to only send milk from healthy animals to processing for human consumption. The secretary said affected dairy farmers have seen their cows fully recover from the virus after about a week. “It emphasizes the importance of biosecurity,” Vilsack said. “Doing what you can to maintain and make sure that your dairy herds are not sharing water supplies with waterfowl, for example, or things of that nature so that we can reduce the risk.”

Weekly USDA dairy report

CME GROUP CASH MARKETS (3/28) BUTTER: Grade AA closed at $2.8425. The weekly average for Grade AA is $2.8438 (+0.0228). CHEESE: Barrels closed at $1.4275 and 40# blocks at $1.4175. The weekly average for barrels is $1.4288 (-0.0492) and blocks $1.4194 (-0.0086). NONFAT DRY MILK: Grade A closed at $1.1200. The weekly average for Grade A is $1.1213 (+0.0008). DRY WHEY: Extra grade dry whey closed at $0.4025. The weekly average for dry whey is $0.4000 (-0.0130). 

BUTTER HIGHLIGHTS: Contacts in the East and West note butter demand for the spring holidays has been robust. On the other hand, demand in the Central region is steady, but some contacts say holiday orders were lighter than last year. Unsalted butter is sought after across the country. Some manufactures in the East say they are storing butter for later in the year, while others suggest they are limiting their churning and selling the butter on the spot market. In West and Central markets, cream is available for production with an expected push as retail customers replenish their pipelines. The NASS Cold Storage report revealed February 2024 butter stocks were up 19 percent from January 2024 and up 1 percent from February 2023. Bulk butter overages range from 3 to 12 cents above market, across all regions. 

CHEESE HIGHLIGHTS: Eastern cheese plant managers relay steady production schedules. Retail cheese demand is noted to be seasonally steady. Overall market tones remain bearish as demand is light, and cheese inventories are ample. Cheese demand in the Midwest is noted to be more active than recent weeks. Milk availability is loose, and spot load prices were exclusively reported below Class III. Block inventories are comfortable. In the West, current cheese market prices are enticing some buyers, but demand remains generally quiet. Contacts share milk production is reaching early spring flush levels. Plant downtime is anticipated to exacerbate already ample milk volumes. Contacts share export demand remains limited. 

FLUID MILK: Farm level milk production is trending steady to higher throughout the country. Contacts share they are beginning to see spring flush volumes in certain areas of the West, as well as in the south-central U.S. In the East, farm level milk outputs are trending steady to higher. Condensed skim availability is loose, which contacts attribute to both school breaks and plant downtime. Contacts share Class II demand is expected to uptick as warmer weather approaches and processors focus on manufacturing ice cream mixes. Cream is more available in the Northeast than in other pockets of the region. In the Midwest, officials identified an illness affecting herds in Texas and Kansas as Highly Pathogenic Avian Influenza (HPAI). Officials share there is no threat to the public, and they do not expect milk shortages as a result of the illness. Processors in the upper Midwest note strong milk production and component levels. Spot milk prices were reported at $6-under to $0.50-under Class III. Several contacts in California shared March milk production was in line with forecasts and stronger than this time last year. Some spot milk prices were reported at $4-under Class III. Milk production in Oregon and Washington is steady to stronger. Elsewhere in the region, milk production is in line with recent week’s production. Cream multiples for all Classes are 1.10- 1.35 in the East, 0.90-1.24 in the Midwest, and 1.05-1.20 in the West. 

DRY PRODUCTS: Low/medium heat nonfat dry milk (NDM) prices moved lower on both ends of the Central and East range. Prices for Western low/medium heat NDM were unchanged. Strong milk production throughout the country has led to active NDM drying schedules. High heat NDM prices were unchanged for the West and moved lower at the bottom end of the Central and East range. Dry buttermilk prices were unchanged in all regions. Contacts share steady drying schedules and limited domestic demand have kept inventories comfortable. Dry whole milk prices moved lower due to weak demand and steady drying activity. Inventories remain tight, and processors are focusing on contractual fulfillment. Aside from an unchanged bottom of the Central dry whey price range, dry whey prices moved lower on all fronts. Steady cheese production schedules have generated high volumes of liquid whey. Contacts share drying schedules are active. The bottom of the lactose price range moved lower. Contacts share spot availability remains tight, but loads are easily found. Lactose drying schedules are steady to stronger. Whey protein concentrate 34% prices were unchanged this week. Contacts share whey protein concentrate 34% demand is quieter than in recent weeks, and inventories remain somewhat slim. Acid casein prices moved lower at both ends of the range, while rennet casein prices slipped at the top of the range. 

INTERNATIONAL DAIRY MARKETS NEWS: 

WESTERN EUROPEAN OVERVIEW: At the beginning of 2024, Western European milk production levels for a number of countries were below levels from the previous year. According to CLAL data made available to USDA, January 2024 EU cows’ milk delivered to dairies is estimated at 11,761,000 MT, down 0.8 percent compared to last year. Among some of the top Western EU milk producers, the January 2024 milk deliveries and percentage changes from January 2023 are Germany, 2,724,000 MT, – 1.8 percent; France, 2,049,000 MT, – 0.3 percent; and Netherlands, 1,176,000 MT, – 3.0 percent. The provisional January 2024 cows’ milk delivered to dairies in the UK was 1,278,100 MT, down 0.5 percent from January 2023. However, some industry contacts suggest current weekly milk production has been heavier than expected, and, in some cases, above that of the year before. In Germany, dairy sources report milk production for week 11 exceeded the previous year’s weekly number for the first time since the start of the year, up 0.5 percent from week 11 in 2023. In France, week 11 milk production was 0.7 percent higher than in 2023. Contacts in the United Kingdom also suggest milk production is above expectations, but wet weather and lower quality feedstocks are preventing milk output from surpassing prior year levels. 

EASTERN EUROPEAN OVERVIEW: Some Eastern European countries continue to see significant increases of milk output to start the year. According to CLAL data made available to USDA, some of the top Eastern EU milk producers, the January 2024 milk deliveries and percentage changes from January 2023 are Poland, 1,122,000 MT, +3.3 percent; Czech Republic, 274,000 MT, +1.2 percent; and Hungary, 143,000 MT, – 0.4 percent. According to CLAL data made available to USDA, the provisional January 2024 cows’ milk production in Belarus was 710,000 MT, up 6.8 percent from January 2023. The growth in milk output is partially supported by the expansion of the milking herds in some countries. Contrary to the reduction of the milking herd in many of their western counterparts, the dairy herds have grown in Poland and the Czech Republic. 

OCEANIA: AUSTRALIA: Dairy Australia recently released the Production Input Monitor for February 2024 earlier this month. This report noted rainfall during the summer months was above seasonal averages in eastern Australia, but drier than usual conditions were present in West Australia, Tasmania, and central Australia. During February, rainfall declined in the country, reducing water storage levels. Through the early parts of the summer, pasture growth was strong, and some farmers have reduced their reliance on purchased feed. This has contributed to reduced demand and lower feed prices in recent months. 

NEW ZEALAND: Beginning May 1, a new free trade agreement will take effect between New Zealand and the European Union. Industry sources indicate this deal could lead to 60 percent of imported butter and 15 percent of imported cheese in Europe coming from New Zealand if quotas are filled. One key aspect of this new agreement is a requirement for New Zealand dairy products entering Europe to avoid using names for products with European origins. Export data for February 2024 was recently released for New Zealand. This data showed a 26 percent increase in value for milk powder, butter, and cheese exported in February 2024 compared to February 2023. Fresh milk and cream export values were 12 percent higher in February 2024. 

SOUTH AMERICA: Seasonal milk output is variant in the region. Reports relay generally healthy, particularly for late summer/early fall, milk output figures in both Brazil and Uruguay. Argentina’s output, though, remains under some notably bearish pressure. Dairy farmers in the Argentine plains continue to face high temperatures and, more recently, intense humidity with strong rains. Reports suggest a potentially concerning situation if Argentine dairy operators continue to struggle with the variant, yet adverse, elements. 

US NATIONAL RETAIL REPORT: The number of conventional dairy ads increased during the week 13 retail ad survey. Total organic dairy ads also grew from last week. The most advertised conventional commodity was cheese during this week’s survey, while the most advertised organic commodity was milk. Organic ice cream ads saw the largest percentage growth during the week 13 survey.