Weekly global protein digest: China’s meat imports sluggish, New Zealand to tax sheep, cow burps

 

Jim Wyckoff, Commentary, The Cattle Site

17 June 2022

 

Analyst Jim Wyckoff shares an update on the US futures market, USDA reports and global cattle news

 

US pork export sales improve, beef near steady

 

USDA Thursday morning reported US pork net sales of 27,600 MT for 2022 were up 65 percent from the previous week and 1 percent from the prior 4-week average. Increases were primarily for Mexico (14,700 MT, including decreases of 200 MT), China (3,800 MT, including decreases of 200 MT), Japan (3,700 MT, including decreases of 200 MT), Colombia (2,400 MT), and South Korea (1,700 MT, including decreases of 200 MT). Exports of 27,800 MT were up 14 percent from the previous week, but down 7 percent from the prior 4-week average. The destinations were primarily to Mexico (12,800 MT), China (3,700 MT), Japan (3,500 MT), South Korea (2,700 MT), and Colombia (1,500 MT).

 

US beef net sales of 17,400 MT for 2022 were down 2 percent from the previous week and 12 percent from the prior 4-week average. Increases were primarily for Japan (5,200 MT, including decreases of 600 MT), China (4,600 MT, including decreases of 100 MT), South Korea (3,500 MT, including decreases of 600 MT), Mexico (1,900 MT), and the Netherlands (400 MT). Exports of 19,800 MT were up 14 percent from the previous week and 7 percent from the prior 4-week average. The destinations were primarily to Japan (5,100 MT), South Korea (5,000 MT), China (4,000 MT), Taiwan (1,100 MT), and Canada (1,000 MT).

 

Food prices to keep rising

 

Price increases show few signs of slowing down. Some of the biggest U.S. food suppliers and restaurants, such as Kraft Heinz Co. and some McDonald’s Corp. franchises say they plan to keep on raising prices to offset starkly higher costs, the Wall Street Journal reports. The food industry has been hit by cost increases for labor, packaging, ingredients, energy and transportation. Besides raising consumer prices, the companies have tried selling smaller packages, raising the per-unit price and improving their operations’ productivity.

 

Ag commodity prices “are going to decline, but input prices are going to stay up for a while"

 

“They always do and that's going to a cost-price squeeze,” said Texas A&M Ag Economist and Co-director of the Agricultural and Food Policy Center (AFPC) Dr. Joe Outlaw. “At the end of the day, it’s not what you bring in, it’s the margin you’re left with, and I have tremendous concerns about where we’re headed right now,” said Glenn Thompson of Pennsylvania, the senior Republican on the House Agriculture Committee. “It will only take some softening of prices before producers may be underwater.”

 

Economists suggested some moves they said could help make Agriculture Risk Coverage (ARC) and Price Loss Coverage (PLC) better deal with lower prices, including providing farmers with the higher payment, if any, from either program, rather than making them elect coverage from one. Updating PLC reference prices was also suggested so they can more adequately reflect the impact of higher input prices.

 

Another suggestion: margin coverage like what currently is in place for dairy via the Dairy Margin Coverage (DMC) program. This would account for changes in both commodity prices and input costs. The dairy margin program issues payments when feed costs are too close to milk prices. There is a $100-a-year fee for the base level of coverage. Farmers can buy higher levels of protection. Thompson, in line to chair the committee if Republicans win a House majority in the Nov. 8 elections, asked how a margin protection plan for row crops would compare to the current crop subsidy programs, which are triggered by low market prices. “Well, clearly, the benefit is that it would take into consideration both the cost side and the revenue side,” said Dr. Joe Outlaw of the Agricultural and Food Policy Center at Texas A&M. The dairy margin program needed repeated revisions, so it would be best to test the idea with a pilot project, he said. “On the cost side, fertilizer and clearly fuel and labor — and there’s a whole lot of things that would matter for a certain set of crops that might not matter for another set of crops, so we’d have to be really careful to make sure we did it balanced. But it would be worth looking at, for sure.”

 

Rep. Al Lawson (D-Fla.) asked about suggestions to create a permanent disaster program. Outlaw and Joe Janzen of the University of Illinois said taxpayer-subsidized crop insurance generally was sufficient. “There’s going to be natural disasters,” said Outlaw, and it would be helpful for farmers to “understand what kind of help they might get.”

 

The rice grower situation was also addressed because they are already facing a cost squeeze because of relative flat prices as input costs surged. Outlaw urged lawmakers to consider targeted assistance to rice producers, noting that without some sort of aid soon, the U.S. could face the loss of producers and infrastructure across the rice sector.

 

“Most of my suggestions require additional resources that may be difficult to secure but are necessary,” said Outlaw in written testimony.

 

China’s meat imports remain sluggish ... 

 

New Zealand announces plan to tax sheep and cow burps ... 

 

Atlas buys Foster Farms ... 

 

Weekly USDA dairy report ... 

 

China’s sow herd increases in May ... 

 

China to buy more pork for state reserves ... 

 

Largest pork processor in US is culling its production operations ... 

 

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