Pinoyagribusiness

Friday, December 30, 2011

Brazil Company to Expand ME Chicken Exports

BRAZIL - BrazArtis Assessoria em Comercio Exterior, an import-export company based in Brazil, has announced a campaign to expand chicken exports to the Middle East.


The endeavour is aligned with the growing Brazilian poultry exportation to the region, a statement from the company said.

The total Brazilian poultry production reached 13 million tons in 2011, almost 6.9 per cent increase from 2010, according to TradeArabia. At the same time, the exportation is expected to total 3.937 million tons, over 30 per cent of the total production, according to Brazilian Poultry Union (UBABEF).

"The Middle East region is a focal exportation and trading hub for Brazil. We are confident in the prospects for the upcoming year and will continue to support our business partners by supplying top quality halal and non-halal chicken products at competitive prices," a spokesperson for BrazArtis Assessoria em Comercio Exterior said.

Brazil's exports span across the whole GCC region including Saudi Arabia, UAE, Qatar, Jordan, Bahrain, Kuwait, Lebanon, Syria and Oman.

As part of strong tie between Brazil and the Middle East, select exports are certified by the Central Islamic Brazilian Halal Food (Cibal Halal), the Brazilian Islamic Centre for Halal Food Stuff Association.

Friday, December 30, 2011

US Lamb T-Bones Crossed Mexican Border

US & MEXICO - Earlier this month, a truck-load of portion-controlled lamb T-bones worth approximately US$28,000 were successfully exported from Wisconsin, through the Laredo–Nuevo Laredo port of entry into Mexico.

 


The Office of Agricultural Affairs (OAA) in Mexico City and the Agricultural Trade Office (ATO) in Monterrey expedited the listing of a US lamb meat producer in the National Service of Health, Food Safety, and Food Quality (SENASICA) list of eligible suppliers. This effort resulted in the successful export of a truck-load of portion controlled lamb T-bones from Wisconsin, through the Laredo–Nuevo Laredo port of entry into Mexico.

On 1 December 2011, while monitoring border trade, ATO Monterrey became aware of a truck-load of portion controlled lamb T-bones from a US company being detained at the border. ATO Monterrey worked quickly to resolve the detention. This included contacting the US exporter and the Mexican importer to ascertain adequate background information on the detained load.

ATO Monterrey realised that the US facility should have been listed in the FSIS export library and in SENASICA's system as a slaughter/processing plant eligible to export ovine meat to Mexico and not only bovine meat. ATO Monterrey relayed these findings to OAA, who immediately contacted the US exporter, the Food Safety and Inspection Service (FSIS) in Washington, D.C., and SENASICA's head office in Mexico City. With OAA's follow up, the listing process was expedited and the U.S. exporter was listed in less than five days.

On 8 December, the truckload of portion controlled lamb T-bones with an approximate value of US$28,000 was received by the Mexican importer and distributor. According to the importer and distributor, the food-service market in Mexico for portioned controlled meat cuts is growing.

Friday, December 30, 2011

Iowa Plant Processes Hens’ Feet for China

IOWA, US - The Cedar River Processing plant plans to export chicken feet from spent hens to China.


Over the past 40 years, livestock processing facilities in Iowa have had to diversify to stay in business. Many have grown larger, but a few have been able to survive by discovering a niche market, according to Harvest Public Media.

One plant in northeast Iowa found its niche by providing a delicacy to China.

With immigration raids forcing some plants to shutter completely and others struggling to implement stringent safety regulations while still making a profit, the most successful plants are thinking outside the box, according to John Lawrence, a livestock specialist at Iowa State University Extension.

He said: "Part of it is looking for an opportunity to grow a market just in volume alone, others may be looking for a way to add value to a product that has little value here at home. Chicken feet is one that we often hear is a delicacy in places like the orient, but may not make it your menu here in the States."

Cedar River Processing in Charles City, Iowa, is preparing to process spent hens and ship their feet to China.

To remain competitive, livestock processing companies like Cedar River have to look to outside markets, Mr Lawrence said.

He explained: "In Iowa, we're blessed with a lot of natural resources in the form of soil and land and pastures and farms raising this livestock, yet we only have a population of around three million people. It would greatly limit our economic activity if we didn't trade outside our state borders. You can take that extension one step further and say outside our national borders, such as the exports to China."

The company was looking to expand and it found fertile ground in Iowa, said Gary Shank, the general manager of the plant.

Mr Shank said: "We started looking about a year and a half ago to find a processor who would process hens with the head and feet on – nobody was willing to do that. So we started looking to see where the most spent hens were in the country and we started looking at Iowa."

Cedar River Processing is affiliated with the Charles Austin wholesale meat company of Chicago, which has been doing business overseas for years, reports Harvest Public Media. Mr Lawrence said partnerships are one of the keys to success.

He continued: "Iowa, being the largest egg producing state in the nation, has a number of spent hens that historically have had a low value and at times were even a cost to dispose of." This new plant is "doing it in such a way that they can utilize that product".

Finding enough animals to keep the facility running is imperative to the plant's success. In Iowa, that should not be a problem.

Mr Shank said: "It'll be slow at first as we get people trained. We hope to get to 60,000 birds per day in one shift. A year or so down the road we would like to put on a night shift so that we're killing 100,000 birds a day."

All that processing means a number of jobs for Charles City. Mr Shank said the company will initially employ around 60 workers and hopes to more than double that number over the next three years.

Harvest Public Media adds that Cedar River Poultry was expected to begin processing hens on 27 December.

Friday, December 30, 2011

Ukraine Extends Licensing of Poultry Meat Imports

UKRAINE - The Cabinet of Ministers has extended the licensing of imports of fresh, chilled or frozen poultry meat in 2012, which was introduced in April 2011. A respective government resolution of 26 December was made public on 29 December.
 

According to the document, the licensing of imports of lard without lean parts, pork fat and poultry fat has also been extended for next year.

According to the State Statistics Service, in January-October 2011, imports of fresh, chilled or frozen poultry meat totaled 48,340 tons for US$48.36 million, while exports reached 45,710 tons worth USD 72.35 million. Imports of lard without lean parts, pork fat and poultry fat amounted to 23,220 tons for US$19.97 million, while exports - 30 tons worth US$60,000.

According to Blackseagrain, in 2010, imports of fresh, chilled or frozen poultry meat amounted to 154,620 tons worth US$176.63 million, whereas exports - 32,460 tons worth US$41.37 million. Imports of lard without lean parts, pork fat and poultry fat totaled 42,030 tons worth US$36.43 million, and exports - 20 tons worth US$40,000.

Friday, December 30, 2011

CME: Calf Prices Increased Contra-Seasonally

US - Why did calf prices increase contra-seasonally? That is the question posed and answered by Tim Petry of North Dakota State University in an article published by the Livestock Marketing Information Centre this week, write Steve Meyer and Len Steiner.
 

In the article, Mr Petry discusses North Dakota steer calf prices but, as you can see in the charts below, the same question could be posed regarding Southern Plains calf prices this year.

5-6 weight (500-600 pound) steer calves hit their normal spring peak at around $160/cwt. in April before retreating to the $140 level in June and July.

Mr Petry points out that those prices “would [typically] have continued to decline into November as calf marketings increased in the Northern Plains and across the US.”

But they in fact rallied back to year-long highs in early December. The same was true in spades of lighter calves which are now trading near $185/cwt.

Mr Petry cites several factors that have driven this unusual fall rally in calf prices:

Corn futures prices have fallen sharply. The demand for calves is derived from the demand for fed cattle roughly a year hence and the cost of converting a calf into a fed steer. The feeder cattle market serves as an intermediary in that calf demand derivation. When corn futures were near $8,00 per bushel at the end of August, those calf-to-feeder-to-fed steer conversion costs loomed huge and kept calf prices low relative to heavierweight cattle markets. But the plunge in corn futures to near $6/ bushel during September promised much lower-than-expected feed costs, adding value to calves.

2012 live cattle and feeder cattle futures increased. Both of these added potential value to the end-product of calf grazing or backgrounding. Live cattle futures rose from $122 in September to near $130 by early November. Feeder cattle went from $134 to $150 from September to November.

Calf supplies are tight. The July 1 Cattle report pegged the 2011 calf crop at one per cent smaller than one year earlier and had feeder cattle supplies outside of feedlots (which includes calves) at 2.5 per cent lower than last year. Summer placements saw many more light cattle moving into feedyards, further tightening the number of calves available this fall.

A feed cost advantage caused some calves to move from the Northern Plains into Canada for feeding. That is an unusual circumstance but it certainly contributed to stronger calf prices, especially in the north.

As for the outlook, Mr Petry points out that calf prices are already at record levels, implying that more strength may be difficult to come by. Calf supplies usually increase into the spring months but they may be historically tight this year given the reduction of the beef cow herd and continuing drought conditions in the Southeast and Southern Plains.

We would add that the recent rally in corn prices will put some pressure on calf prices — though the concurrent rally in live and feeder cattle futures will blunt that impact.

Will we see $200 light-weight calves? It is a real possibility as we go into the normal spring highs. Much will depend on grazing conditions and corn prices. The size of the spring fed cattle rally (or, perhaps summer rally given 2012’s goofy placement patterns) will be another key in pushing the derived demand for calves higher.

If you are not familiar with the Livestock Marketing Information Centre, we would urge you to check it out at www.lmic.info. The centre is a cooperative effort among 28 state extension services, six federal agencies and, currently, eleven associate institutions. CME Group is one of these associate members. Opened in 1955, the Centre has been a leader in data collection and analysis for over 55 years. The website provides access to a number of analyses and to members’ homepages where more statespecific materials can be found.

Friday, December 30, 2011

New Import Regulations Introduced

INDONESIA - The government has introduced new regulations on the import of live animals and animal products.




Two new implementing regulations under Law 18/2009 have been issued by the Government of Indonesia for the import of carcasses, meat, edible offals and processed products of animal origin.

Those are Minister of Agriculture No: 50/PERMENTAN /OT.140/9/2011 and Minister of Trade No. 24/M-DAG/PER/9/2011, both dated 7 September 2011.

Campaign Against Antibiotics Stepped Up

ANALYSIS - The campaign against the non-therapeutic use of antibiotics in livestock production in the US was stepped up this week with renewed appeals from Congresswoman Louise Slaughter for the practice to be ended.


 

The campaign will undoubtedly be met with cries of anguish from some sections of the US farming community, who regularly use antibiotics to enhance feed conversion and boost weight gain.
 
However, there is a growing clamour of concern over the potential for a growth in antibiotic resistance in humans being passed on by eating meat from animals raised this way.
 
There is particular concern over the salmonella strain, Salmonella typhimurium, which is resistant to multiple antibiotics important for human health including beta-lactams, animoglycosides, and cephalosporins.
 
Congresswoman Slaughter has introduced a bill to phase out the practice using antibiotics.
 
"The routine, regular dosing of antibiotics to healthy animals is absolutely contributing to the rise in antibiotic-resistant bacteria," she said.
 
Meanwhile, the US beef and pig meat industries are reporting an increase in exports.
 
During October beef exports were up 10.7 per cent compared to a year ago and beef imports were down 4.4 per cent and pork exports were up 42 per cent compared to a year ago and pork imports were down 11 per cent.

October has seen net exports of pork, beef, broiler and turkey meat hit the highest month ever at 1.225 billion pounds and also represented the largest per cent of total US monthly production at 15.5 per cent.
 
The October results for pork exports were the second highest month ever at 438 million pounds year on year. Exports to China/Hong Kong were up 277 per cent, Japan up 38 per cent, South Korea up 65 per cent and Canada up 27 per cent.
 
This is reflected in global trade as Europe is also reporting strong exports of both beef and pork, with the EU now becoming a net exporter of beef following years of being a net importer.
 
The dynamics seen in the US pork exports with the majority going to Asia points to where the new demand is.

 Chris Harris, Editor-in-Chief

US Poultry Outlook – December 2011

Sharply lower broiler chick placements and slower growth in bird weights have lowered the fourth-quarter 2011 broiler meat production estimate by 25 million pounds to nine billion pounds and resulted in decreased estimates for the first and second quarters of 2012, according to the latest Livestock, Dairy, and Poultry Outlook from the USDA's Economic Research Service (ERS).
 

Summary
 
Pork/Hogs: October pork exports were more than 42 per cent greater than a year ago, propelled primarily by very strong Asian demand, i.e. Japan, China and South Korea. Strong export growth is expected to continue through the fourth quarter, before tailing off in 2012. Total US pork exports are expected to be 5.1 billion pounds, both this year, and in 2012.
 
Beef/Cattle: Disproportionally large cow slaughter has kept average dressed weights lower during most of 2011 than if steers had constituted half or more of beef slaughter, as they typically do. Packer margins and high feed and feeder cattle prices are exerting downward pressure on fed cattle prices.
 
Beef/Cattle Trade: US beef exports are expected to increase by 21 per cent in 2011. Although US domestic beef supplies will be five per cent lower in 2012, exports should remain strong and stay about even with levels exported this year. As tight global beef supplies will continue into next year, US beef imports are expected to increase only moderately into 2012.
 
Poultry: Sharply lower broiler chick placements and slower growth in bird weights have lowered the fourth-quarter 2011 broiler meat production estimate by 25 million pounds to 9.0 billion pounds and resulted in decreased estimates for the first and second quarters of 2012. The lower production is expected to gradually lower stocks. Turkey production was basically unchanged in October as slightly higher bird numbers were offset by lower bird weights. Cold storage holdings for whole turkeys continued below those of a year earlier, putting upward pressure on prices.
 
Poultry Trade: Broiler and turkey shipments rose in October. Broiler exports totalled 689.7 million pounds, a 2.5 per cent increase from a year ago. Turkey exports totalled 59.2 million pounds, an increase of 20.7- per cent from October 2010.
 
Sheep/Lamb: The sheep industry, buoyed by strong prices and an industry policy to grow the inventory, may be poised to see its first inventory increase since 2006. Consistently high Choice Slaughter lamb prices at San Angelo coupled with reductions in production and live trade may be signaling increased retention.
 
Dairy: An improved feed price outlook is balanced by lower milk prices in 2012. Production in 2012 is forecast to rise slightly based on higher milk output per cow. Exports are likely to decline next year compared with 2011, contributing further to the lower milk price outlook.
 
Poultry

Broiler Meat Production in October Falls by Three Per Cent
 
Broiler meat production, which has fallen in three of the last four months, totalled 3.1 billion pounds in October, down three per cent from the previous year. Total broiler meat production during the first 10 months of 2011 was 31.4 billion pounds, 2.6 per cent higher than in the same period a year earlier. In October, the number of birds slaughtered fell to 700 million, down 3.2 per cent from the previous year, as integrators have been reducing the number of chicks placed for grow-out over the last several months. The lower number of birds slaughtered was partially offset by an increase in the average live weight of birds at slaughter, up fractionally to 5.94 pounds. Average broiler weights at slaughter are expected to continue higher in November and December but the rate of growth is expected to be much slower than it was over the first three quarters of 2011. With these expected changes, the estimate for fourth-quarter 2011 broiler meat production was decreased 25 million pounds to 8.98 billion pounds, 5.4 per cent below the previous year. This lowers the annual forecast for broiler meat production in 2011 to 37.3 billion pounds, an increase of one per cent from 2010. The broiler meat production projections for first- and second-quarter 2012 were each reduced by 100 three quarters of 2012. The revised forecasts in the first two quarters are down 5.3 and 4.2 per cent on a year-over-year basis, and the revised total broiler meat production for 2012 is now 36.5 billion pounds, down 2.1 per cent from 2011.
 
With relatively high corn prices forecast for the remainder of 2011 and into 2012, and with relatively weak prices for most breast meat products, broiler integrators are expected to scale back production through much of 2012. The number of chicks being placed for grow-out continues to be well below that of the previous year. Over the last five weeks, (5 November to 3 December), chick placements have averaged 154 million, down 6.6 per cent from the same period in 2010. Chick placements are expected to remain below year-earlier levels through the first half of 2012 and gradually pull even with and then exceed year-earlier levels in the second half of 2012.
 
Cold storage holdings of broiler products at the end of third-quarter 2011 were revised downward slightly to 639 million pounds, down six per cent from the previous year. With strong declines in broiler meat production expected in fourth-quarter 2011 and the first two quarters of 2012, ending stocks are expected to remain below year-earlier level through third-quarter 2012.
 
Broiler stocks at the end of October totalled 667 million pounds. This is an increase of around 28 million pounds from September but still about five per cent lower than the previous year. Stocks for most broiler products continue to be well below their year-earlier levels, with the exception of breast meat products. With lower year-over-year production expected and resulting lower stocks levels, broiler product prices are expected to get some upward pressure.
 
Prices for almost all broiler products were higher in November than the previous year. The lone exception was whole broilers, which are still considerably lower (down six per cent). Strong exports continue to place upward pressure on leg quarter prices (up 31 per cent) and other leg meat products such as boneless/skinless thighs (up 27 per cent) and whole thighs (up 44 per cent).
 
The forecast lower boiler production levels through the first half of 2012 are expected to gradually place upward price pressure on almost all broiler products. Whole bird prices are expected to be at $0.77-$0.78 per pound in fourth-quarter 2011, down three per cent from the previous year. However, prices in 2012 are expected to increase and be above year-earlier levels throughout the year.
 
October Turkey Production Even with Year Earlier Output
 
Turkey meat production in October totaled 525 million pounds, almost identical to production a year earlier. Although the total meat production was unchanged, the number of turkeys slaughtered rose by 0.5 per cent to 23.3 million. The increase in the number of birds slaughtered was offset by a slight decline in the average weight at slaughter from a year earlier to 28.3 pounds.
 
The fractional growth in turkey meat production in October contrasts to the strong expansion in production over the first half of 2011, when production was up 5.5 per cent compared with the same period in 2010. Over the first 10 months of 2011, turkey meat production has been 3.4 per cent higher. The second half of 2011 is expected to be a sharp contrast as production was only 0.5 per cent higher in the third quarter, and the fourth-quarter production forecast is 1.5 billion, only 0.3 per cent above the previous year.
 
With little growth in production and turkeys being taken out of storage in preparation for the Thanksgiving holiday, stocks of all turkey products fell by over 100 million pounds between the end of September and the end of October. Total turkey stocks were 407 million pounds at the end of October, down almost one per cent (0.7) from the previous year. This is a significant change from stocks at the end of September that were 7.6 per cent higher than the previous year.
 
Declines in stocks of whole birds accounted for 69 per cent of the decline in total turkey product stocks from September to October. Whole turkey stock levels always decline at this point in the year but stocks of whole birds fell by almost 71 million pounds, dropping the level for whole birds to 209 million pounds, almost 14 per cent lower than the previous year. Whole bird stocks at the end of September were only 2.6 per cent lower than the previous year. The decline in stocks of turkey products was much less (down 32 million pounds), and stocks of turkey products at the end of October were 199 million pounds, 18 per cent higher than in October 2010.
 
With the steep October decline, the estimate of ending stocks for 2011 was lowered to 205 million pounds, down 10 million pounds from the previous estimate but still seven per cent higher than a year earlier. The stock estimate for first-quarter 2012 was lowered by 15 million pounds to 325 million. However, the estimates for the second and third quarters were both increased to 500 million pounds. Anticipating a strong draw-down in stocks during in the holiday period in 2012, ending stocks for 2012 were reduced by 10 million pounds to 200 million.
 
During the first 11 months of 2011, the national price for whole hens has been higher than the previous year on a year-over-year basis. Prices for November were $1.14 per pound, up seven per cent from a year earlier and 38 per cent higher than the 2009 price. Prices are expected to decline seasonally in December but remain well above a year earlier, and the average for fourth-quarter 2011 is forecast at $1.10-$1.11 per pound, an increase of over six per cent from fourth-quarter 2010. Lower stocks of whole birds during most of 2011 have placed upward pressure on prices. Even with higher production, low stock levels at the start of 2012 are expected to pressure prices higher and whole hen turkey prices are expected to average $0.90-$0.94 per pound in first-quarter 2012, an increase of approximately two per cent from the previous year. However, production gains in 2012 are expected to gradually reduce prices, with hen prices in the second and third-quarters lower than the previous year.
 
Over the first 10 months of 2011, turkey poults placed for grow-out totalled 232 million, an increase of 0.9 per cent from the same period last year. The small increase would indicate that turkey production in the first half of 2012 is likely to be close to or slightly higher than in 2011. Given the strong wholesale prices for whole birds and most turkey products in the second half of 2011, turkey producers would normally be more heavily expanding production, but forecasts for continued high feed prices and a weak domestic economy through 2012 are likely contributing to producer resistance to expand.
 
Table Egg Production Continues Higher
 
The table egg laying flock in October was estimated at 282 million hens, 0.9 per cent above the previous year. Changes in the table egg flock numbers on a year-over-year basis have generally been lower in 2011. The flock size was higher in only three of the first 10 months, although table egg production has been higher throughout the year. The table egg flock is expected to remain higher than the previous year through the remainder of 2011 but only slightly. At the beginning of November, the estimate of the number of birds in the table egg flock was down but the decrease was less than one per cent. With expected higher feed prices and continuing economic uncertainties, egg producers are not expected to have much of an incentive to expand production in 2012.
 
Even with table egg production higher throughout the first 10 months of 2011, total production has been 5.5 billion dozen, only marginally higher (0.8 per cent) than the same period in 2010. In October, production was 562 million dozen, an increase of 1.9 per cent from the previous year. Fourth-quarter 2011 table egg production is estimated at 1.69 billion dozen, or about 1.1 per cent higher than the previous year. Even with the higher forecast, table egg prices are expected to remain strong through the end of the year. The fourth-quarter 2011 wholesale price for one dozen Grade A eggs in the New York market is forecast to average $1.27 to $1.28, up about 10 cents per dozen from third-quarter 2011 and about four per cent higher than a year earlier.
 
Hatching egg production has been lower than the previous year through the first 10 months of 2011. Over the first half of 2011, hatching egg production was down by relatively small amounts per month but since July, the declines have been much sharper, averaging around three per cent per month. Although there have been some declines in the number of egg-type eggs produced, the majority of the decline has come from a lower number of broiler-type eggs. The decrease in the production of broiler-type eggs is expected to continue through the first half of 2012 or until broiler integrators begin to expand production.
 
Total Egg Exports Fall in October
 
Monthly exports of eggs and egg products had been mostly higher in 2011 on a year-over-year basis through September but fell in October to the equivalent of 22.4 million dozen eggs, 13.3 per cent below a year earlier. The exports were down to Canada, Hong Kong and Germany and a number of smaller markets but were partially offset by higher shipments to Japan and Mexico. Exports of both shell eggs and egg products declined in October, with shipments of shell eggs at 11.5 million (down 12 per cent) and shipments of egg products at the equivalent of 10.9 million dozen (down 12 per cent). The October shipments were likely impacted by strengthening US prices. Domestic shell egg prices have continued to strengthen in November and into December. Over the first 10 months of 2011, total egg shipments were 232 million dozen, up 6.7 per cent from the same period in 2010.

Poultry Trade
 
Broiler shipments remain strong in October
 
October broiler shipments were up from a year ago. Broiler meat shipped in October 2011 totalled 689.7 million pounds, a 2.5 per cent increase from the same period in 2010, although last October shipments in 2010 were at the highest monthly volume recorded that year. There are several notable differences in trade flows between 2011 and 2010. Shipments to Russia in October 2010 totalled 211 million pounds, which accounted for 31.5 per cent of the US broiler exports for that month. In October 2011, Russia imported only 64.4 million pounds, a 69.5 per cent reduction. One reason for this big change is that imports were high in 2010 as the US re-entered the Russia’s market following resolution of trade restrictions.
 
Another market that made a considerable difference in 2011 October broiler shipments was Hong Kong. Broiler shipments to Hong Kong totalled 55.7 million pounds in October 2011, a 45 per cent increase from last October. In October 2010, shipments to Angola totalled only 14.4 million pounds. However, 12 months later, these shipments rose to 60.5 million pounds, a 320 per cent increase from a year ago. Secondary markets also imported more broiler meat in October 2011, offsetting lower shipments to Russia.
 
Turkey shipments rose in October
 
Turkey shipments totalled 59.2 million pounds in October, up 20.7 per cent from a year ago. Shipments to the largest US market, Mexico, totalled 31.4 million pounds, accounting for 53 per cent of total turkey exports. Exports to China, the second largest US turkey market, rose considerably in October, from 3.2 million pounds in October 2010 to 5.2 million pounds in October 2011. Sizable turkey shipments also went to the Philippines, for an increase of over one million pounds from a year earlier. Through October, turkey exports are up 23 per cent in 2011.

Thursday, December 22, 2011

This Week's Poultry News Round-Up

Looking ahead to 2012 and beyond, will the Chinese economy power the global meat industry? Meat consumption in China is expected to increase and the meat processing industry will develop further – albeit at a slower place than over the past decade.
Following recent criticism of Canada's international poultry trade policy, the Executive Director of Chicken Farmers of Canada, stressed: "We stand alone in providing clean, consistent and transparent access to our market, while other countries hide behind phoney non-tariff barriers."
 Action has already begun at European level to punish Member States that have made little or no effort to conform to the new hen welfare law, which comes into force across the EU on 1 January.



 

Is the Chinese bubble about to burst? For some time now, the growth rate in China has been the most rapid of the BRIC countries (Brazil, Russia, India and China). China's growth has also been dragging the rest of the world economies along behind it, shining as a beacon to the faltering economies in Europe and the US, wrote ThePoultrySite Editor in Chief, Chris Harris.

Tthere has also been growth in wealth and in the middle class in China and the population has been moving to an urban way of life. These developments have also brought about changes in eating habits: meat and protein diets are replacing cereals and crops. Meat consumption in China reached around 59kg per head in 2010, and the processed and pre-cooked product markets are growing.

The International Monetary Fund forecasts that China's economy that spiked at over 14 per cent growth about four years ago, has now settled to a growth rate of about nine per cent. And the meat industry there is virtually keeping pace with it. An IBIS World report, published this month, forecasts that the industry will develop at a rate of 8.3 per cent a year, reaching $82.38 billion in 2016.

Revenue from the meat processing industry in China this year is expected to have risen by 13 per cent year on year to $55.24 billion. On average, since 2006 the industry has seen a 22.5 per cent rise in value.

Prospects for the future depend on how and whether the Chinese government can keep a cap on inflation. The latest figures show it running at 4.2 per cent in November, down from the July figure of 6.5 per cent.

If inflation is kept in check and the economy continues to expand, meat consumption is expected to increase and the meat processing industry will develop further – albeit at a slower place than over the past decade.

Turning our attention from Asia to North America, Canada pledged to support free and open trade at the World Trade Organization (WTO) ministerial meeting. However, there was no mention of Canada's protected poultry or dairy industries, wrote Charlotte Johnston, editor of ThePoultrySite.

At the meeting in Geneva, Ed Fast, Minister of International Trade and Minister for the Asia-Pacific Gateway said that free and open trade is the best way to create jobs and economic growth for people around the world.

But while over the last five years, Canada has pursued an ambitious and active free trade plan to open doors for Canadian businesses around the world and is on the way to becoming the first tariff-free zone for manufacturing imports in the G-20, back home, the situation is quite different: the poultry and dairy industries are protected by supply management systems. Canada is coming under criticism from abroad over this apparent anomaly in its trade policy.

However, Mike Dungate, Executive Director of Chicken Farmers of Canada, responded to the article, saying Canada's trade policy is misunderstood. While Canada has a great deal of export interests in agriculture (world's 4th largest exporter), Canada is also the 6th largest importer of agricultural products.

He stressed that Canada is not a closed market for dairy and poultry: it is, in fact, the 16th largest importer of chicken in the world and the 3rd most valuable market for US chicken exports.

"We stand alone in providing clean, consistent and transparent access to our market, while other countries hide behind phoney non-tariff barriers. While many countries have implemented protectionist measures in the past two years, Canada has maintained the access it has always provided to its chicken market – access that is almost twice our WTO commitment," said Mr Dungate.

European Union Commissioner John Dalli says that action has already begun at European level to punish Member States who have made little or no effort to conform to new hen welfare laws in the EU. The ban on conventional battery cages for egg production in the region comes into force on 1 January 2012. Those producers who have invested in alternative housing systems for their hens fear that their local markets will be flooded with 'illegal' eggs produced in other countries where little investment and effort have been made to comply with the directive.

Turning to bird flu news, the discovery of one dead wild bird in Hong Kong last week with H5N1 highly pathogenic avian influenza led to the immediate closure of live bird markets when infected carcasses were discovered at a market and authorities across China are now on alert. There have also been four new outbreaks of H5N1 in poultry in Bangladesh and two more human victims have been reported in Egypt, one of whom has died.

 Jackie Linden, Senior Editor

Key Points on Bird Flu Control Outlined at WVPA Meeting

Avian influenza viruses have been and remain important public and animal health due to economic and human fatalities that cause, according to Dr Alejandro Garcia of Laboratorios Avilab in Mexico. Chris Wright, senior editor, reports.

 



Dr Alejandro Garcia
 
Dr Alejandro Garcia of Laboratorios Avilab in Mexico shared his experience of avian influenza with delegates during the XVII Congress of the World Veterinary Poultry Association (WVPA), held in Cancun, Mexico in August 2011.

The Avian Influenza virus (AIV) is an animal disease; veterinarians and vet scientists play an important role in the management in preventing humans coming into contact with the disease.

We must resolve the problem of the carriers (wild and migrating birds) because they mobilise the virus, putting at risk commercial animals, said Dr Garcia. The control and prevention of them are essential in avoiding a possible human pandemic.
 
Control and Eradication of Avian Influenza
 
The best action for a country, zone or compartment in the control and prevention of AIV is the total eradication by slaughter of diseased animals' destruction of carcasses and all the elements related to infected birds (bedding, feed etc.), said Dr Garcia.

Washing and disinfection of the barns and contaminated material according to the standards specified by the OIE in its Code of Animal Health Land, is another of the practices to be implemented.

In some countries, the characteristics of the poultry industry and the circumstances under which there have been outbreaks and epidemics caused by viruses of high and low pathogenicity AI, force the use of vaccination.

Vaccination is a useful tool for the control of avian influenza (AI) outbreaks, continued Dr Garcia, but its use is forbidden in most countries worldwide because of its interference with AI screening tests and its negative impact on poultry trade.

Currently licensed AI vaccines increase host resistance to the disease but have a limited impact on the virus transmission, he said. To control or eradicate the disease, a carefully conceived vaccination strategy must be accompanied by strict biosecurity measure.

Recently, the World Organisation for Animal Health (OIE) and the United Nation's Food and Agricultural Organization (FAO) have recommended the use of vaccination against H5N1 HPAI virus in developing countries where mass culling of poultry is no longer acceptable for ethical, cultural, ecological and economic reasons.
 
Conclusions About Avian Influenza

Based on the author's extensive knowledge of avian influenza and its effects on the poultry industry, Dr Garcia offered 21 important observations about the disease.

1. AIVs have been and remain important for public and animal health due to the economic and human fatalities they cause.

2. AIV, by its genetic nature, has the ability to mutate very quickly, producing viruses that are mostly new to the immunological memory of the human or animal populations. This feature of the virus also generated highly pathogenic virus from one that had originally been of low pathogenicity.

3. AI is a very dangerous virus and is capable of changing its life cycle – either by glycosylation, deletion, insertion or substitution events, some amino acids in different proteins in their genomes etc. – when it is under pressure from the animal's immune system. It does so in order to survive.

4. The role of migratory birds is still inconclusive in the spread and occurrence of the disease in affected countries.

5. The presence of the disease in poultry populations is determined primarily by discrete biosecurity measures and management of products and subproducts, as poultry flocks are free of the disease are found in areas where the virus is endemic.

6. AIV subtype H5 or H7 has killed humans of all ages from young children to adults.

7. It is known that H5N1 has the capacity to be transmitted occasionally from human to human. Such transmission, however, has only occurred in exceptional instances, usually involving very close contact with a patient during the acute phase of illness. To date, H5N1 has not spread beyond one generation of close contacts.

8. The risk of transmission and adaptation of AIVs from animals to humans and the increase in mortality is low, e.g. Asian H5N1, H1N1 North America. This is related to the cell receptors that have each species in their epithelial cells of the virus target organs.

9. Vaccination has helped to mitigate the disease in the poultry population and reduced the number of deaths in humans.

10. There are areas in developing countries, which lack electricity and have AI vaccines of poor efficiacy, where it is difficult to control the disease in poultry populations.

11. Different degrees of protection and immune responses have been observed in some avian species, e.g. chickens versus waterfowl or gulls and ducks, that have been vaccinated with inactivated emulsified AI vaccine.

12. Maternal antibodies influence the response to the vaccine. In some cases, the antibodies completely block the response, leaving the poultry susceptible to disease.

13. The smuggling of live or dead animals as well as products and by-products of poultry, may be the most important source of spread of a disease-free country – more than the presence of migratory birds.

14. Live bird markets represent an ideal environment for the transmission, survival and crossing of the virus.

15. When statutory notifiable avian disease is confirmed, action to confine and stamp out disease includes movement controls on susceptible species in the area around the premises, enhanced biosecurity, culling of susceptible poultry on the farm, and cleansing and disinfection of the premises.

16. The elimination of highly pathogenic virus either H5 or H7 subtype in poultry flocks can be achieved as long as affected and exposed birds are slaughtered and movement of poultry products and by-products is strictly controlled. Epidemiological surveillance and biosecurity are also required.

17. The measures taken by developing and underdeveloped countries to free poultry flocks from the disease are dramatically different and depend on the level of financial support (compensation), the first countries, affected birds slaughtered, the suspect and the adjacent, coupled with strict biosecurity measures and movement of poultry products and by-products, which have to comply with health campaigns, immunisation and different levels of biosecurity measures.

18. Timely notification of AI virus and transparency of governments and people involved in the poultry-animal interface help to control and possibly eradicate the disease.

19. AIVs emerge and re-emerge: for example, in the Netherlands, subtype H7N1 from 2010 re-emerged in March 2011.

20. The press and other media (TV, radio, internet, etc) and some academics have been responsible for magnifying and sometimes exaggerating the pathogenicity of the virus. This has affected the productive sectors (animals) and the economy of a country, said Dr Garcia. He cited the example of Mexico in 2009, when H1N1 swine flu, which is then considered a pandemic. A year later, the title 'pandemic' was dropped but not before the sector was severely damaged. It is known that there were pressures to classify this virus as pandemic in 2009.

21. The presentation of pandemic or epizootic of any subtype of the AIV is difficult, concluded Dr Garcia. Protection involves not only humoral immunity but also cellular and innate forms and there is also cross-protection between some subtypes, e.g. between H9N2 and H5N1, as they share some peptide homology along the HA protein.

Wednesday, January 04, 2012
CME: Meat Demand Maintains Annual Increase
US - 2011 ended with a piece of good news as the National Restaurant Association’s Restaurant Performance Index (RPI) for November hit a five-month high, indicating a continuing rebound for the foodservice sector. It also showed that US beef, pork and chicken demand are maintaining year-on-year increase as of October, write Steve Meyer and Len Steiner.


These indexes, which we compute monthly, appear in the chart below. All observations except the last represent calendar year changes from the year before. The final observation in each series represents the 12 month period from November 2010 to October 2011, the last month for which data are available.

The indexes represent overall domestic consumer level demand for each protein since they are based on per capita consumption and real retail prices. “What about foodservice product?” is a usual, and legitimate, question when we mention that retail prices are used in the index calculations.

The retail price is used for two reasons. First, there are no data for the price of foodservice protein components that, to our knowledge, are publicly available.

Second, the retail price should be a shadow value of product sold through foodservice in that any increase in foodservice volume will reduce the volume available through retail outlets and thus push retail prices higher.

If readers see the latter as rationalisation, we will have to plead guilty. The fact remains that no other data are available.

The trailing-twelve-month indexes for bot pork and chicken declined when October data were added as the October year-onyear index changes for both species were negative.

Chicken demand in October was six per cent lower than in October 2010 while pork demand was down 4.6 per cent, Oct ‘10 to Oct ‘11. The October 2011 beef demand index was 0.9 per cent higher than one year earlier.

Friday, January 06, 2012
CME: 2011 Year of Adjustments for Meat Sector
US - 2011 will go down in the history books as a year of continued adjustments for the US beef, pork and broiler sectors, write Steve Meyer and Len Steiner.


All three were still adjusting to higher feed costs in an effort to restore long -run profitability. The differing biological characteristics of the three species, of course, were impacting those adjustment processes.

The vaunted flexibility that the chicken’s short reproductive cycle provides to the broiler industry proved to be both a blessing (can react quickly) and a curse (quick reactions leave you open to unexpected reversals).

The curse of a long reproductive cycle prevented the beef industry from going for the “head fake” of lower corn prices in 2009 and early 2010. Mother Nature, of course, made sure that the beef industry did not launch itself into a premature expansion by severely impacting grazing conditions in some major beef cattle regions. Meanwhile, the pork industry appears, for the moment, to have made a painful reduction and, perhaps, learned its lesson from quick output reversals of the past that led to severe price pressure.

The charts at right show annual data for slaughter and production for the three major species. The overall trends and patterns are, we think, very telling. Among the lessons are:

Each species has relied upon heavier slaughter weights to increase output. The practice began with hogs in the ‘60s when some major improvements in leanness and, consequently, feed efficiency, began. Cattle followed in the ‘70s and chickens joined the trend to higher weights in the ‘80s.

This trend is not over — at least for cattle and hogs. Feedlots, hog buildings and packing plants are all denominated in HEAD. Products are still sold by the POUND. Increasing POUNDS PER HEAD is an obvious and easy way to increase revenue per unit of physical plant.

The only limit will be the size of cuts but new processing techniques will, we believe, solve most problems that arise there. The chicken sector may be different because its weight increases are driven by, in essence, a separate boneless/skinless breast business — which has NOT performed well of late.

There was, for many, many years, no such thing as a chicken cycle. The primary reason, of course, is that chicken demand increased steadily and, due to that reproductive cycle, companies could respond quickly. The growth pattern has obviously been slowing, though, and some cyclical characteristics are appearing in the annual data. Will they continue?

There was, for many, many years, a pronounced hog cycle that has virtually disappeared. Take away the 2007-2008 output surge driven by circorvirus vaccines and hog slaughter and pork production have steadily risen since output finally settled after the 1998- 1999 bloodletting in the production sector.

Even the cattle cycle (historically eight to 10 years in length) has waned. Has it fallen by the wayside, too? Or has it ust lengthened and flattened? The slaughter and production dip of 2004-2005 was caused primarily by fewer Canadian cattle in the wake of their first BSE case in 2003. Take away that reduction and cattle slaughter and beef prod have declined in a very steady manner since 1996 and 2002, respectively.

Friday, January 06, 2012
OFC - Reduce Waste to Meet Food Demand
GLOBAL - In the next 25 to 50 years, food production will have to double to keep up with growing populations and growing consumption, writes editor in chief, Chris Harris.

However, if global wastage of food is cut, then production will not have to grow at such a rate to meet demand, the UK government's chief scientific advisor, Prof Sir Bob Watson told the Oxford Farming Conference.

Sir Bob told the conference that recent reports such as the Foresight Report and the study by Sir John Beddington's Commission on Sustainable Agriculture, showed that the current food production system is unsustainable.

He said there is huge wastage in present food production and there are growing concerns over the excessive use of nitrogen and fertilisers to produce food.

"We are not feeding the world sustainably and at the same time one billion people go to bed each day hungry, and that is not acceptable," said Sir Bob.

He told the conference that there will be a growing demand for better food in developing and progressing countries such as China, but food production is also in competition with land, water and energy usage. He added that climate change is also having an effect on food production, with drought and floods in some regions.

He said that taking no action is not an option and there is a need for a change in attitude right along the food production chain.

"Food demand will double in the next 50 years, but you don't need to double production if you get rid of wastage," he said.

However, he said the challenge is to do it with less labour and to increase yields with less land.

He said that food production only needed to be increased by between 30 and 60 per cent if waste is cut.

He said that in developing countries a vast amount of the food that is produced is wasted either on the farm or in transport to market, whereas in developed countries such as the UK and the US, the majority of the wastage comes in the home, in retail and in food service.

While reducing waste will be one part of meeting the challenge of feeding a growing population, research and development also need to be addressed.

He said that it will be necessary to access new technology in seeds, agricultural chemicals, irrigation and to address weather changes, as climate change will also be critical in meeting food demands.

"Science will be critical in meeting then challenge of climate change, biodiversity loss and increased pollution," he said.

Prof Watson said to meet these global challenges it is necessary to build food stocks, trust and cooperation and to champion and non-integrated approach to food security and support sustainable intensification as well as press for trade liberalisation in the common agricultural policy and common fisheries policy.

He said that agriculture has to be at the centre of sustainability and diversification.

He added that it is necessary to manage the ecosystems better and improve food production with a smaller footprint.

To achieve innovation along the whole food production chain, science and technology will be critical.


Chris Harris, Editor-in-Chief

Food Processing Sector in Russia

The Russian economy has entered a “post-crisis” period of moderate growth. Domestic demand, which collapsed in 2009, has been gaining strength, according to the USDA Foreign Agricultural Service.

 


The food processing sector in Russia continues its recovery, supported by rising disposable income, increasing real wages, declining unemployment and growing food expenditure. During the January to August 2011 period production of the following increased versus 2010: meat and offal, sausages, meat products, dry milk and cream, butter, canned milk, pasta, sugar, confectionery, frozen fruits and vegetables, and mineral water. However most food processing companies believe that the food industry has not fully recovered yet from the crisis. The majority of raw materials and ingredients used by Russian food processors/manufacturers are imported. This leaves ample opportunities for U.S. exports to Russia. WTO accession, which is anticipated for 2012, should ease import restrictions for some products, such as dairy products and certain meats, from the United States.

SECTION I. MARKET SUMMARY
 
Although the food processing sector in Russia weathered the last global economic recession well, it is still being heavily influenced – both positively and negatively -- by the past two global economic crises. In 1998, Russia suffered a financial crisis which turned out to be a starting point for growth in the local food processing industry after a long period of stagnation. Locally manufactured products were affordable for local consumers compared to imported products and manufacturers improved quality to meet consumers’ needs and seize a larger market share. Prior to the latest economic downturn, the food industry had been growing by about 10% per annum. Foodmag.ru estimates that from 2005 to 2008, investments into food processing enterprises totaled more than 135 billion rubles which demonstrates the attractiveness of this sector for both Russian and foreign investors. Producers of meat and meat products, dairy, edible oil, beverages, and confectionary items made the most capital asset improvements. Two-thirds of total investments were used for modernizing equipment to increase labor productivity, create efficiency, and lower overhead. New equipment helped strengthen Russian food processors making their products more competitive.
 
Increased expenditures on food products in 2011 indicate that the Russian food industry has joined other markets -- such as the car, consumer electronics, apparel and shoes, tourism and construction materials markets -- demonstrating active growth and recovery from the 2008 crisis. However, according to Ernst & Young, as of 2011 most food processing companies do not think that the food industry has fully recovered from the 2008-2009 slow down. Internal factors including drought, fires and crop failure plagued 2010. In addition, the food sector had to cope with the consolidation of certain beverage and dairy products manufacturers and the Retail Trade Act 1 which put limits on pay-offs to retail buyers and mangers among other rules that have impacted food processing companies directly or indirectly. The global economic recession also led the majority of companies to reconsider their development strategies and direct their efforts toward, first, optimizing their business processes in order to raise their operational efficiency. Secondly, companies are diversifying in order to reduce vulnerability on any one sector.
 
The most crisis-resistant sectors were businesses that specialized in manufacturing primary goods and that received government support, namely: farming, grain processing, manufacturing flour, bread production, milk production and dietary foods. To the extent that food processors relied on these sectors they have benefited. However, the majority of raw materials and ingredients used by food processors are imported.
 
The food processing industry is made up of foreign and domestic manufacturers with the latter dominating number wise. The biggest Russian food manufacturers are: Baltika Brewery Company, Unimilk, “United Confectionaries”, “Cherkizovo”, “Efko” Groups of Companies. Among the most well-known foreign food manufacturers in Russia are Kraft Foods and PepsiCo which invested heavily in WimmBill Dann in 2010-2011 These foreign investors are strengthening their positions with investments and marketing activities that overshadow domestic companies. The leaders in this market are focused on consolidation and expansion into regions outside of Moscow and St. Petersburg.
 
The factors that have restrained faster growth in the food-processing sector are as follows:
 
•Higher prices of raw materials
•Growing demands from large retail chains and greater competition among food manufacturers for shelf space
•Problems with recruiting qualified personnel
•Sales and distribution problems of manufactured products
•Cost of public utilities
•Logistics problems
•Significant debt load
•Lack of financing in necessary volumes, terms and at affordable interest rate
•Lack of developed distribution system

Table A. Russian Food Processing Sector 2007-2010
 




There was significant contraction in the number of businesses after the 2008 economic crisis. However, the data suggests that economically viable firms survived and more than filled the void. For example, the value of food production actually increased each year during the 2006-10 period, and as up by 12.6% in 2010. Net profit was also up in 2010, by 15%.
 
According to Russian Federal Statistics Service, in January-August 2011, the production index of food products amounted to 100.6% against 104.9% in January-August 2010 including broader categories such as meat and meat products - 106.9%, pasta products - 100.6%, mineral waters and soft drinks - 101.1%, beer - 100.3%, sugar - 125.2 percent. Compared to the same period of 2010, output of the following products increased: meat and offal (7.5%), sausages (4.5%), meat products (12.2%), dry milk and cream (21%), butter (2.9%), canned milk (1.7%), pasta (3.1%), sugar (21.5%), confectionery (4.2 %), frozen fruits and vegetables (by 48.8%), mineral water (5.7%). Production of flour from grain crops was almost the same as last year (growth rate - 0.4%), as well as pasta (0.5%) and beer (0.4%). On the decrease were: production of cereals (17%), cheese and cheese products (3.5%), dairy products (3.4%), vegetable oils, unrefined (16.7%), canned fruits and vegetables (1.1%). The decline in output of dairy products was associated with decreased domestic raw material output. Decreased production of vegetable oils is due to reduced production of domestic oilseeds in 2010.
 
The major consumer of food ingredients in the Russian food market is the meat processing industry with average annual growth of 15%. One of the latest trends in the meat processing sector is increasing emphasis on “natural” food ingredients. Meat processors source both domestic and imported ingredients. Domestic poultry and pork production have shown steady growth while beef production decreased in 2010. Ernst and Young experts explain that the poultry production was hampered in 2010 by the drought that drove up feed prices which make up 70% of production cost and to a lesser extent by the lifting of the ban on American poultry imports. The poultry industry is the most consolidated sector and is comprised of around 600 producers. According to Russia’s State Statistical Service (Rosstat), farms of all types produced about 4.6 MMT of poultry and livestock for slaughter (live weight) in the first half of 2011, 3.8 percent more than January-June 2010. Agricultural enterprises increased production by 7.4 percent at the same time. The Russian Ministry of Agriculture (MinAg) reported that Russia will increase livestock production by 2.8 percent, while total agricultural production will grow 10.0 percent in 2011. The poultry market appears to be close to self-sufficient although imports are still well represented in the processing sector. Pork production totaled 739,000 tons in 2010 which is 14% more than in 2009. Since 2005, pork production has more than doubled. Despite the fact that some anticipate self-sufficiency in pork production within 3-4 years, pork imports remain rather high; in 2010 pork imports totaled 625,000 tons which is 2% lower than in 2009. The biggest pork suppliers are Brazil (34.4%), Germany (17.6%) and Denmark. Meat imports are subject to a quota system which is as follows for 2012: fresh and chilled beef – 30,000 tons, frozen beef – 530,000 tons, fresh, chilled and frozen pork- 320,000 tons, pork trimmings – 30,000 tons, poultry meat – 250,000 tons, mechanically deboned poultry meat (mince) – 80,000 tons. Upon WTO access the quotas will likely change and exporters should monitor the FAS Attaché reporting page for updates.
 
According to the Agrarian Marketing Institute, by 2012 meat production in Russia will increase by more than 30 percent compared to 2009 level. The main growth is expected in the poultry market where the poultry share is expected to exceed 40 percent of the Russian market’s meat production. Beef’s declining share will continue in spite of the forecasted increase in beef production.
 
Effective January 1, 2010, Russia requires all imported poultry products be processed with only those ingredients approved for use in Russia. Please consult the FSIS Export Library for a list of approved ingredients <http://www.fsis.usda.gov/Regulations_&_Policies/Russia_Requirements/index.asp>. Also since January 1, 2010 frozen poultry was prohibited for use in processing select foods (e.g., baby food and food for nursing or pregnant mothers). Please consult your importer or USDA FSIS for guidance on a case-by-case basis.
 
The dairy products market is valued at $16-17 billion and is growing annually by 7-9% in terms of value. Wimm-Bill-Dann and Unimilk maintain the dominant positions in the Russian dairy market. 2010 was a significant year for the Russian milk processing market: Danone took over Unimilk then PepsiCo acquired Wimm-Bill-Dann. The Russian dairy market produces milk, cottage cheese and sour cream and Russians are very loyal to local brands. However, in 2010 Russia imported 255,000 tons of dairy products and cheese.
 
The Russian juice market is worth $6 billion with 2.9% growth compared to 2009. The leading players are international companies PepsiCo and Coca-Cola which in 2010-2011 acquired, respectively, Wimm-Bill-Dann and Nidan Soki - the biggest Russian manufacturers. PepsiCo and Coca-Cola have a collective market share of almost 85%.
 
Experts assess the Russian confectionary market at around $12 billion annually which makes Russia the second-largest confectionary market in the world. The confectionary sector is consolidated around a few domestic and foreign players. Top players include United Confectioners which brings together 15 manufacturers including Rot Front, Babaevsky and Krasny Oktyabr which are household names. Nestle, Roshen, KDV-Group Lamzur’, Neva, Slavyanka, and Sladko follow the leaders and also have huge production facilities, wide assortment, active brand support, effectively developed distribution and logistics. Baked products occupy the largest share of the market - approximately 55% followed by chocolate products (32%) and sugary products (13%). Production of chocolate and baked products in 2010 grew by 12.3% compared to 2006 and totaled 1.3 million tons.
 
The size of Russia’s specialized food ingredients market is evaluated around more than $2 billion. This sub-sector has quickly recovered after the 2008-09 crisis showing 5% growth in 2010 due to domestic food processing industry demand. RBK Research experts forecast 10% growth in 2011.
 
Russia’s specialized food ingredients market is weighted as follows: flavors (29%), preservatives (24%), colorings (19%), antioxidants (13%), food acids (6%), and cloud emulsions (2%). The market is dependent on imports, due to lack of raw materials domestically and high risks of entry into business.
 

Regulatory Framework
 
In 2010, the Government of the Russian Federation (GOR) passed the “Principles of the Russian Federation State Policy in the Field of Nutrition for the Period to 2020” which is considered by many as some progress in terms of GOR support for the food processing industry including food ingredients manufacturers. The main objectives of the policy are: expansion of domestic production of basic raw materials that meet modern standards of quality and safety, the development of manufacturing food products enriched with essential components, specialized baby food, functional food products, dietary (curative and preventive) food products and dietary supplements. Also, the GOR pays attention to the development and implementation of innovative technologies in agriculture and the food industry, including biotechnology and nanotechnology, and development of healthy eating educational programs for various groups of the population. In this regard, technical regulations relating to food are expected to be adopted. It is proposed to strengthen the legal responsibility of the manufacturer for production of food products which are consistent with statutory requirements, and to improve quality control mechanism for food and raw materials produced in Russia and imported from abroad. Also, according to the document, the GOR would provide the conditions for investment in production of vitamins, enzymes for the food industry, probiotics and other food ingredients, consumer foods enriched with vitamins and minerals, as well as would prioritize development of research in the field of modern biotechnological and nanotechnological methods to obtain new sources of food and biomedical estimation of its quality and safety.
 
The main regulations for the industry will be the Customs Union’s technical regulations "Safety Requirements for Food Additives, Flavorings, and Technological Aids". The draft of these technical regulations is published on Customs Union website and the document is expected to be accepted in the coming months: http://www.tsouz.ru/db/techreglam/Pages/Pishdobavki.aspx.
 

Trade
 
The Russian food industry in general is characterized by its dependence on imports. Around 40 percent of products used by the Russian food industry are imported: $36.4 billion was spent in 2010 for importing food products and raw materials. More than a half of the meat and milk products in major Russian cities are imported. 70% of the raw materials in meat processing plants are imported.
 
According to data from the Federal Customs Service in January-August 2011, Russia’s imports of food products and agricultural raw materials totaled $25.8 billion which is 26.2% more than in the corresponding period of 2010. Compared to the same period in 2010, import volume of fresh and frozen meat increased by 9.6%, butter - by 16.8%, citrus fruits - by 19.0%, tea - 5.7%, cereals - 2.2 times, sunflower oil - 2.1 times, products and canned meat - by 44.2%, raw sugar - by 21.5% cocoa - 5.9%, products containing cocoa - by 10.2%, alcoholic and nonalcoholic beverages - by 18.8%. At the same time imports of fish declined by 18.0%, condensed milk and cream - by 38.2%, white sugar - by 8.8%, cigarettes - by 29.7%. Average contract prices for some produce and other food increased. The greatest increase in contract prices was on fresh and frozen meats (11.4%), fish (1.4 times), concentrated milk and cream (7.3%), butter (25.5%), citrus (16.2%), coffee (1.6 times), tea (5.7%), sunflower oil (45.9%), meat products and canned meat (10.8%), raw sugar ( to 36.0%), sugar (38.6%), and products containing cocoa (22.5%).

Monday, January 09, 2012

Argentine Beef Consumption Continues To Fall

ARGENTINA - Upward pressure on prices has seen beef consumption fall to 53.8 kg per capita per annum - the lowest levels in 91 years.


Reduced availability of products, increasing population size and higher prices are to blame.

The Chamber of Meat Trade and Meat Products (CICCRA) says that the consumption of beef fell 6.7 per cent over the last year. The lowest recorded levels of meat beef consumption occurred in 1920, at 47 kg per capita.
 
On the other hand, sales of poultry and pork products have increased. This is likely due to it being more price competitive rather than changes in consumer eating habits. Beef prices have increased by 130 per cent in the last year.

President of the Poultry Processing Companies (CEPA), Roberto Domenech said that in 2011 the consumption of poultry meat increased to 40 kg per capita, a 1.5 kg increase.

CIICRA reports that the consumption of pork products increased 9.2 per cent over the last two years.
 
Butchers and traders are saying that whilst they have seen slight increases in the sales of poultry and pork, these increases do not match the drop in beef consumption.
 
Economists from the Institute of Economic Studies of Rural Argentina said that between 2009 and 2011 prices rose by 80 per cent, whilst consumption fell 14 per cent.
 
Price increases can be put down to increased global beef prices, but also a decrease in the number of animals slaughtered last year.

Monday, January 09, 2012

Mexican Meat Exports to Japan Double

MEXICO - Mexican meat exports to Japan nearly doubled in 2011, reaching 70,134 tonnes, compared to 38,176 tonnes in 2010, according to figures from the National Health Service, Food Safety and Food Quality (SENASA).


The increase in meat exports to Japan is down to a concerted effort from Mexican producers and companies together with the Federal Government to meet the sanitary requirements demanded by one of the world's most demanding markets.
 
With exports of more than 48,000 tonnes of pork products and byproducts, and about 20,000 tonnes of cattle in 2011 Japan became a major destination for Mexican meat.

Exports also included more than 1,000 tonnes of poultry products and 650 tonnes of horse meat.
 
The exports came from 41 federally inspected meat plants in 13 states - Aguascalientes, Baja California, Coahuila, Durango, Jalisco, Michoacan, Nuevo Leon, San Luis Potosi, Sinaloa, Sonora, Veracruz, Yucatan and Zacatecass.

Beef products shipped to Japan included both frozen and chilled cuts and offal.
 
The frozen and chilled pork products included processed products such as bacon, chilorio, roasted suckling pig and gravy.

Monday, January 09, 2012
Aquaculture To Provide More Food For Filipinos

PHILIPPINES - With the world population reaching seven billion, many countries may have to rely on aquaculture and sustainable fisheries practices to ensure enough supply of food in the coming years, the Southeast Asian Fisheries Development Center (Seafdec) told the Manila Times.


Manila Times reports that Dr Joebert Toledo, chief of Seafdec’s Aquaculture Department, said that the world is now relying more and more on aquaculture rather than capture fisheries, noting that climate change has affected the migration of pelagic fish.

“This is apparent in the absence of large schools of fish in traditional fishing grounds,” he said.

Dr Toledo added that experts have also noted a shift in dietary preference for seafood, owing to health concerns. In view of this shift, he said that Seafdec has been working full blast on fine-tuning aquaculture practices best suited to expand the fish population in many areas of the Philippines.

“This is necessary to assure that there is enough food for the Filipino people, which is expected to hit the 100-million mark in no time,” Dr Toledo told Manila Times, citing that country is now importing anchovies (dilis), round scad (galunggong) and sardine (tamban).

Since 1976, Seafdec has been working on fish cage and fish pen culture, and basic research into the hatching, nutrition and diseases of fish and other marine resources helped in developing large fishponds and inland hatcheries of milkfish, grouper, snapper, sea bass and tilapia.

Earlier, the Department of Agriculture said that it alloted P1 billion from its 2012 national budget to finance an integrated community-based fisheries program to counter the threats of degradation of coastal ecosystems, climate change and globalisation.

The fund shall partly be used to maintain 62 mariculture parks and nine regional and municipal fishports in the country, and for the provision of training and technical assistance to various areas in aquaculture, municipal, commercial, post-harvest, and regulatory bodies in support of the fishery industry.

Tuesday, January 10, 2012

Seoul Seeks to Start Exporting Beef

SOUTH KOREA - South Korea will seek to begin exporting beef within a few years as part of its efforts to help stabilise prices, the agriculture minister said Tuesday.

"Considering wagyu (Japanese beef) is 1.5 times more expensive than Korean beef but that Japan still exports beef, I believe we, too, can export Korean beef," Suh Kyu-yong, the minister of food, agriculture, forestry and fisheries, told a press briefing, reports YonhapNewsAgency.
 

Tuesday, January 10, 2012

LMC: 4% Decline In Cattle Kill Confirmed For 2011

NORTHERN IRELAND, UK - Last year was a remarkable year for deadweight cattle prices, according to the Livestock and Meat Commission of Northern Ireland.




In Northern Ireland, prime cattle prices were generally 14 per cent higher than 2010 levels throughout 2011 and to a large extent the strong prices were driven by the tight supply situation throughout Ireland.

 Table 1 below shows how the cattle kill in Northern Ireland was significantly lower in 2011 compared to 2010 levels. Over the course of the year the total prime cattle kill was six per cent lower than 2010 levels. However, with a 14 per cent increase in the cull cow kill, the impact on throughput at the factories in 2011 was softened to a certain extent with the overall kill down by four per cent.
 
2011 was bookended by a very large cattle kill in both January and December. Last January, the kill was significantly higher than previous year levels, while in December the general trend of tight availability throughout 2011 was broken with a four per cent increase in the prime cattle kill (a reflection of the big freeze in December 2010). With heavier carcase weights also, overall prime beef production was six per cent higher than December 2010 levels. With the cow kill up by 24 per cent year-on-year, the overall kill was up by seven per cent in December.
 
The stronger kill in December meant that the overall decline in slaughterings in 2011 was not just as steep as it may have been otherwise. By the end of 2011, the steer kill was down by two per cent compared to 2010 levels. However, the young bull / calf kill was down by 17 per cent on 2010 levels, meaning that the overall male prime cattle kill was down by seven per cent. This reflected the reduced number of cattle on the ground over the course of last year.
 
The mature bull kill was down (-34 per cent) sharply also. It is important to note that this does not represent a liquidation of the breeding bull kill and rather is a reflection of the reduced number of male beef cattle being kept entire and fed beyond 24 months (the age at which a young bull is deemed to become a mature bull).
 
The five per cent decline in the heifer kill also reflected this lower number of cattle on the ground. The reduced heifer kill also corresponded with increased retentions of heifers in 2011 for breeding. This would have reduced the number available for slaughter.
 
With more heifers retained for breeding and strong cull cow prices, there was a significant 14 per cent increase in the number of cows slaughtered in 2011 compared to 2010. This was driven mainly by an increase in the beef cow kill.

Lamb kill down by 13 per cent

 In 2011, the lamb kill was significantly lower than 2010 levels. By the end of September, the kill for the year to date was running at 25 per cent lower than 2010 levels. However, with a substantial uplift in the kill in the final quarter, the overall kill for 2011 was just 13 per cent lower than 2010 levels.
 
In December the NI lamb kill was 50 per cent (10,000 head) higher than 2010 levels. This is a substantial increase and reflects a trend which was ongoing throughout the entirety of the final quarter of 2011. It does not appear that this increase has been at the expense of exports to ROI and it remains to be seen whether throughput in early 2012 will be tighter as a result of this increased kill in late 2011.

Tuesday, January 10, 2012
 
Australian Lamb Exports Jump Three Per Cent

AUSTRALIA - Australian lamb exports reported a three per cent increase during 2011, compared with 2010, to 160,007 tonnes swt (Department of Agriculture, Fisheries and Forestry) - the third largest calendar year total on record (behind 2009 and 2007), according to Meat and Livestock Australia (MLA).




 

MLA reports that the increase for 2011 occurred despite a fall in lamb production over the same period, as strong overseas demand, with tight global supplies (particularly out of New Zealand – NZ) attracted a higher proportion of Australian lamb.
 
The largest export market for Australian lamb in 2011 was the Middle East, despite a five per cent decline year-on-year, to 34,987 tonnes swt. The Middle East just pipped the US, which saw a one per cent increase, to 34,334 tonnes swt. It should be noted however, that the US was the highest value export market for 2011, with a larger proportion of higher end chilled cuts than the Middle East.
 
Greater China experienced significant growth during 2011, with Australian lamb exports up 15 per cent year-on-year, to 29,620 tonnes swt. This is a region identified by both Australia and NZ as a key growth market for lamb (and mutton), and with disruptions to NZ supplies during late 2010 and 2011, Australian lamb filled the demand in Greater China.
 
MLA states a similar pattern occurred with the EU, to which Australian lamb exports lifted eight per cent year-on-year, to 12,356 tonnes swt. The limitation on exporting lamb to this market, set by a tariff rate quota (of 18,786 tonnes carcase weight equivalent – cwe)), remains an issue for Australian exporters, particularly when compared with the NZ quota of 227,854 tonnes cwe.
 
Of the smaller markets, Australian lamb exports grew 12 per cent year-on-year to Papua New Guinea, to 10,212 tonnes swt, and four per cent to South East Asia, to 9,585 tonnes swt while shipments to Japan fell four per cent, to 7,381 tonnes swt.
 

Australian Beef Exports Finish 2011 Higher

AUSTRALIA - Despite 2011 being a year marked by unprecedented events in key beef export markets, Australia’s beef and veal shipments increased by three per cent for the year, totalling 949,195 tonnes swt (Department of Agriculture, Forestry and Fisheries (DAFF)), reports Meat and Livestock Australia (MLA).




 

MLA reports that, surpassing the 922,833 tonnes swt registered for the full 2010 calendar year, and falling just short of shipments in 2006 and 2008, Australia’s beef and veal shipments finished the year at a rapid pace. November’s shipments were the highest in three years, while the year concluded with a record December volume of 82,054 tonnes swt.
 
For Australian beef exports in 2011 to have exceeded 2010 levels by three per cent reflected the very strong underlying global demand for Australian beef, considering the issues faced for exporters throughout the year. An A$ averaging 103US¢, and hitting 110US¢ twice throughout the year, created a significant headwind for Australian exporters, while the ongoing global economic turmoil created demand concerns in many advanced beef markets.
 
For Australia’s largest beef export market, Japan, the natural disasters in March devastated the economy, impacting demand for Australian beef for the remainder of the year. For 2011, Australia’s beef exports to Japan totalled 342,189 tonnes swt – down four per cent on the previous year. Additionally, Australian product faced increased competition from US beef in the Japanese market, as the strong A$ contrasted with the very weak US currency. However, despite all of these issues, Japan remains Australia’s largest beef export market by a large distance, taking 36 per cent of all beef exports for the year, and more than double the next largest market (the US).
 
Australian beef and veal exports to the US in 2011 totalled 167,820 tonnes swt – down nine per cent on the previous year and the lowest calendar year volume for several decades. In contrast, the Korean market expanded again in 2011, rising 18 per cent on 2010, to 146,347 tonnes swt – falling just short of the record 149,663 tonnes swt shipped in 2006.
 
MLA states that undoubtedly, the stars of the 2011 export year were the smaller, non-traditional markets, which offset (or even contributed to) the lower volumes to Japan and the US. Russia, the Middle East and South East Asia were the main contributors to the increase in total exports for the year, with rises also witnessed to more traditional markets of the EU and Canada.
 
Traditionally dominated by the big two markets of Japan and the US, Australian beef exports to all “other” markets (including Korea) increased 15 per cent year-on-year, offsetting a six per cent decline to Japan and the US combined.
 

Tuesday, January 10, 2012

Packed Agenda for World Meat Congress

FRANCE - The role of the meat industry as it affects the environment, animal welfare and human health are three of the main themes for the World Meat Congress in Paris in June.


The congress which will take place at the Palais de Congrès will open with a discussion on the global protein market, including fish, and will also see presentations on agricultural commodity price structures and consumer behaviour.
 
The congress' discussion on the impact the meat industry has on the environment will see presentations from Stewart Ledgard from AgResearch Limited, Theun Vellinga from Waginengen Livestock Research and Jean-Baptists Dolle from the Insitut de l'élevage. The discussions will look at reducing negative impacts on the environment and also the positive impacts that livestock farming can have.
 
Among the speakers on animal welfare issues in the global meat industry will be Cheryl McCrindle from the University of Pretoria, Jos Goebbels the president of the Centrale Organisatie voor de Vleessector and consultant Charlie Stenholm.
 
Concerns over the meat sector and human health will be addressed by Dominik Alexander the senior managing epidemiologist with Exponent Inc Health Sciences and Stuart Phillips from McMaster University.
 
The congress will also take a look at related markets and agriculture policy, with a view of the 5th quarter markets and exotic meats.
 
The congress will also discuss concerns over sanitary and tariff barriers to trade.
 
The World Meat Congress takes place in Paris from 5-6 June,

Turkey Production in the EU

European production of turkeys remains rather stable at 1.8 million tons since the crisis of avian influenza in 2006, according to AVEC, the Association of Poultry Processors and Poultry Trade in the EU Countries, in its annual report for 2011.
 



However, the picture is different across countries: production growth is mainly recorded in Germany and Poland, while France, Italy and the United Kingdom are struggling to stabilise production levels.

The sharp price increase of agricultural raw materials is taking place in a difficult economic situation. In addition, higher feed conversion rates prevail. The turkey industry must prioritise the reduction in cost price.

Production costs are volatile. Volatility of consumption patterns are difficult to manage. Even apart from food scares, the consumer today is very price-sensitive. Increases in retail prices make consumers reconsider their purchasing decisions. Given the price position of turkey meat, it should, however, be possible to maintain its current level of consumption.

Imports from third countries is a real challenge to the EU production because they impact the balance of the market. These imports are playing an important role in the supply of the processing industries. This demonstrates that the European turkey industry is burdened by the requirements of European regulation on the protection of the environment and animal welfare. These additional costs cannot be recovered by the European producers and have not been incorporated by imported products.

Reduction in Prevalence of Salmonella enteritidis and Salmonella typhimurium
 
Regulation (EC) 584/2008 of 20 June 2008 establishes the Community objective of reducing the prevalence of Salmonella enteritidis and Salmonella typhimurium in turkeys. The maximum percentage of meat turkey flocks positive with respect to these two serotypes must be reduced to less than or equal to one per cent by 31 December 2012.

The European industry has evidence for prevalence rates today. The European Commission has nevertheless decided to establish the absence of Salmonella enteritidis and Salmonella typhimurium in 25g of turkey meat, despite the possible progress obtained during the transitional period until 31 December 2012. The tightening of the regulations comes as the EU welcomes the continued decline in the number of human cases registered and it assigns that result to the effectiveness of the global approach.

Turkey Welfare
 





Apart from the regulations on the protection of animals during transport and at the time of killing, the turkey sector is paying attention to the welfare of turkeys during rearing. Foot pad dermatitis (FPD) is considered as a welfare indicator in broilers although it may be questioned whether it could be a tool for monitoring turkey welfare. The natural character of turkey production is different from chickens in that they do not turn the litter, like broilers. From literature and experience in practice, it is clear that the cause of FPD is multifactorial, including contact between foot pad and litter/ excreta, growing conditions, genetic variation and nutrition. A comprehensive study is required to the solutions to reduce the incidence and severity of FPD in turkeys for sustainable turkey production in Europe.

A consortium of research institutes and small and medium-sized enterprises and their associations have submitted a project for European funding to gain more scientific knowledge on the development and causative factors of FPD in commercial turkeys and on the relationship between FPD and health, welfare and performance.

December 2011

Wednesday, January 11, 2012

Non-Profit Processing Plant Opens for Business

US - An independent meat processing plant in Marion North Carolina started by McDowell Economic Development Association (MEDA) Inc. and supported by the Independent Small Animal Meat Processors Association (ISAMPA) will open for business on 15 January.


Foothills Pilot Plant (FPP) is a non-profit facility created for poultry and rabbit processing to serve independent growers seeking USDA and FDA inspection of their meat products.

The plant processes chickens, turkeys, rabbits, and other specialty fowl on a fee for service basis.

In partnership with ISAMPA, FPP also serves as a center for learning best practices for small flock production of poultry and small scale production of meat rabbits. This facility is another step towards promoting sustainable agriculture in Western North Carolina.
 
The plant is administered by MEDA board members and the Foothills Pilot Plant advisory committee, which consists of individuals with different areas of expertise.
 
Based upon a feasibility study commissioned in 2006, a plan was developed to establish this project in Marion, North Carolina, in partnership with the McDowell Economic Development Association (MEDA), McDowell County Government, independent growers, North Carolina Department of Agriculture & Consumer Services (NCDA&CS), NC State University's College of Agriculture & Life Sciences (CALS) and NCA&T University. Small family farms and community leaders have supported the development of Foothills Pilot Plant to serve independent growers of poultry and rabbits.
 
Major contributors for the development of this project are: the North Carolina Golden LEAF Foundation, the North Carolina Rural Center, USDA Rural Development, the Appalachian Regional Commission, and the Indpependent Small Animal Meat Processors Association of Western North Carolina.

Wednesday, January 11, 2012

Australian Lamb Prices Higher In 2011

AUSTRALIA - National average saleyard prices for lamb increased across the board during 2011, with strong rebuilding intentions and steady demand in both the Australian and overseas markets having a positive influence upon prices, reports Meat and Livestock Australia (MLA).

MLA states the greatest increase in average prices for the year was in light lambs, with tight supply a key factor, underpinned by the favourable grazing conditions. This category increased 16 per cent year-on-year in 2011, averaging 540¢/kg cwt.
 
There was also competition from restockers and feeders for lighter lambs, with this category averaging 14 per cent higher on the previous year, at 585¢/kg cwt.
 
Merino lambs, helped by the rejuvenated wool outlook, lifted 12 per cent compared with 2010, to average 493¢/kg cwt.
 
Trade and heavy lambs for processing lifted nine per cent, to 549¢/kg cwt, and eight per cent, to 529¢/kg cwt, year-on-year during 2011 – with global demand supporting the higher prices.
 
The national saleyard mutton indicator averaged 11 per cent higher in 2011, at 413¢/kg cwt. The combination of flock rebuilding, improved wool prices and tight supplies were the main drivers for the mutton price increase.

Wednesday, January 11, 2012

Beef Prices Consistent, Sheep prices on the Move

IRELAND - Livestock Price Coordinator for the Irish Cattle and Sheep Farmers’ Association (ICSA), John Cleary, has said that while prices have not improved following the post Christmas spike, the factory trade has remained solid and prices on a par with last week.


 Mr Cleary also said that the overall outlook is quite good for at least the first eight to nine months of 2012.
 
For a good mix of steers, the base price being quoted is €4.05 – 4.10/kg, a further increase of 5c for the lower quotes from last week. Factories are quoting €4.20- €4.25/kg for heifers, this is no change from last week. For a mix of U and R grade bulls, the base price is also €4.15 - €4.20/kg, roughly the same quotes from last week Base price quotes for cows stand at €3.20-€3.65/kg, again no change from week.
 
Commenting on this week’s trade, Mr Cleary said: “Things are much better than last week. Prices are high and factories are actively looking for stock to meet their quotas so this all means that farmers are in the driving seat. Farmers, however, should not be simply settling for whatever the factory quotes them for their stock. These places are desperate for stock so those more adept at negotiating can push for higher than the quotes. The main piece of advise the ICSA could give to anyone at the minute is not to sell soft. The overall outlook is for a positive eight to nine months for 2012. The kill rate should remain below the norm for the majority of 2012 and this will mean that prices should continue strongly for the majority of the year."
 
Sheep prices are on the rise also with scarcities developing across the country. Prices for lambs up to 23.5kg are €5.25/kg, up 5c from last week. Ewes are being quoted €3.20/kg, no change from last week.

Thursday, January 12, 2012

Weekly US Broiler Hatchery Report

US - According to the USDA's National Agricultural Statistics Service (NASS), compared to the same week last year, six per cent fewer broiler-type eggs were set and four per cent fewer chicks were placed.
 

Broiler-type eggs set down six per cent
 
Commercial hatcheries in the 19 State weekly programme set 193 million eggs in incubators during the week ending 7 January 2012. This was down 6 per cent from the eggs set the corresponding week a year earlier.

Average hatchability for chicks hatched during the week was 85 per cent. Average hatchability is calculated by dividing chicks hatched during the week by eggs set three weeks earlier.

Broiler-type chicks placed down four per cent
 
Broiler growers in the 19 State weekly programme placed 162 million chicks for meat production during the week ending 7 January 2012. Placements were down 4 per cent from the comparable week a year earlier.

Thursday, January 12, 2012
Cargill Earnings Fall Sharply
US - International producer and marketer of food, agricultural, financial and industrial products and services, Cargill, has reported an 88 per cent fall in earnings in the second quarter of the 2012 financial year.


Earnings from continuing operations to the quarter to the end of Novemebr last year were $100 million down from $832 million in the same period a year ago.

In the first six months, earnings from continuing operations were $336 million, compared with $1.53 billion in last year’s first half.

Both the year-ago figures exclude earnings from Cargill’s former majority investment in The Mosaic Company.

Consolidated revenues in the 2012 second quarter were $33.3 billion, up 17 per cent from $28.5 billion a year ago.

First-half revenues reached $67.9 billion, compared with $54.2 billion in the prior period.

“The second quarter was significantly below expectations, especially in contrast to last year when we posted our strongest quarter ever,” said Greg Page, Cargill chairman and chief executive officer.

“Our food ingredients and agriculture services businesses generated solid earnings. At the same time, our commodity-based trading and asset management businesses faced significant challenges.

"First, commodity and financial markets were driven more by political uncertainties than by underlying supply and demand fundamentals.

"Second, our performance in the sugar market was poor. Additionally, our meat businesses on a combined basis experienced one of their weakest quarters. Finally, we recognized a significant number of one-time items, including asset impairments, and acquisition and integration expenses.”

Mr Page said Cargill is actively working to reduce its costs and simplify its work processes, and he is optimistic about the company’s earnings prospects for the remainder of the fiscal year.

“Cargill has been through difficult cycles before, made changes and emerged stronger for it. We are confident that the actions we are taking to create a more agile enterprise will better position us in the current economic environment.”

Mr Page noted the fundamentals of Cargill’s business remain sound. Its diversified business model is backed by a strong balance sheet and excellent access to liquidity.

The company maintains a disciplined approach to risk management, and it continues to reinvest in assets that strengthen its ability to be a reliable supplier and innovative partner to its customers globally.

On a segment reporting basis, the food ingredients and applications segment was the largest contributor to second-quarter earnings.

The segment’s food ingredient businesses on a combined basis almost matched last year’s near record performance.

Its global group of meat businesses was well off last year’s record earnings pace. The shrinkage in US fed cattle supplies pressured margins in beef; other meat units also faced higher raw material costs.

Cargill’s recent acquisitions in food ingredients in Brazil and Europe, and in animal protein in Central America, were all accretive to earnings in the second quarter.

Earnings were solid in the agriculture services segment but lower than in the prior year, a period in which market opportunities for US grain handling and export, and for global feed ingredient merchandising, were more favorable. Costs related to the acquisition of the Provimi animal nutrition company were recorded in this segment.

Earnings in the origination and processing segment were below last year’s exceptional results, reflecting the challenges of operating in commodity markets driven more by the volatile political environment than by the underlying supply and demand fundamentals. Additionally, performance in sugar negatively affected segment results.

Results within the risk management and financial segment were mixed. Strong performance in risk management services to customers was more than offset by weaker results in asset management due to the stress in global financial markets.

The industrial segment, which makes up a small portion of Cargill earnings, was moderately below the year-ago level due in part to higher freight expenses.

Cargill completed the acquisition of Provimi, a leading global animal nutrition company, for an enterprise value of $2 billion. The merger brings together Cargill’s expertise in compound feed, supply chain and risk management with Provimi’s nutritional expertise, technology and portfolio of premix, additives and feed ingredients. Now with more than 16,000 employees in 37 countries, the combined business has the scale, reach and capabilities to deliver innovative, high-quality products and services to customers worldwide.

Friday, January 13, 2012
2011 - Poor Year for Spanish Agriculture
SPAIN - 2011 was a year with more pain than glory for the Spanish livestock sector. Cuts in state aid, falls in agricultural income and increases in debt all led to the majority of livestock producers making a loss, says the Spanish Federation of Livestock Producers.


An immediate reaction to this was the drop in the number of farms.

One of the consequences of this, was an increase in unemployment. In Spain more than 700,000 people live directly off livestock production.

The group says that another serious issue is the decline in breeding herds, and pedigree breeding herds.

A dramatic rise in production costs pushed agricultural incomes down by 3.4 per cent in 2011. Fertiliser prices rose by 20 per cent, energy by 17.7 per cent, feed by 15.5 per cent and diesel by 7.3 per cent.

For farmers the main concern has been the rise in the cost of raw materials for animal feed. Concentrates for beef have risen by 18.4 per cent between September 2009 and September 2011.

On top of this, the Federation of Livestock Producers says that the government has done little to support the agricultural sector.

The proposals for the reform of the Common Agricultural Policy will seriously hurt Spanish farmers.

Beef: Margins in the beef sector have reduced dramatically, which means the sector remains in a delicate situation. An increase in meat exports and live animals has helped to balance this slightly.

Dairy: In 2011 dairy prices improved. The dairy sector welcomes the EU milk package announced at the end of 2011, which encourages milk contracts. Spanish producers have been active in campaigning for fair milk prices.

Pigs: Increased costs and problems in the supply chain marked this as a poor year for pig producers. High grain and soy prices cut into farm profitability, as feed accounts for 70 per cent of production costs.

Many farms incurred capital costs, adapting for the EU regulation banning sow stalls, which will come into play in 2013.

Poultry: High prices have benefited poultry producers and offset some of the high input costs. However new welfare implications, with the introduction of the ban on battery cages for laying hens has caused some uncertainty in the industry.

Friday, January 13, 2012

Mixed Start To 2012 Livestock Markets

AUSTRALIA - The first full selling week of 2012 was somewhat of a mixed bag for prices, particularly when compared to the end of 2011.While young cattle prices remained near all-time highs, prices for export categories averaged lower than the final full selling week of December (17 December). All lamb categories started the year lower, reports Meat and Livestock Australia (MLA).

MLA reports however, it must be stated that the first full week of trading can often by marked by an absence of buyers, while producers can be keen to market stock after the lack of selling opportunities over the Christmas and New Year break.
 
For 2012, both appear to be applicable, with cattle yardings up 22 per cent on the corresponding week last year, and lamb offerings jumping 15 per cent. While much of the year-on-year national increase in cattle numbers for the past week was in Queensland, it must also be remembered that yardings during the first full selling week of 2010 were extremely low, as flooding saw most sales cancelled.
 
After hitting an all-time high of 428¢/kg cwt in the final few selling days of 2011, the EYCI opened 2012 on Monday at 419.25¢/kg cwt – slipping to 412.75¢/kg cwt by Friday. Demand for young cattle remains very strong, with the results from the opening weaner sales of the year well received by most sellers.
 
Heavy steers averaged 349¢/kg cwt for the week, cheaper than the end of 2011, and equal with the corresponding week in 2010. Nationally cows averaged 307¢/kg cwt for the week, with direct to works prices at 295¢/kg cwt.
 
Lamb prices started 2012 cheaper, with prices back across all categories, albeit just barely for restocker and feeder lambs. Higher lamb offerings in NSW, Victoria and SA reportedly contributed to the lower start to the year, with the hot weather throughout early January possibly inducing increased turnoff. Nationally, trade lambs finished the week at 494¢/kg cwt, while heavy and light lambs averaged 477¢/kg cwt and 499¢/kg cwt, respectively.
 
Less impacted by the summer break, the national average for restocker and feeder lamb prices only started the year down 1¢ on the finish of 2011, averaging 542¢/kg cwt. Producers are reported to be chasing additional lambs for finishing, keen to make the most of an abundant supply of feed grain and pasture.
 
As market activity increases in coming weeks, a clearer state of play for both cattle and lamb markets should become evident.

Monday, January 16, 2012
November US Pork Exports Record-Large
US - US pork exports set another monthly volume record in November, according to statistics released by USDA and compiled by the US Meat Export Federation (USMEF), which helped offset record-high production and provide a significant boost to pork cutout values.
 

Exports totaled 217,080 metric tons valued at $597.85 million – up 22.5 per cent and 35 per cent, respectively, over November 2010. This boosted the January-November volume total to 2.04 million metric tons (up 18 per cent year-over-year) and the value total to $5.526 billion (up 27 per cent). This puts US pork export value, which had never reached $5 billion before this year, on pace to approach the $6 billion mark in 2011.

Per-head pork export value soars to nearly $60 in November
November pork exports equated to nearly 29 per cent of total production (including variety meat). In terms of muscle cuts only, exports still totaled 24 per cent of total production. Export value per head slaughtered set a new monthly record at $59.98, which was $15 higher than a year ago. For January through November, the per centage of total production exported equated to 27 per cent, or 23 per cent when including only muscle cuts. This compares to 23.7 per cent and 19 per cent for the same period in 2010. Export value for the year averaged $55.21 per head, compared to $43.72 per head a year ago.

US pork continues to perform remarkably well in Japan, with November results up 6 per cent in volume and 17 per cent in value over a year ago. For January-November, exports to Japan totaled 451,509 metric tons, nearly matching the 2008 volume record of 451,853 metric tons. Export value reached $1.79 billion, easily setting a new record and setting the stage for a year-end value total that could threaten the $2 billion mark.

"USMEF has continued to market US pork aggressively in Japan, because we know this it is a valuable and fiercely competitive market," said USMEF President and CEO Philip Seng. "When we first broke the $1 billion barrier in 2005, some speculated that this market may have peaked. They said so again in 2008, when exports hit $1.5 billion. To be approaching $2 billion is remarkable, and it shows just how vital Japan is to the bottom line of the US industry."

November exports were also bolstered by strong results in the China/Hong Kong region, which set another monthly record at 66,993 metric tons valued at $140.2 million. For the year, export volume to this region was up 68 per cent to 428,683 metric tons and export value nearly doubled to $794.6 million.

Pork exports to South Korea continued to build on a record year, with November results up 62 per cent in volume to 11,673 metric tons and more than double in value to $35.6 million. For the year, exports to Korea have soared by 126 per cent in volume (172,791 metric tons) and 176 per cent in value ($453.7 million).

Exports volume to Mexico was lower in November at 47,295 metric tons (down 12 per cent) but value remained steady at $94.7 million. Despite volume for the year being down 3 per cent to 477,221 metric tons, Mexico remains the leading volume destination for US pork. Export value for the year ($925.3 million) was up 4 per cent from 2010’s record pace, and by year’s end may break $1 billion for the first time.

November results pushed pork exports to Canada to new record totals in both volume (188,250 metric tons, up 14 per cent) and value ($673.8 million, up 20 per cent). Other markets that have topped their previous records in 2011 include Australia (58,631 metric tons valued at $187.8 million) and Central-South America (66,352 metric tons valued at $171.3 million).

Australia has Lower Lamb Slaughter in November

AUSTRALIA - Australian lamb slaughter slipped six per cent year-on-year during November, to 1.67 million head, which was matched by a six per cent fall in production, to 35,638 tonnes cwt (Australian Bureau of Statistics), reports Meat and Livestock Australia (MLA).


MLA reports that this follows a similar result in October, with lamb turnoff lower during spring, as producers took advantage of widely available feed across much of the country.

The decline in both slaughter and production was led by three of the four largest lamb producing states. Victorian slaughter dropped 15 per cent, to 682,921 head, SA was seven per cent lower, at 339,521 head, and WA eased three per cent, to 194,180 head.

NSW lamb slaughter bucked the trend, lifting six per cent year-on-year, to 393,039 head, while Tasmania jumped 15 per cent.

Pork Exports Record-Large; Beef Exports Also Strong

US - US pork exports set another monthly volume record in November, according to statistics released by USDA and compiled by the US Meat Export Federation (USMEF), which helped offset record-high production and provide a significant boost to pork cutout values. November beef exports also performed well, reaching 105,268 metric tons valued at $456.25 million.
 

Exports totaled 217,080 metric tons valued at $597.85 million – up 22.5 per cent and 35 per cent, respectively, over November 2010. This boosted the January-November volume total to 2.04 million metric tons (up 18 per cent year-over-year) and the value total to $5.526 billion (up 27 per cent). This puts US pork export value, which had never reached $5 billion before this year, on pace to approach the $6 billion mark in 2011.
 
Beef exports were steady with the October 2011 volume and up slightly in value. On a year-over-year basis, November exports were up 4 per cent in volume and 17 per cent higher in value from the very strong totals recorded in November 2010. This boosted the January-November export total 22 per cent higher in volume than a year ago to 1.179 million metric tons, and up 35 per cent in value to $4.944 billion. When December results become available, beef export value will eclipse the $5 billion mark for the first time ever.
 
Per-head pork export value soars to nearly $60 in November
 
November pork exports equated to nearly 29 per cent of total production (including variety meat). In terms of muscle cuts only, exports still totaled 24 per cent of total production. Export value per head slaughtered set a new monthly record at $59.98, which was $15 higher than a year ago. For January through November, the per centage of total production exported equated to 27 per cent, or 23 per cent when including only muscle cuts. This compares to 23.7 per cent and 19 per cent for the same period in 2010. Export value for the year averaged $55.21 per head, compared to $43.72 per head a year ago.
 
US pork continues to perform remarkably well in Japan, with November results up 6 per cent in volume and 17 per cent in value over a year ago. For January-November, exports to Japan totaled 451,509 metric tons, nearly matching the 2008 volume record of 451,853 metric tons. Export value reached $1.79 billion, easily setting a new record and setting the stage for a year-end value total that could threaten the $2 billion mark.
 
"USMEF has continued to market US pork aggressively in Japan, because we know this it is a valuable and fiercely competitive market," said USMEF President and CEO Philip Seng. "When we first broke the $1 billion barrier in 2005, some speculated that this market may have peaked. They said so again in 2008, when exports hit $1.5 billion. To be approaching $2 billion is remarkable, and it shows just how vital Japan is to the bottom line of the US industry."
 
November exports were also bolstered by strong results in the China/Hong Kong region, which set another monthly record at 66,993 metric tons valued at $140.2 million. For the year, export volume to this region was up 68 per cent to 428,683 metric tons and export value nearly doubled to $794.6 million.
 
Pork exports to South Korea continued to build on a record year, with November results up 62 per cent in volume to 11,673 metric tons and more than double in value to $35.6 million. For the year, exports to Korea have soared by 126 per cent in volume (172,791 metric tons) and 176 per cent in value ($453.7 million).
 
Exports volume to Mexico was lower in November at 47,295 metric tons (down 12 per cent) but value remained steady at $94.7 million. Despite volume for the year being down 3 per cent to 477,221 metric tons, Mexico remains the leading volume destination for US pork. Export value for the year ($925.3 million) was up 4 per cent from 2010’s record pace, and by year’s end may break $1 billion for the first time.
 
November results pushed pork exports to Canada to new record totals in both volume (188,250 metric tons, up 14 per cent) and value ($673.8 million, up 20 per cent). Other markets that have topped their previous records in 2011 include Australia (58,631 metric tons valued at $187.8 million) and Central-South America (66,352 metric tons valued at $171.3 million).
 
Beef export value nearly $220 per head in November, more than $200 for 2011

November beef exports equated to 14 per cent of total production when including variety meat, or 11 per cent for muscle cuts only. This was consistent with the 2011 average but up significantly from the 2010 ratios of 11.7 per cent for total production and 9 per cent for muscle cuts. November exports equated to $219.73 per head of fed slaughter, up $41.50 from a year ago. For January-November, export value averaged $204.27 per head – more than $50 higher than the previous year’s average.
 
Beef exports to Canada posted another strong month, solidifying it as the leading value destination for 2011 and ensuring a $1 billion performance by year’s end. For January through November, exports to Canada totaled 174,122 metric tons (up 27 per cent) valued at $940.5 million (up 43 per cent).
 
Mexico is still the volume leader for US beef exports, despite a slight slowdown in volume in November. Export volume in November was down 4 per cent to 21,884 metric tons, but value still climbed 6 per cent to $84.6 million (trailing only Japan). For the year, exports to Mexico were up 5 per cent in volume to 234,888 metric tons and were 23 per cent higher in value to $902.8 million.
 
Japan was the leading value destination for US beef in November at $85.3 million, up nearly 40 per cent from a year ago. Export volume was 18 per cent higher at 14,312 metric tons. For the year, exports to Japan were up 29 per cent in volume to 148,182 metric tons and 38 per cent in value to $812.1 million.
 
November exports to South Korea, Hong Kong and the Middle East were all lower than a year ago, but all of these markets were still up solidly for the year. In fact, Hong Kong and the Middle East had already set new annual volume and value records in October.
 
Exports to Russia were also slightly lower in volume in November but more than 60 per cent higher in value. Russia had already set a new annual value record in October which has now reached $243.6 million. Led by surging exports to Chile, the Central-South America region has also set new records this year for both volume (23,340 metric tons, up 50 per cent) and value ($75 million, up 76 per cent).
 
"There is much to be excited about this year with regard to US beef exports," Mr Seng said. "Not only are we going to break $5 billion for the first time ever, we are gaining back valuable market share in Asia and taking exports to new heights in other regions across the globe. Demand for US beef has never been greater, and this is generating a lot of momentum for 2012."
 
Lamb exports set new value record
 
US lamb export value reached $27.76 million through November, up 49 per cent from a year ago and just edging the previous annual record of $27.75 million (set in 2006) with a month remaining in the year. Lamb exports had already topped their previous high in volume, but strong November results pushed export volume for the year to 16,958 metric tons (up 79 per cent from a year ago). Strong performance in Mexico and Canada accounted for much of this growth, but results have also been solid in Central America, the Middle East and the southeastern Caribbean islands.
 

Tuesday, January 17, 2012
How Strong are Links between Meat and Cancer?
ANALYSIS - A new study published in the British Journal of Cancer and produced by researchers at the Karolinska Institutet in Stockholm in Sweden has concluded that eating processed meats increases the risk of pancreatic cancer.

The study is the latest is a series of research reports that has links the consumption of processed meats and red meat with various cancers.

In November last year a research team, led by John Witte of University of California, San Francisco linked increase consumption of ground red meat and processed meats to prostate cancer.

The researchers also said they found that the correlation was primarily driven by red meat that was grilled or barbecued, especially when well done.

And in the UK last year, a report from the Scientific Advisory Committee on Nutrition (SACN), which reviewed evidence on the links between red and processed meat and bowel cancer, concluded that red and processed meat probably increases the risk of bowel cancer and people who eat around 90g or more should consider cutting down to reduce their risk.

With a succession of such reports being published, it is a wonder that red meat and processed meat products are not sold with a health warning as seen on the side of cigarette packets.

Against the battery of reports that have been appearing, the red meat industry has not been the speediest to put up its counter claims.

However, the American Meat Institute has poured cold water on the claims from the World Cancer Research Fund over the connections between red and processed meats and cancer.

The AMI said earlier this year that the renewed claims should be met with scepticism as they are not supported by the full evidence and they conflict with the US Dietary Guidelines, which say that red and processed meat can be a healthy part of balanced diet.

The AMI also said that the WCRF's original 2007 report was based upon very weak findings and many contradictions, and was questioned by many groups, including the International Agency for Research on Cancer.

Other studies have also found holes in the WCRF's report.

An editorial in the Annals of Oncology said: "The substantial review of evidence in the WCRF report demonstrates that there is no discernible association between many forms of cancer and specific dietary practices."

Another study by Dr Stewart Truswell, of the University of Sydney, and Dr Dominik Alexander, of Exponent, whose review was published in the American Journal of Clinical Nutrition, highlighted a number of errors and omissions in the WCRF review of red and processed meat and colorectal cancer. These included analytical inconsistencies and data extraction errors in the evidence presented which could have contributed to an overestimate of the association between eating red meat and the risk of CRC.

The conclusion of Dr Alexander's review was that "there is no conclusive evidence of causal relationship" between eating meat and colorectal cancer.

Even the latest report from the Karolinska Institutet has clauses within it that also cast doubt on its own conclusions.

The report says: "Our study has some limitations. First, as a meta-analysis of observational studies, we cannot rule out that individual studies may have failed to control for potential confounders, which may introduce bias in an unpredictable direction. All studies controlled for age and smoking, but only a few studies adjusted for other potential confounders such as body mass index and history of diabetes.

"Another limitation is that our findings were likely to be affected by imprecise measurement of red and processed meat consumption and potential confounders."

The research looked at 13 studies into red and processed meat consumption and cancer. Having discarded two of the studies conducted a meta-analysis of the remaining 11 studies, of which seven provided data for the consumption of processed meats.

"When results from all studies were combined, an increase of 50 g per day of processed meat consumption was associated with a statistically significant 19 per cent increased risk of pancreatic cancer," the study said.

It added: "The positive association between processed meat consumption and pancreatic cancer risk was attenuated and not statistically significant in a sensitivity analysis excluding one of the studies (No¨thlings et al, 2005).

"There was no overall association between red meat consumption and risk of pancreatic cancer. However, red meat consumption was statistically significantly positively associated with pancreatic cancer risk in men. Red meat consumption was on average higher in men than in women.

"If there is a threshold effect with an increased risk of pancreatic cancer only at very high levels of red meat consumption, a positive association may be more likely to be detected in men. The observed positive association in men may also be a chance finding."

Despite the potential limitations in findings, the Swedish study concludes that there is a "statistically significant positive association between processed meat consumption and risk of pancreatic cancer. Red meat consumption was not associated with risk of pancreatic cancer overall, but was positively associated with risk in men".

Wednesday, January 18, 2012
CME: Pork & Beef Value in November Hit Records
US - The excellent year for US pork and beef exports continued in November with pork tonnage and value setting new records and beef tonnage and value hitting their highest level for November on record, write Steve Meyer and Len Steiner.


Some highlights of Friday’s release of product weight data by the Department of Commerce and Foreign Ag Service:

Pork muscle meat exports were record-high at 169,460 metric tons (373.5 million pounds). That figure is 23.2 per cent larger than one year ago and brings YTD exports through November to 1.588 million metric tons or 3.5 billion pounds, 22 per cent larger than during January-November 2010.

The value of pork exports also set a new record at $515.8 million in November. That figure is 33.7 per cent larger than last year and brings YTD export values for muscle cuts to 4.822 billion, 30.1 per cent higher than in 2011. All but one month in 2011 (thru November) saw pork muscle meat export values that were higher than the previous monthly record set in 2008. So, not only has tonnage been higher but the value of those shipments has grown by an even higher percentage meaning per-unit values have grown, too. Higher quantity and higher price means strong demand!

The three largest months on record for pork exports occurred in 2011 with January, October and November all exceeding the prior record level set in March 2008.

Pork variety meat exports were 25 per cent larger in November versus one year ago and the value of those shipments was up 71 per cent from last year. Year-to-date through November, variety meat exports were six per cent larger than last year and were sold for nearly 19 per cent more in total value.

Japan returned to its usual place atop the rankings of US pork export destinations in November. Total pork and pork variety meat exports to Japan were up six per cent in November versus one year earlier and were up 17 per cent through November for the year. YTD total export value to Japan reached $1.79 billion. That, according to the United State Meat Export Federation “ . . easily set a new record and set the stage for a year-en value that could threaten the $2 billion mark.” US ANNUAL pork exports to ALL DESTINATIONS did not add up to $2 billion as recently as 2003.

Pork and pork variety meat shipments to China/Hong Kong set another monthly record at 66,993 metric tons. That figure was valued at $140.2 million and pushed YTD export values to China/ Hong Kong to $794.6 million, nearly double the level of 2010. Shipments to this important if sometime fickle market were up 68 per cent for the year through November.

November beef exports did not challenge the record level of 90,282 metric tons set in July but were very strong none the less, breaking last year’s November high of 71,582 metric tons. The 3.4 per cent year-on-year increase in muscle meat tonnage, though, drove a 17.6 per cent increase in muscle meat value in November as unit prices increased sharply. YTD muscle meat tonnage now stands at 846,343 metric tons, well above the previous YTD record pace of 801,781 metric tons reached in November of 2003. That year still marks the high for beef cut exports at 858,185 metric tons — a record that will almost certainly fall when December data is released in February.

As was the case for volume, export values were record high for November but were lower than the all-time record of last July. November value of $395.8 million was 17.6 per cent higher than last year and pushed YTD cut values to $4.325 billion, 35.8 per cent higher than one year ago.

Beef variety meat shipments were up 4.6 per cent in volume and 19.2 per cent in value, year-on-year for November. YTD volume and value totals for variety meats were +13.7 per cent and +27.4 per cent, respectively.

Thursday, January 19, 2012
CME: Pork Production Forecast Higher in 2012
US - The latest WASDE forecasts for US beef, pork and poultry supplies in 2012 were little changed from December. There continues to be broad expectation that US meat protein supplies will be tighter in 2012, underpinning firm protein prices, particularly given forecasts of strong exports for all three main species, write Steve Meyer and Len Steiner.


The decline in meat protein supplies (see chart) is due to smaller beef and broiler production. Pork production is expected to increase for the second consecutive year but the pace of the increase has so far been relatively modest.

Total beef production for 2012 is now forecast at 25.075 billion pounds, slightly higher than the forecast put forward in December but still some 1.22 billion pounds or 4.6 per cent lower than in 2011. If this forecast for beef production materializes, it would represent the smaller output number since 2005.

Grain prices have pulled back recently but this will do little to increase beef production this year. Indeed, it may have the effect of shortening supplies even more as lower grain prices make it more profitable to hold back heifers and expand. As producers bring fewer heifers to market, the supply of feeder cattle available to feedlots will decline, reducing total beef production. USDA will publish its results of the January cattle inventory survey on 27 January and our expectation is that beef cows held back for replacement will still be lower than in 2011 as producers in key areas struggled with drought conditions. An improvement in weather conditions (still a big question mark), lower grain prices and record out front cattle futures should encourage beef cow retention in 2012.

Pork supplies are expected to advance higher in 2012 but despite record high prices last summer, producers remain cautious. Total pork production for 2012 is now forecast at 23.209 billion pounds, 431 million pounds or 1.9 per cent higher than a year ago. This forecast is modestly higher than what was presented in December but, in our view, the key for the pork market in 2012 remain exports. Of the +23 billion pounds that are expected to come to market in 2012, about 5.1 billion pounds or 22 per cent are expected to go to exports. Only 5 years ago, pork exports accounted for 14 per cent of total production.

In 2011, pork exports were largely driven by strong demand in Asian markets. In some cases (S. Korea), the pickup in demand was accelerated by short term factors, such as the outbreak of FMD. Tight supplies and higher pork prices in China caused that market to catapult to second place, after Japan, in the second half of the year. Will China remain in this second place spot for 2012? It is hard to say. China has the largest sow herd in the world and a large share of production comes from backyard operations. Should feed prices pull back, Chinese producers have shown they can quickly ramp up production. On the other hand, rapid modernization and the resulting growth in demand coupled with population shifts to urban areas could sustain future growth. Needless to say, this is the big wild card for US pork supplies and prices in 2012.

Broiler supplies for 2012 (ready-to-cook production) are forecast at 36.109 billion pounds, 735 million pounds or 2 per cent lower than a year ago. Corn prices may have pulled back from the record levels last summer but they remain in the $5.5 - $6.0 range, well above historical levels. At this point the expectation is for lower production in Q1 and Q2 and then flat to slightly higher production in Q4. Broiler exports are forecast to rise by less than 1 per cent but still remain at all time record highs

Thursday, January 19, 2012
Beef and Veal Production Surges in November

AUSTRALIA - Australian beef and veal production approached record volumes during November, rising four per cent year-on-year and six per cent on the five year average, to 203,120 tonnes cwt (Australian Bureau of Statistics), reports Meat and Livestock Australia (MLA).

MLA states that this was the highest monthly beef and veal production since October 2008 and was largely due to a four per cent rise in adult slaughter, which finished November at 689,263 head.

Beef production in Queensland (99,073 tonnes cwt), NSW (42,867 tonnes cwt), SA (11,097 tonnes cwt) and Tasmania (4,520 tonnes cwt) rose four per cent, 11 per cent, 22 per cent and two per cent year-on-year, respectively, in line with slaughter levels. However, production in Victoria (32,348 tonnes cwt) and WA (10,010 tonnes cwt) fell three per cent and eight per cent year-on-year respectively, as a result of lower kills.

Average adult carcase weights in November improved slightly on last year, rising one per cent year-on-year, to 290kg/head cwt.

Thursday, January 19, 2012
Fonterra Exports Break Records

NEW ZEALAND - Fonterra has broken its record for the highest export month with 246,000 tonnes of dairy products loaded on ships during December boosting New Zealand’s economy by NZ$1.3 billion for the month.


In March 2011 Fonterra shipped 229,000 tonnes of product, but continued growth in global demand for dairy products combined with record milk production early on in the current dairy season has led to another spike.
 
In December, Fonterra closed the door on an export container every 2.7 minutes -- 546 containers a day. Fonterra's exports account for more than a quarter of all NZ exports.
 
Fonterra Trade & Operations Managing Director Gary Romano said a good autumn and a mild winter created optimal grass growing conditions ahead of the 2011/12 dairy season.
 
"This helped create a wave of milk up about 10 per cent on a daily basis during the peak flow in late September through to November.
 
"While conditions were good overall, farmers did face extreme challenges including a near nationwide dumping of spring snow and flooding in some regions.
 
"Our farmers have coped tremendously, not just with bad weather but also the record milk flow which peaked at more than 80 million litres a day," he said.
 
"Our teams have gone the extra mile to manage the huge amount of milk this season and get value out of every drop of milk. From the moment we collect the milk, process it, pack it, store it, ship it -- our people have put in a huge effort, they haven't stopped."
 
Demand for high quality dairy products is still looking strong with South East Asia, China, the Middle East and North Africa driving the growth in exports.
 
"Dairy is becoming increasingly important in these markets as people grow wealthier and want access to more nutritious foods," Mr Romano said.

Thursday, January 19, 2012
Retailers Make Huge Profits From Beef Sales

SOUTH KOREA - Excessive profits by department stores and supermarket chains have been cited as the main reason why hanwoo meat (beef) remains expensive despite a plunge in homebred cattle prices.


A report by the Consumers Union of Korea showed that department stores and large discount chains increased the prices of the top grade 1++ hanwoo by up to 12 per cent last year, while the wholesale price dropped 23 per cent during the same period.

The Korea Herald reports that beef prices at major retailers almost doubled the prices of smaller vendors, said the consumer advocacy group that surveyed hanwoo prices at 511 distributors and 130 restaurants in 11 cities in recent weeks.
 
Some retailers and restaurants are arguing that the quality and nutrition of beef could be different even among the same grade hanwoo.
 
The consumer group, however, made it clear that there should be no quality difference in the same grade hanwoo as all the hanwoo traded is graded at the abattoir.
 
“Even when taking into account additional charges, we cannot understand how beef prices at major retailers can be more than double those of other vendors,” Kang Jung-wha, the head of the consumer union told the Herald.
 
“If the grade is same, there is no quality difference regardless where they are sold,” she said.
 
Beef cattle prices have fallen sharply as a result of an oversupply of cows raised here over the past two years, weighing heavily on cattle breeders.
 
The Ministries of Agriculture, Home Affairs and the nation’s antitrust watchdog are reviewing ways to simplify the five-stage distribution system to three stages to benefits both cattle breeders and consumers.

Friday, January 20, 2012
CME: Lower Meat Supplies - Uncertain Exports

US - Recent editions of this report have focused on two themes: lower meat protein supplies, largely due to smaller beef and broiler output; and uncertain export demand, particularly for pork, writes Steve Meyer and Len Steiner.
 

On both fronts a consensus appears to be forming. It appears market participants generally accept that beef supplies will decline in 2012, pork will rise modestly and chicken output will stay down at least through spring.

On the export front, the expectation is for relatively flat growth, with only modest gains in some cases over the record levels established in 2012. Where there appears to be real disagreement, in our view, is with regard to domestic demand. Those that hold a more bullish view of the market argue that steady improvement in the broader economy will sustain higher meat protein prices in 2012.

Consensus GDP growth forecasts for 2012 are at 2.4 per cent compared to 1.8 per cent growth in 2011. Improvements in employment numbers, housing metrics, equity valuations and generally higher economic activity imply better demand at both retail and foodservice. The charts below illustrate both the weakness that developed in the second half of 2011 and more recent data points showing signs of improvement.

The restaurant performance index, published at the end of December but covering the previous month, showed that both the current situation and expectations components of the index are now above contraction thresholds.

Restaurant operators noted improvements in both same store sales and foot traffic. For the next three weeks restaurant companies will report their quarterly results and the expectation is for better results than in the previous quarter. Another positive indicator is the recovery in consumer sentiment, which has made a U-turn and will likely test post-recession highs in January.

Those that hold a more bearish view of the market focus on lingering negatives from the recession, particularly on the employment front and consumer finances. According to the University of Missouri economics, pork retail demand was down 4.8 per cent, chicken was down eight per cent and only beef managed to eek out a 1.2 per cent growth.

While unemployment has pulled back, much of the decline has been due to people abandoning the workforce rather than finding jobs.

A substantial number of people now depend on unemployment benefits and, as those benefits run out, consumer finances will struggle. Housing markets also remain a concern, impeding consumer mobility. Another looming threat is the ongoing uncertainty in Europe and the possibility of a slowdown in emerging markets. The Euro situation may have disappeared from the headlines but it will remain a threat until a credible solution is found. Love them or hate them, financial markets are the glue that keeps capitalism together. The unraveling of the Euro in 2012 could certainly lead to a global recession and negatively impact consumer protein demand.

Friday, January 20, 2012

Meat Consumption Habits are Changing

ANALYSIS - The current economic crisis and new eating habits are reducing consumption of meat in the developed world, writes Editor in Chief Chris Harris.
 
The consumption of meat in the United States is expected to be 12.2 per cent lower this year than in 2007, according to a report from Danish Crown and Food and Culture.
 
On average each American is forecast to eat approximately 75kg meat in 2012 and while this may appear to be a large amount, it is actually 12.2 per cent less than in 2007. In 1999 the average US consumption of meat was 86kg.
 
However, while consumption has dropped in the US, it still has a high per capita consumption compared with many other countries around the world, although the trend for reduced meat consumption is being reflected in many of the developed nations.
 
A report from Minna Kanerva from the University of Bremen said that in Europe, the UK is the country with most stable consumption, while Spain has seen the fastest increase, rising from lowest to highest position, although in recent times consumption has levelled off.
 
France has been recording a drop in consumption over the last decade and while Germany had seen a drop in consumption in the 1990's this has now levelled off.
 
The Netherlands has seen the steepest fall in meat consumption together with Hungary.
 
Finland and the Netherlands have the lowest meat consumption in Europe and the greatest fall across Europe has been in the consumption of beef, according to Minna Kanerva.
 
A report from Euromonitor also shows that sales of meat in the developed nations have slowed as the growing trend meat-free or meat-reduced diets has its impact on consumer markets.
 
The Euromonitor report shows that meat has been one of the worst performers between 2005 and 2010 with sales growing less than 14 per cent ahead only of vegetables at just under 11 per cent.
 
Euromonitor says that part of the issue is that there has been a growing trend for low-meat diets in Europe and North America - often backed by celebrity led campaigns such as Meatless Thursday and Meat-free Monday.
 
The Euromonitor report shows that the modern consumer as a more complex character with various religious, market and fashion trends starting to dictate the way they spend their money and on what, as well as other concerns over expense and cash flow.
 
It reports a new kind of consumer emerging - a "flexitarian" - who is reducing meat consumption because of health and environmental concerns.
 
Euromonitor said it predicts that a gradually growing population of vegetarians, semi-vegetarians, meat-reducers and "vegivores" are set to consume more meat free foods and the global value of meat alternatives is set to increase by 15 per cent between 2010 and 2015.
 
With countries in the developed nations such as the US eating less meat, it means that there is more domestic product on the market, increasing competition for those meat exporting countries.
 
However, with growing wealth, populations and urbanisation in developing countries, there is an opportunity for the global meat trade to find new markets and compensate for the drops in consumption in the developed nations.
 
Karl Christian Møller, Chief Analyst of Danish Crown said: "We see a tendency for consumption worldwide will be more evenly distributed. While the Americans cutting back on consumption of meat, consumers in countries such as China and other middle income countries put their consumption up and are buying more meat."
 
Because of the growth in regions such as China, SE Asia, Russia, South America and India, meat consumption globally is increasing almost at a rate where production and trade cannot keep up with demand.
 
While the industry is might be struggling to meet this growing demand outside the developed world, it can alleviate the problem by cutting waste.
 
FAO figures show that about a third of all food produced globally in the industrialised world is wasted and more than a fifth of meat.

In Europe alone 3.1 per cent of meat is lost in production, 0.7 per cent in handling and storage and five per cent in processing and packaging. Another four per cent is lost during distribution and another 11 per cent at the consumption stage.

 Chris Harris, Editor-in-Chief

Friday, January 20, 2012

Egyptians Visit Brazilian Poultry Companies

BRAZIL - Brazilian companies that export chicken are going to receive a delegation from Egypt over the weekend.


According to the executive president at the Brazilian Poultry Union (Ubabef), Francisco Turra, the group should visit slaughterhouses and verify whether halal slaughter is strictly followed.
 
"As they consume halal products, they are coming here to check whether the practice is executed according to the books, and to visit the plants," said Mr Turra.

The executive added that visits by importers are routine and do not mean concern with the quality of the product. In the case of Egypt, as there was a change in political regime, with the fall of dictator Hosni Mubarak, "It is now necessary to re-evaluate everything," he pointed out.

Mr Turra added that Brazil "is a model" in halal slaughter and that representatives in the sector are usually called to speak in international events about how the Country adopted and developed the practice. Halal, which means "permissible" in Arabic, is preparation of foods and other products according to Islamic tradition.

To the executive, Egypt is a "great market" that bought "an incredible volume" of 124,400 tonnes from Brazil in 2010, equivalent to US$197 million. With the political crisis, exports dropped 42.1 per cent, to 72,000 tonnes, or US$ 121.8 million in 2011.

"There is space for recovery of what was lost last year," said Mr Turra. To him, Egypt is "focused on Brazil". "They like our product and also like doing business with Brazilians," he pointed out.

Chicken exports to Egypt gained strength late last decade, when the country had cases of avian flu and local production was practically extinguished. Prior to that, the market was protectionist and there were barriers for imports of the product from Brazil.

Tuesday, January 24, 2012
CME: Price-Quantity Relationship shows Export Impact
US - The impact of output reductions and higher exports for US beef and pork can be clearly seen when one considers the price-quantity relationships for 2011, writes Steve Meyer and Len Steiner.


Moreover, the situation for the poultry sectors can be seen in stark contrast to those of the “red” meats by considering the same graphics.

The scatter diagrams below show annual per capita consumption in retail weight on the X axes and deflated retail price on the Y axes. The consumption data come from the Livestock Marketing Information Center while the retail price data are the standard USDA weighted averages that are based on Bureau of Labor Statistics data.

The CPI for all goods is used to deflate the prices to 2005 dollars. As you can see, US domestic per cap consumption of beef and pork — which readers of DLR know is actually “disappearance” which, in turn, is actually “availability” — has fallen sharply in recent years.

Pork per cap consumption most recently peaked at 50.8 pounds in 2007. It is now estimated to be only 45.9 pounds for 2011, a decline of almost 10% with roughly a third of that decline occurring last year. Beef consumption was roughly 65 pounds per person for each year from 2003 through 2007 before it, too, fell steadily to last year’s 57.4 pounds, a decline of about 12%.

The prices of both “red” meats increased as domestic product offerings fell, suggesting that demand (which reflects consumer preferences through the price they are willing to pay for the quantity offered) has fared better than has consumption.

The scatter diagrams for chicken and turkey look much different, though. First, per cap consumption for both species is still nearer the high end of the historic range than at the low end. Second, 2011 did not see dramatic changes for domestic product offerings.

Chicken producers, of course, accomplished that stability by accepting prices that fell far short of costs for most of the year — a course of action that cannot continue. It is almost certain that the 2012 observation will involve a lower quantity but the question is whether we will finally see a higher chicken price to go with it.

The ‘11 P-Q observation for turkey suggests higher demand relative to recent years as deflated prices rose on hardly any decline in product offerings. Since 2005, chicken demand has fallen while turkey demand has grown.

Tuesday, January 24, 2012
Meat and Poultry Demand Struggles Continue
US - In this week's "Market Preview" featured in National Hog Farmer magazine, Steve Meyer discusses the meat and poultry demand situation in the US.


Meat and poultry demand continued to struggle in the second half of 2011, but still stands a chance of being higher for the year. Figure 1 shows annual demand indexes for pork, beef and chicken from 1970 through 2011. The data through 2010 are for calendar years, while the 2011 observation covers December 2010 through November 2011, the last month for which complete data are available. I use the 12-month period to capture the full gamut of seasonal variation in that last observation. Using a year-to-date figure would omit part of that variation which, in most instances, is quite important.


Through November, pork demand had fared better than either of its major competitors, gaining 1.2% from the same period 12 months before. The pork index of 92 says that pork demand is 8% lower than it was in the index’s base period of 1985. Note that all three indexes equal 100 in that year.

Both beef and chicken demand remain on the positive side of the ledger, but just barely so. That is especially true of chicken, which was only 0.3% higher for the December-November period. These struggles continue the pattern of recent years after the demand index for chicken grew from 94.9 in 1982 to 146.2 in 2005. That 23-year period saw 18 positive years vs. only five negative years.

The chicken demand index then fell four straight years before growing marginally in 2010. It is very likely that 2011 will again see a decline in chicken demand when December data is available.

The bad news is that these "annual" numbers for 2011 have been getting worse and worse as the year has progressed. Figures 2 through 4 show year-on-year comparisons of monthly indexes. That is, the last observation in each chart shows the demand index for that species in November 2011 vs. November 2010.

 

 


As you can see, these monthly indexes indicate that the demands for all three species were very strong from mid-2010 through the mid-2011. Chicken demand began to falter in May, plunged in September and saw one of its largest year-on-year declines ever in November. Pork demand maintained its growth through June, but has been 4-5% lower than last year since July. Beef demand has been up and down since mid-2010, but remained on the growth side for most months through November.

What will be the key factors for domestic demand this year?

First and foremost will be the performance of the economy in general and its impact on consumer spending. Per capita disposable income growth fell from 2.7% (year-over-year) in the fourth quarter of 2010 to -0.7% in the third quarter of 2011. There are some signs that the trend may be changing but this important measure of consumer well-being (and purchasing capacity) is 4% below its pre-recession peak in mid-2008 and is only 1.8% higher than the low it reached in the fourth quarter of 2009. If consumers are going to spend more money on meat and poultry, they need more income.

And they likely will spend more for meat and poultry in 2012 simply because beef and chicken prices are likely to rise significantly. Beef production will fall sharply in the last half of the year, pushing already-record wholesale and retail prices even higher. The chicken output reductions that began last fall will continue and probably get larger, finally pushing chicken prices higher as well.

Pork prices are still near the record levels set in September and will remain high. But retail pork prices will almost certainly decline this year relative to the prices of both beef and chicken. This price effect will strengthen pork demand, but the question is whether it will be enough to offset the negative impact of the income effect described above. The answer remains to be seen, but I think it is likely, especially if the economy returns to a recovery mode and incomes rise a bit.

Is soft pork demand an indictment of any one demand factor, such as Pork Checkoff promotions and advertising? Absolutely not. The indexes only describe how demand is changing. They say nothing in and of themselves about why it is changing. I am confident that consumer incomes and consumer spending was the major negative force in the domestic market in 2011. I don’t know how effective your Checkoff promotions were, but I will say that the indexes may well have been even worse had those promotions not been in place. The impacts of these separate factors can be derived, but it requires some complex modeling.

 



As published in National Hog Farmer's Weekly Preview.

EU Expected to Lift Ban on Thai Fresh Chicken

THAILAND - Thai Deputy Prime Minister and Finance Minister Kittirat Na-Ranong says that the European Union (EU) is expected to lift its ban on Thai fresh chicken exports to the 27-member trading bloc later this year.


According to Bernama.com, Kittirat told reporters that the Thai ambassador to Brussels, as well as Thai agriculture and commerce authorities recently met John Dalli, European Commissioner for Health and Consumer Policy, to discuss the EU's import ban on Thai fresh chicken and some other Thai food products.

Kittirat quoted the European Commissioner as saying that the EU was satisfied with conditions of Thailand's poultry facilities and food safety measures and is unlikely to renew its ban on Thai fresh chicken exports in mid 2012, noting, however, that all EU member states have yet to approve the stance and, in the meantime, the European commissioner urged Thailand to treat EU products exported to Thailand accordingly, including beef and some fruits.

According to the Thai deputy premier, he had discussed the EU fresh chicken ban at many forums and also met European Commissioner for Trade Karel De Gucht during the Ministerial Conference of the World Trade Organization (WTO) in Geneva last December, and wrote to three European commissioners tasked with health, consumer protection, trade and agriculture, asking them to lift the ban against the Thai food products right away.

The deputy premier said he was glad with the latest development and believed that the cancellation of the ban would allow Thailand to restore market shares in the major EU market and would also raise demand for Thai farm produce and earnings for Thai farmers.

Thursday, January 26, 2012

IPE 2012: Future of the US Poultry Industry Explored

ANALYSIS - Delegates at a half-day conference on the future of the poultry industry heard that technology can provide solutions to the the problem of feeding a growing global human population and that the US economy is already on its way to recovery. Senior Editor, Jackie Linden, reports from IPE Week.


 

"Technology is the answer to safe, affordable and abundant food," asserted Jeff Simmons, President of Elanco, at the Executive Conference on the Future of the US poultry industry yesterday, 25 January. The session was held in conjunction with the International Poultry Expo in Atlanta, US.

Faced with the realities of a growing global human population, rising demand for meat and dairy products, environmental limitations, economic constraints and political issues, he said that there is no bigger global issue today than the need to provide safe, abundant and affordable food to the seven billion people on the planet.

"The science must be right but there is a need to address too the economic, environmental, social/moral and consumer 'corners' of the issue," he continued, adding that Elanco has 30 people globally focusing exclusively on consumer issues.

With the Earth's resources finite, 70 per cent of the answer lies in technology to improve efficiency, said Mr Simmons.

Technology enables three 'rights', he said: food, a basic human right; choice, a consumer right and sustainability, which he described as environmentally right.

On the first, hunger is the number 1 health problem in the world – in that 25,000 people die worldwide from starvation every day and even developed countries present cases of ‘hidden hunger’, in which a significant minority of children, particularly, are undernourished.

Citing a recent study of international consumer attitudes in 26 countries between 2001 and 2010, Mr Simmons highlighted that the surveys reveal 99 per cent of consumers make their food purchases based on taste, cost, nutrition and choice. He sees the opportunities for the poultry industry to offer consumers choices in what they buy and eat and criticised some of the extreme fringe groups who represent a small proportion of the population but whose aims are, in effect, to limit consumer choice by imposing their views on the majority.

On the need to improve sustainability, Mr Simmons said: "We must freeze the footprint of animal production in order to feed the human population and maintain the planet."

Also speaking at the event was Jim Paulsen, chief investment strategist at Wells Capital Management, who offered his views on the economic and financial outlook, mostly for the US market.

He presented evidence to support his view that the recovery in the US has already started, including a rise in the numbers employed and the first signs of a return of consumer confidence – two factors that are closely linked, he said.

Highlighting the similar patterns between the present situation and the recessions of 1991 and 2001, he expects the recovery to be slow, rather than dramatic. This contrasts with the recovery following earlier recessions, which were sudden and dramatic and were followed by equally sudden recovery. He explained that the earlier recoveries were boosted by significant increases in the labour market but, since the 1980s, the US population has been rising more slowly as the result of a falling birthrate and limits on immigration, two factors that put a brake on growth.

In Mr Paulsen's view, 2012 is a ‘gear year’: two to three years after a recession, unemployment begins to fall and consumer confidence returns, increasing spending and thus leading to economic growth. He asserted that the downturn is caused less by the rise in unemployment and more by the reluctance of the employed population to spend money as they prefer to ‘play it safe’ and save during these periods.

Mr Paulsen has calculated that the current rate of GDP growth in the US is, in fact, the fourth best in the last 50 years, and he forecasts it will be between 3.0 and 3.5 per cent this year.

Turning his attention to Europe, Mr Paulsen described the current situation in the Euro–zone as a chronic problem rather than an imminent calamity, now that the problem is now being treated as an economic issue, rather than a political one. Whilst economic growth in the region will be slow, at best, he is not predicting financial contagion. He asserted that the solution to the EU problem lies in stimulating growth rather than imposing austerity.

For the emerging economies, Mr Paulsen expects a return to growth in 2012 after they were held back last year to prevent ‘overheating’.

 Jackie Linden, Senior Editor

Friday, January 27, 2012
CME: Margins Fall for Beef Packers/ Tighten for Pork
US - A hot point of discussion the past few weeks has been the status of packer margins in both the pork and beef sectors, write Steve Meyer and Len Steiner.


As you can see in the diagrams below, while margins have certainly tightened for pork packers, they have fallen off a cliff for beef packers.

As always, readers should note that the margins depicted here are GROSS margins. They do not estimate packers’ profits. They estimate the amount of money packers have to pay for plant, equipment, labor, transportation, energy and any other costs. Whatever is left over is net profit. We do not try to estimate packer costs because we have very little data and, based on our knowledge, those costs differ considerably from company to company and plant to plant.

What is surprising in that margins could get this bad this quickly after packers in both species have managed margins so well over the past few years. There have, of course, been many ups and downs — even more than these charts show since we use 4-week moving averages to smooth the data a bit. The raw weekly data is VERY noisy. Why the big declines?

The situation for pork packers is perplexing indeed, primarily due to its timing. Pork margins frequently get tight in the summer (as they did last year) when hog supplies decline. Packers need to maintain throughput to support labor forces, minimize unit costs of plant, equipment, etc., maintain customer relationships, etc. They chase the limited supplies hard, bidding up prices and damaging margins in the short run in order to manage their long-run business.

Hogs, though, have hardly in short supply this past fall. Pork packers, as a group, ran near capacity for much of the fall and meat margins (the difference between the cutout value and the cost of the animal) were above $10/head in late November. See the margin component chart on page 2. Meat margins began declining in December and were negative for the weeks of January 7 and 14, the last two weeks for which data are available.

Why have packers continued large slaughter runs (+4% and +2.5% from 2010 levels the past two weeks) at negative meat margins? Is there something coming on the demand side that will reward them for maintaining volume? Are they fighting to maintain market share in spite of short-term losses? All of those would explain this behavior. We think negative meat margins will be reconciled sooner rather than later, though, so expect some pressure on cash hogs unless stronger cutout values appear quickly.

The beef side is, in our opinion, much more of a capacitydriven situation. The beef packing sector has been over-sized relative to cattle numbers for some time. Some reconciliation has occurred over the past few years (Tyson’s closure of its Emporia, KS plant being the most notable) but there is still more capacity than can be profitably supported and that situation is going to get MUCH worse over the next 18-24 months. Just how much worse will be answered to some degree by this afternoon’s Cattle report.

This margin situation has been brewing for some time as well. The margin component chart on page 2 shows that meat margins for beef packers have been negative for the vast majority of weeks since mid-2010. The situation has become critical since October 1 when the beef margin hit -$105.89. The low, so far, was Christmas week at -$123.59. But there are more cattle in feedlots now than last year, you might say. Yes, but that doesn’t mean there are more market-ready cattle in yards.

Early placements of light-weight cattle began last winter when wheat pastures were short. They continued in a big way last summer when grass pastures failed. The flow of these light-placed cattle to market has been very difficult to predict and we would argue that packers’ behavior, slaughter levels late in 2011 (even considering the two snowstorms in the southern plains) and prices are evidence that market-ready supplies are tight. And they will get even tighter. One bright point for both species — and the saving grace for total packer margins — is the value of by-products. Exports of pork variety meats and a rebound in cattle hide values had by-products at record levels this fall and they should remain high in 2012.

Cattle Outlook: Retail Beef Prices Set Record

US - Retail beef prices set a new record in December for the fourth month in a row. The average grocery store price for choice beef was $5.016 per pound, up 1.5 cents from November and 57.8 cents higher than in December 2010. Retail beef prices have been above year-ago for 22 consecutive months.

 
Ron Plain
 
The 5-area average price for slaughter steers was $121/cwt in December, down $2.50 from November, but up $17.70 from a year earlier.

Based on preliminary data, beef demand was up 4% in December and up 1% for all of 2011. Beef demand was down in 2008, 2009 and 2010.

Cow slaughter in 2011 totaled 6.712 million head, the most since 1996. Beef cow slaughter was up 4.6% from 2010 and dairy cow slaughter was up 3.8%. High cow slaughter with feeder cattle prices are at record levels is an odd combination. In this case, the extreme drought in the southern plains overrode the economic incentive to expand the cow herd.

Beef cutout value was higher this week. On Friday morning, the choice boxed beef carcass cutout value was $184.17/cwt, up $2.73 from last week. The select carcass cutout was up $3.90 from the previous Friday to $179.21 per hundred pounds of carcass weight. The choice-select spread, $4.96, was down $1.18 from a week earlier to the lowest level since August 22.

Fed cattle prices were higher this week but on extremely light volume, only 550 head. Through Thursday, the 5-area average price for slaughter steers sold on a live weight basis was $123.00/cwt, down $2.67 from last week, but $18.69/cwt above the same week last year, and the highest of record. There was no price quote for steers sold on a dressed weight basis this week.

This week's cattle slaughter totaled 608,000 head, down 3.2% from the week before and down 7.0% compared to a year ago. The average steer dressed weight for the week ending January 14 was 854 pounds, up 3 pounds from the week before and up 5 pounds from a year ago.

Feeder cattle prices across the country this week were unevenly steady compared to last week. The Oklahoma City auction prices were $4 lower to $4 higher with the ranges for medium and large frame #1 steers: 400-450# $185.50-$197.50, 450-500# $184.50-$191.50, 500-550# $168.50-$180.50, 550-600# $162-$173.50, 600-650# $156.50-$172, 650-700# $154.50-$158.75, 700-750# $150.75-$158.25, 750-800# $147-$154.50, 800-900# $141.25-$150.25, and 900-1000# $133.50-$144.50/cwt.

The February live cattle futures contract settled at $124.70/cwt today, up 15 cents compared to last Friday. The April contract closed at $128.45/cwt, up 73 cents for the week. June settled at $127.17 and August closed at $128.95.

USDA's semi-annual cattle inventory report was bullish on cattle prices in the coming year. More next week.

GLOBAL POULTRY TRENDS - Slow Growth Forecast for Turkey Meat

Since 2000, there have been years when global turkey production has expanded and others in which it has contracted, hence over the period to the estimates for 2012, the industry has recorded only slow growth averaging well below one per cent per year, according to industry watcher, Terry Evans, in his latest update on the prospects for the global turkey industry.

 




According to FAOSTAT, data turkey meat production between 2000 and 2009 (table 1) expanded by some 0.4 per cent from a little under 5.1 million tonnes to almost 5.3 million tonnes. However, when making these calculations, FAOSTAT has assumed that annual production in Poland has been between 50,00 and 60,000 tonnes, despite data on Poland's turkey meat exports amounting to 80,000 tonnes in 2008 and 73,000 tonnes in 2009! Another statistical source has indicated that turkey production in Poland is in the region of 280,000 tonnes which, if correct, would mean that the FAOSTAT total for Europe and the world is understated by at least 200,000 tonnes.
 
So, the actual global total for 2009 could be about 5.5 million tonnes while the forecasts for 2011 and 2012 would rise to around 5.7 million tonnes. This again underlines the point that on many occasions, a series of data should not be taken too literally; the trend being much more important.
 


Based on FAOSTAT figures, the number of turkeys slaughtered worldwide in 2009 was a little more than 656 million, which represented a reduction of some 34 million (five per cent) on the 2008 record of almost 691 million. Of the 2009 total, 380.6 million (58 per cent) were killed in the Americas and 212 million (32 per cent) in Europe.

An interesting feature of the development of the turkey industry has been how the average eviscerated of birds has increased. Back in 2000, the average carcass weight globally was around 7.6kg. However, this disguises big differences between regions and, more importantly, countries. Thus, at that time, the average eviscerated weight of turkeys in Italy was 9.7kg, which contrasted with just over 9kg in the USA and 6.4kg in France. By 2009, the global average had risen to almost 8.1kg. While the average in Italy had increased by 0.7kg to 10.4kg, the gain in the USA was even more rapid as the average went up by 1.5kg to 10.5kg. In contrast, the increase in France was just 0.5kg to reach 6.8kg while in Germany, the weight gain was marginal, the average rising from 8.6kg to 8.7kg.
 
The higher slaughter weights reflect changes in the market place, with consumers not only buying whole birds for special holiday occasions, while consuming turkey portions and prepared product at other times of the year. For example, in the US back in the 1970s, at least half the turkeys produced were eaten over the festive holidays, while today this proportion has contracted to around 30 per cent.

Although the number of turkeys slaughtered worldwide actually declined from 667 million in 2000 to 656 million in 2009, because of the rise in slaughter weights, the actual yield of turkey meat went up from just under 5.1 million tonnes to 5.3 million tonnes.

On a regional basis, while the Americas and Europe combined accounted for 94 per cent of global production in 2000 and 2009, this figure conceals the fact that during this period, the Americas increased its market share from 56 per cent to 63 per cent, while Europe lost ground its share falling from 39 per cent to less than 32 per cent.

The changes in the top 10 turkey-producing countries over the period are shown in table 2.
 


Broadly speaking, table 2 shows that the 10 biggest turkey meat producers accounted for 90 per cent of global production in 2000 and also in 2009. However, there have been some dramatic changes in the ranking of those countries, which underline the point that Europe's share of the total has declined over the review period. Thus, in 2000, four European countries occupied the second to fifth places in the league table but by 2009, France, Italy and the UK had slipped down to the fourth, fifth and seventh positions, respectively. On the other hand, the expansion that has occurred in Germany had pushed this country into the number two position although forecasts for 2011 and 2012 indicate that, in these years, Brazil (which was eighth in 2000) with a forecast production of some 500,000 tonnes a year, will have knocked Germany off the number two spot.

Outside of the Americas and Europe, the only country producing significant quantities of turkey meat is Israel although even here, output has contracted to less than 100,000 tonnes a year.
 



Figure 1. Turkey meat production in selected countries ('000 tonnes)
 
Figure 1 shows how Brazil and Germany are the only countries among the major producers to exhibit consistent growth throughout the period 2000 to 2009 but the forecasts for 2011 and 2012 (which are included in the graph) reveal that, while continued growth is anticipated in Brazil, output in Germany likely to level out and possibly decline slightly. The chart also presents what one statistical reporting authority considers is happening in Poland with production rising from around 260,000 tonnes to 285,000 tonnes between 2005 and 2008 and having since contracted a little to around 280,000 tonnes.

The 38 per cent expansion that occurred in Africa between 2000 and 2009 was mainly the result of significant increases in Morocco, Tunisia and Algeria. However, the regional total still represents no more than 2.5 per cent of the global figure.

Clearly, the Americas is the main producing region with the United States easily the number one producer, accounting for almost 2.6 million tonnes a year or some three-quarters of the regional total. Back in 2000, this country's share was considerably higher at 85 per cent, however.

In 2011, it is estimated that 244 million turkeys will be killed in the US although in 2000, the number was higher at 271 million which, in turn, was well below the 1996 record of more than 300 million. In 2009/10 half of the birds were grown in just four states – Minnesota, North Carolina, Arkansas and Missouri. Also, more than a half were processed by just three companies – Butterball LLC, Jennie-O Turkey Store, Inc and Cargill Value Added Meats.

The expansion in Brazil has been nothing short of dramatic, output having increased four-fold between 2000 and the forecast for 2012. Much of the increase has been built on an expanding export trade. However, there are now signs that exports have suffered a set-back, which is likely to apply a brake on the rate of production growth even though domestic consumption continues to go up.

Production in Europe is entirely related to developments in the European Union and, as has been noted earlier, the current and short-term prospects for which are for a level of growth well below what has been achieved during the first half of the past decade. Among the major producers only Germany has expanded output as production in France, Italy and the UK has markedly declined.

The doubling of output in Oceania is a direct reflection of the gains made by Australia's turkey industry, where annual output currently stands around 53,000 tonnes.
 
Turkey Trade Flat
 
International trade in turkey meat can be described as 'flat' as global exports have hovered between 830,000 tonnes and 950,000 tonnes throughout the past decade with no definite trend emerging.

Exports of turkey meat, like its production, are primarily restricted to two regions – Europe and the Americas, and a handful of countries (table 3). The Americas' role in this trade has increased at the expense of Europe. In 2009, the Americas accounted for some 41 per cent of the global total and Europe 57 per cent, which compares with 29 per cent and 68 per cent, respectively, back in 2000.
 




The Americas has the world's biggest exporter, the US, whose volumes of fresh/frozen product traded have fluctuated from year to year between 180,000 and 280,000 tonnes between 2000 and 2009. In 2010, US turkey meat exports amounted to 265,000 tonnes, of which 146,000 tonnes went to Mexico, while a further 63,000 tonnes were shipped to China, Hong Kong, Canada and the Dominican Republic, these five markets accounting for 80 per cent of the total. During that year, exports represented around 10.5 per cent of US domestic production. More than 90 per cent of shipments are turkey parts and dark meat products. USDA forecasts for 2011 anticipate an increase in US exports to 295,000 tonnes, though for 2012, a cut-back to 281,000 tonnes is foreseen.

Having expanded throughout the period 2000 to 2008, exports from Brazil have since declined, primarily as a result of reduced purchases by its largest market, the European Union. However, Brazilian traders are currently optimistic about sales to the EU and are also seeking out new markets in Asia, particularly Malaysia and Indonesia.

Canada exports around 25,000 tonnes a year though the figure has not changed greatly over the past decade, its two biggest customers being the US and South Africa.

The other country in this region shipping significant amounts is Chile, the total having risen from around 5,500 tonnes in 2000 to nearly 18,000 tonnes in 2009.

Europe's exports are almost all accounted for by shipments from EU member countries but the annual total has declined from more than 600,000 tonnes to 470,000 tonnes in 2009. If sales to fellow EU countries are discounted, annual exports are less than 150,000 tonnes. A major factor contributing to the decline has been the reduction in purchases by Russia from more than 100,000 tonnes back in 2000 to just 40,000 tonnes in 2009, while the forecasts for 2011 and 2012 point to this figure falling further to around 30,000 tonnes.
 



Figure 2. Leading turkey meat exporting countries ('000 tonnes)
 
Outside Europe, turkey meat imports are almost negligible with the exceptions of Mexico and China. Purchases by Mexico escalated to around 200,000 tonnes in 2008 but then fell back to 143,000 tonnes, as the quantity bought from the US slumped from 154,000 tonnes to 111,000 tonnes. However, since then, Mexico's total imports have climbed back to the 160,000-tonne level with the forecast for 2012 at 164,000 tonnes.

Recent years have witnessed an increase in purchases by China where virtually all the turkey meat consumed is imported and the total is forecast to reach almost 50,000 tonnes by 2012 with some 90 per cent being bought from the US.

Europe imported 450,000 tonnes of turkey meat in 2009 (table 4) with EU member states taking 380,000 tonnes. If intra-EU trade is excluded then annual receipts amounted to around 100,000 tonnes and this figure is expected to contract to some 90,000 tonnes in the next couple of years.
 



Figure 3. Leading turkey meat importing countries ('000 tonnes)
 
Little Increase in Turkey Consumption
 
Although there are few measurements of turkey meat consumption, while the total quantity consumed globally has increased, the rate of growth has not matched that of the human population. As a result, the uptake per person has not gone up and worldwide, it looks to average around 0.8kg per person per year.

Detailed figures are only available for a few countries (table 5) and readers should note that the uptakes for 2010 and 2011 have been presented to the nearest whole number, as it can be argued that the errors involved in calculating the available supplies of turkey meat, as well as human population numbers, make assessing consumption levels more precisely debatable. By far the world's biggest eaters of turkey meat are the Israelis whose average annual consumption is around 10kg.
 


Consumer appreciation of turkey's good taste and nutritional value gave consumption in the US a massive boost in the 1980s when average uptake reached 7.7kg per person, which was more than double the levels recorded in the 1970s. However, since 1990, the quantity eaten has broadly settled at this level and is calculated to have averaged 7.5kg in 2010, though it is forecast to slip to 7.4kg in 2011 an 2012.

Per-capita consumption in Canada is around 5kg a year, while the average for the EU is assessed at around 4kg.

Consumption in Mexico and Brazil appears to range between 1.0 and 2.0kg while, for all the other countries where this assessment is made, the average is 1kg or less.

It is difficult to see per-capita turkey meat consumption increasing much in developed countries although significant gains may occur in some of those with expanding economies, such as Russia and China and where currently the level of uptake is low.

January 2012

Wednesday, February 01, 2012
Cherkizovo Pork, Poultry Sales Volume Up in 2011
RUSSIA - Sales volumes in Cherkizovo's pork division in 2011 increased by four per cent to approximately 91,400 tonnes of live weight, compared to 87,650 tonnes in 2010

RUSSIA - Sales volumes in Cherkizovo's pork division in 2011 increased by four per cent to approximately 91,400 tonnes of live weight, compared to 87,650 tonnes in 2010

Prices in rouble terms increased by 11 per cent from 71.95 roubles per kg in 2010 to 80.04 roubles per kg in 2011 (excluding VAT).

Compared to the price in the third quarter of 2011 the price in the fourth quarter increased by 2 per cent to 82.97 roubles per kg.

In dollar terms, prices for pork sales increased by 15 per cent from $2.37 per kg of live weight in 2010 to $2.72 per kg of live weight in 2011 (excluding VAT).

Compared to the third quarter of 2011, the price in the fourth quarter decreased five per cent to $2.66 per kg.

Poultry Division
Sales volumes in the Poultry division in 2011 increased by 34 per cent to approximately 260,200 tonnes of slaughter weight compared to 194,100 tonnes in 2010, reflecting organic volumes added in the Bryansk and Penza clusters and the inclusion of sales by Mosselprom, acquired in May 2011.

Prices in rouble terms increased by one per cent from 71.89 roubles per kg in 2010 to 72.79 roubles per kg in 2011 (excluding VAT) .

Compared to the third quarter of 2011, the price in the fourth quarter stayed almost flat at 73.74 roubles per kg.

Prices for poultry sales in dollar terms increased by 5 per cent from $2.37 per kg in 2010 to $2.48 per kg in 2011 (excluding VAT).

Compared to the third quarter of 2011, the price in the fourth quarter decreased 7 per cent to $2.36 per kg.

Meat Processing Division
In 2011, consumption recovered to pre-crisis levels, and sales volumes in the Meat Processing segment increased by 3 per cent to approximately 145,270 tonnes compared to 141,550 tonnes in 2010. Prices in rouble terms increased by 13 per cent from 118.21 roubles in 2010 to 133.65 roubles per kg in 2011 (excluding VAT).

Compared to the price in the third quarter, the price in the fourth quarter of 2011 increased by 6 per cent to 142.74 roubles per kg. Prices in dollar terms increased by 17 per cent from $3.89 per kg in 2010 to $4.55 per kg in 2011 (excluding VAT). Compared to the third quarter of 2011, the price in the fourth quarter decreased 2 per cent to $4.57 per kg.

Commenting on the performance, Sergey Mikhailov, CEO of Cherkizovo Group said: "We delivered a 34 per cent increase in sales volumes within our Poultry division in 2011 through a combination of organic growth, the contribution from Mosselprom, and the launch of additional facilities at our Bryansk and Penza clusters.

The Pork division delivered growth in line with management's expectations as the segment recovered from the effects of the extreme weather conditions in 2010. In the course of the year we launched breeding facilities at our pork farms in Tambov, Voronezh and Lipetsk.

In the Meat Processing division we saw a steady increase in demand as consumption recovered in 2011. We are focused on improving the product mix in this segment.

Pricing in the poultry division in 2011 has been relatively flat, while in the pork division pricing has increased as a result of demand rising more than expected due to its substitution from beef, where prices have been on a steep uptrend in 2011.

Overall, management is optimistic that the Group will produce a strong financial performance for the full year in line with our expectations and will further continue to deliver against its strategy."

Thursday, February 02, 2012

Drop in Pork Exports - Growth for Beef and Lamb

GLOBAL - While beef and lamb slaughterings declined across the EU, a growth in pig slaughterings was noted in 2011.
 

Downward Trend in Pig Slaughterings Forecast for 2012
 
Pig slaughterings in the European Union grew two per cent year-on-year during the first three quarters of 2011.

The UK and Poland had the strongest growth rates of nearly seven per cent, while production in Denmark rose by five per cent, according to a report prepared by QMS's Iain Macdonald and Stuart Ashworth. Expansion also took place in Spain and Germany where slaughterings increased by three and two per cent respectively. However, a downward trend is forecast to continue into 2012 as sow herds have contracted in a number of Member States.

Most French pig producers failed to make a profit in 2011. Losses were made as increased feed costs pushed production costs above €1.50/kg. Brazil too witnessed a decline in pork exports. In December three Brazilian processors were permitted to resume exporting pigmeat to Russia. Hence there is industry optimism that further access may be granted as 2012 progresses.

After the US recognised the Brazilian province of Saint Caterina as the only FMD-free state, it gave the latter's pig sector a boost. The FMD-free status was recognised 14 months ago, but due to worries, this was delayed.

According to USDA census, the US pig herd grew by two per cent in December 2011. However, the breeding herd expanded at a more modest pace, indicating a mere four per cent growth. On the one hand this indicates a substantial improvement in productivity, but on the other hand it suggests that producers are exhibiting caution. Abattoir throughputs rose two per cent during 2011 and a similar expansion is forecast for 2012.

Several Factors Affect Aussie Beef Imports
 
In 2011, Brazil witnessed a 14 per cent decline in beef exports, although it was the third largest exporter behind Australia and the USA.

The decline was a result of Brazil's focus on the Middle East, with one-third of the total being delivered to Iran, Egypt, Saudi Arabia and Israel. Total exports were limited mainly by the combination of reduced domestic production and increased domestic demand. The USDA’s forecast of two per cent recovery in Brazilian production volumes in 2012 is likely to be consumed by the Brazilian population.

Australian beef exporters managed to overcome a number of external shocks during 2011. Among these external factors were the natural disasters in Queensland (floods) and abroad in Japan (earthquake and tsunami), its largest market. Exports were also hampered by the strong Australian Dollar, which reduced competitiveness against US beef in key Asian markets. During 2011, 54 per cent of total volumes went to the US and Japan compared with 81 per cent in 2004.

Looking forward to 2012, Meat & Livestock Australia (MLA) is forecasting a further gain in exports of 3 per cent. The main assumptions behind this growth are a recovery in demand from the US as its production volumes fall back and beef prices subsequently rise, plus further diversification into the growing markets of the Middle East and South Asia. Production volumes are forecast to be boosted by greater carcase weights; a further consequence of wet weather during 2011 which led to improved grazing conditions.

JBS's decision to close one of its Argentinian plants was made due to a number of linked factors, beginning with the falling cattle population in Argentina which has left the firm operating with spare capacity whilst having to pay more to source stock. As a result, profitability has suffered and processors have found it difficult to access permits for the lucrative export trade. The resulting uncertainty has led JBS to downsize.

South American trade partners have suspended beef imports from the FMS-affected region in northern Paraguay. With severe questions being asked of the nation’s animal health standards, beef producers in Brazil, Argentina and Uruguay may benefit from a rebalancing of export demand. However, tight supplies in these countries will restrict their ability to fill the gap left in global trade.

Korea is set to re-open its market to Canadian beef from animals under the age of 30 months after its parliament passed new import health requirements. Eventually the market is forecast to be worth around £20m per annum to the Canadian industry.

Australian Lamb Exports Grew in 2011
 
Although New Zealand's total lamb shipments decreased in 2011, deliveries to China increased by 40 per cent to and it overtook the Middle East to become New Zealand’s second largest market after the EU. With such growth coming in a year characterised by tight supplies and rising prices it marks a re-balancing of NZ exports towards the fast growing Asian marketplace.

By contrast, Australia achieved lamb export growth of 3 per cent in 2011.Shipments reached 160,000t for the year; the third largest annual total on record. Growth came in spite of reduced domestic production as tight supplies on the global marketplace generated demand. The largest market for Australian lamb was again the Middle East, although volumes declined 5 per cent. China also again proved to be a growth market for Australian lamb with deliveries climbing to 29,600t, an increase of 15 per cent on 2010.

Similarly, Ireland grew its sheepmeat exports ahead of production. Exports of 29,200t in the nine months to September were up 16 per cent on the same period of 2010 against output up just one per cent. Again this is a case of a tightening of supplies at a global level pushing up overseas demand for Irish product.

Friday, February 03, 2012
CME: What Can the Prices of Beef & Pork Cuts Tell Us
US - What can the prices of individual beef and pork cuts tell us about a) consumer preferences and b) the types of animals we should be raising? write Steve Meyer and Len Steiner.


We think that is a very interesting question that does not get asked often enough. And thus, it doesn’t get answered often enough either! Our analysis today is strictly graphical and anecdotal. Someone with more time (and talent, probably) available could do a much more sophisticated analysis of these data but we think the trends are quite suggestive of factors that are impacting cattle and hog markets.

First, let’s consider beef cuts. The top chart at right shows monthly average prices for a variety of Choice wholesale beef cuts as well as fresh 90CL (90% chemical lean) and 50CL trimmings. The muscle cuts represent commonly traded value-added wholesale cuts from each of the major beef primals.

We think it is striking that the prices of the two highestquality cuts in this grouping, bonless ribeyes and boneless strip loins, have fallen on a pretty consistent basis since 2005 and 2004, respectively. While we understand that lower disposable incomes, worries about the future, soft business for high-end restaurants, etc. have been at play since 2008, the downtrends for these cuts begin well before the onset of the Great Recession. In addition, the uptrends in the prices of lower-quality cuts such as rounds and chuck clods appear to have begun before the recession as well. They did indeed increase in pace since 2008 but, again, the recent upturn was just an extension of something that apparently started well before the credit and banking problems that brought about the economy’s downturn.

An alternative explanation could be consumers’ being more concerned about fat content as loins and ribeyes generally have more intramuscular fat (marbling) and marbling plays a much larger role in their desirability. Rounds and chucks, on the other hand, are generally leaner. But the fly in that ointment is briskets which usually contain far more fat than the “end-meat” cuts from the round and chuck. The same could be said for trimmings — which are not high on the list of low-fat items.

And then there is the surge in ribeye price this past fall. Is this a behavioral anomaly? An export driven spike? Or a change in the trend? Anyone who would like to believe the latter has to reconcile the spike in ribeys with the continued downtrend in strip loins, however.

We think the most serious question posed by these beef cut relationships is whether we are properly designing the animals from which the cuts come. If consumers are discounting “high value” cuts and paying relatively more for generally leaner, lower-priced cuts, do we actually need this many Choice grade cattle? Maybe the better solution is a super-efficient steer that will stay leaner. A point to ponder, we believe. The trends in pork cuts are more subtle. The “high-lean” cut in the pork complex is the loin. It is basically one big, lean muscle which is usually closely trimmed. It should be the darling of pork cuts for the modern diet. And loins have held their own among the prices of the various pieces of the pork carcass with no major downtrends and an uptrend in 2010-2011 that generally matches other cuts.

But like the beef complex, there are some very odd signals of consumer preferences in these prices. Study the lines representing bellies, butts and picnics. All three have gained over time on loins with belly prices almost always exceeding loin prices since 2009. All three of these cuts contain FAR more fat the does the loin. So, while we hear that people want lean, they are apparently bidding for cuts that do not fit that profile.

The truth is that fat, to a great extent, means flavor in meat of all varieties and consumers are apparently favoring flavor. They will tell us lean is important because that is what they are supposed to say — but they are paying for flavor! While producers need to raise lean hogs because they are far more efficient, they must constantly pay attention to muscle quality.

Monday, February 06, 2012
Pressure on Brazilian Beef Exports

GLOBAL - After several years of intense cow culling, the Brazilian beef industry is still facing lower availability of cattle for slaughter, according to the AHDB European Market Survey.
 

The Brazilian Institute of Geography and Statistics (IBGE) show cattle slaughterings in the year to September were almost three per cent down on 2010 at 21.5 million head. Production fell by five per cent year on year to five million tonnes indicating a marked fall in carcase weights.
 
Increased domestic demand and hence firm beef prices, plus a strong real, put pressure on export levels in 2011. Exports of fresh and frozen beef declined 14 per cent year on year.
 
In Europe, following the end of the dioxin crisis in Germany at the end of January 2011, the EU cull sow market gradually recovered and prices increased steadily through most of the year.

Prices were in general slightly higher than year earlier levels, particularly in Germany, Denmark and the Netherlands.
 
After reaching a peak in early December, prices have started to fall back.

Wednesday, February 08, 2012
Aussie Beef Exports to Japan Underpinned by Brisket

AUSTRALIA and JAPAN - Australian beef exports to Japan during January totalled 16,799 tonnes swt, only 57 tonnes swt higher than the flood affected 2011 volumes, with the volume sustained by strong demand for briskets, reports Meat and Livestock Australia (MLA).

The surge in brisket exports, up 48 per cent year-on-year to 4,047 tonnes swt, was helped by firm demand from the Japanese fast food sector, limited US stocks (due to the import suspension imposed on a major US plant), and softer buying from Korea.

Otherwise demand from Japan during January lacked spark, following substantial volumes shipped in December 2011.

The high A$ and firm cattle prices made negotiations difficult for both Australian and Japanese traders. Major declines for the month were seen in fullset (down 56 per cent to 578 tonnes swt), manufacturing beef (down 11 per cent to 4,635 tonnes swt), and other/hamburger patty categories, according to data released by Department of Agriculture, Fisheries and Forestry.

Friday, February 10, 2012
CME: Changes for Beef, Pork & Poultry Supplies
US - USDA updated yesterday its forecasts for grain and meat supplies 2012. As we noted in our 2/8 report, much of the focus in the grain front remains on the progress of S. American crops and USDA confirmed notable reductions in Argentine corn production and Brazilian soybean output, write Steve Meyer and Len Steiner.


Still, grain futures were lower following bearish surprises in the wheat complex. At this time grain market participants are focusing on upcoming USDA early estimates of the 2012/13 US crop. These are not official estimates but are presented each year in the USDA annual outlook meeting. The expectation is for big increases in US corn acres and a notable improvement in US corn ending stocks. However, in the short term, the corn market remains concerned about the extent of current crop supplies and the possibility of another surprise when the March corn stocks data is released.

On the protein front, USDA made some adjustments to its estimates for beef, pork and poultry supplies. Beef production was increased by 150 million pounds but still it is expected to be about 1.1 billion pounds (-4,1%) smaller than the previous year. A somewhat slow start for exports in January likely caused USDA analysts to pull back the export outlook by about 10 million pounds. It is a relatively minor adjustment and one that may be reversed in the next update. The latest weekly export data showed robust exports to a number of markets and the expectation is that US beef exports should continued to benefit from limited supplies in world beef markets as well as from a lower valued dollar now that risk taking appears to be returning.

Imports were left unchanged at 2.090 billion pounds, about 1.9% higher than the previous year. While we agree that imports will be relatively low compared to the levels in 2008-08 (see chart), it is likely that US beef imports in 2012 may post a larger increase than USDA currently estimates. Strong prices for US lean cow meat and the expectation that prices could further escalate in the spring and summer will likely make the US market more competitive and bring more product into the US. Do not expect a big turnaround in imports, however, as key supplying countries (Australia, Canada, New Zealand) appear to be in herd rebuilding mode and so far appear to have plenty of grass and little incentive to sell.

US pork production in 2012 is currently forecast at 23.254 billion pounds, about 475 million pounds or 2.1% higher than a year ago. The forecast for higher pork supplies rests on expectations for modest increases in the pig crop and higher hog carcass weights. Pork exports remain a point of debate in the trade and USDA currently expects them to hold about steady with 2011 at 5.11 billion pounds.

Monday, February 13, 2012
US Red Meat Exports Top $11.5 Billion in 2011
US - According to year-end statistics released by USDA and compiled by the US Meat Export Federation (USMEF), exports of US pork, beef and lamb set new records across the board in 2011, reaching all-time highs in both volume and value and exceeding $11.5 billion in total value.
 

Pork exports totaled 2.255 million metric tons valued at $6.11 billion, breaking the previous volume record of 2.052 million metric tons and shattering the value record of $4.88 billion, which were both established in 2008. Year-over-year, pork exports were up 18 per cent in volume and 28 per cent in value.

"It is extremely gratifying to see all red meat exports reaching new heights, even with the various trade obstacles we still face across the world," said USMEF President and CEO Philip Seng. "US producers have provided superior products to market and made solid investments in the international markets - not only from pork, beef and lamb checkoff programs, but also from the corn and soybean checkoffs. Along with the experienced staff we have in place in the foreign markets, our trade officials who continue to work for greater market access and the exporters and traders who work every day to grow the presence of US meat worldwide, they are to be commended for their foresight and commitment to global marketing."

While the record-breaking performance of 2011 is impressive, Mr Seng feels strongly that USMEF and its industry partners have laid the groundwork for even greater success in the future.

"Demand for US red meat has never been stronger, and we are well-positioned to build on this success," he said. "We have the marketing tools in place to showcase the quality and consistency of US products, which our industry is able to deliver at a very competitive price and end users are able to utilize in extremely creative and innovative ways. Real opportunities exist for further growth, and USMEF fully intends to capitalize on this strong momentum."

Pork export ratio, per-head value, very strong in 2011
For the year, pork exports equated to 27.5 per cent of total production when including both muscle cuts and variety meat. In terms of muscle cuts only, exports totaled 23 per cent of total production. This was up substantially from 23.7 per cent and 19 per cent, respectively, in 2010. Export value per head slaughtered was $55.55, an increase of 27 per cent (nearly $12) from a year ago.

In December, pork exports were down slightly from November's record performance but remained well above the previous year's pace. Exports increased 16 per cent in volume (215,870 metric tons) and 32 per cent in value ($582.6 million) from December 2010.

"Among the factors driving the success of US pork exports are the chilled programs and value-added programs that USMEF has implemented in several key markets, especially in north Asia," Mr Seng said. "Producers, processors and exporters have really worked together in recent years to provide a wider range of high-quality products that we can use to expand these markets. As a result of this collaboration, premiums delivered by the international markets continue to have a very positive impact on the US pork industry's growth and profitability."

In addition to setting a global value record, Mr Seng noted that the US industry achieved new heights in its top two markets, Japan and Mexico.

"Coming off a record year in Japan, we grew export value by another 20 per cent and nearly eclipsed the $2 billion mark," he said. "That's a testament to the effective marketing strategies deployed in what is easily the world's most competitive pork market, as we have found new ways to further penetrate the restaurant and retail sectors and capitalize on rapidly growing sectors such as convenience stores. In Mexico, our outreach to national and regional supermarket chains has been highly successful, along with the strong relationships we have established in the processing sector."

Pork exports to Japan set new records for both volume (493,313 metric tons) and value ($1.96 billion), respective increases of 13 per cent and 19 per cent over 2010. While slightly lower in volume (537,535 metric tons) than last year, Mexico became the first market other than Japan to import more than $1 billion in US pork in a single year. Exports to Mexico jumped 6 per cent in value over 2010, reaching $1.04 billion.

Other pork export highlights included several new records, with a very strong year in the Hong Kong/China region pushing exports up 64 per cent in volume to 483,323 metric tons and nearly doubling in value to $910 million (and surpassed 2008 records). Exports to South Korea more than doubled in volume to 188,307 metric tons and increased 162 per cent in value to $497 million. Exports to Australia grew 23 per cent in volume (64,350 metric tons) and 38 per cent in value ($204.6 million) - breaking the $200 million mark just seven years after the first exports of US pork to this market. Central and South America saw increases of 21 per cent in volume (72,023 metric tons) and 32 per cent in value ($186.6 million), as existing free trade agreements with Honduras and Chile boosted 2011 exports and newly ratified trade agreements with Panama and Colombia offer excellent opportunities for further growth in 2012.

Tuesday, February 14, 2012
China Pork Imports Rise; Irish Beef Production Drops
GLOBAL - Over the past twenty years, Chinese pig production has increased at an average rate of 2.1 per cent annually. Meanwhile, in Ireland, in 2011 cattle slaughterings were four per cent lower year on year at almost 1.65 million head.


During the second half of 2011, finished pig prices in Europe stayed at a high level. Pig meat production in 2011 was about 2 per cent higher compared to 2010, although supplies became tighter towards the end of the year. According to AHDB's European Market Survey, amongst major producing Member States, only Spain experienced declining prices during the autumn. Since Christmas, prices across Europe have fallen sharply.

According to Australia's MLA (Meat and Livestock Australia), 2012 is expected to represent a record year for beef exports. The growth in exports will be a result of improved Australian production combined with lower supplies from other major global producers.

Compared to November 2010, total German cattle numbers during November 2011 dropped one per cent at 12.5 million head. The most significant reduction was in male cattle aged above two years which were down 14 per cent. There was also a four per cent fall in numbers of males aged between one and two years old.

Over the last two decades, the Chinese economy has seen a growth of about 8 per cent. Increasing incomes have led to a changing food consumption pattern. So also, pig production in the country has increased at an average rate of 2.1 per cent per year over the past twenty years. Production costs have also risen simultaneously.

According to the Irish Central Statistics Office, cattle slaughterings in 2011 were four per cent lower year on year at almost 1.65 million head. On the other hand, cull cow throughputs were slightly ahead of year earlier levels at 337,000 head, with production from these animals up two per cent to 107,000 tonnes.

Sunday, February 12, 2012
Allendale: US Meat Supply vs Global Demand
ANALYSIS - From an overall meat demand perspective, the world market is a major driver and a key reason why the US has been trading at extended price levels the past few years, writes Sarah Mikesell, senior editor.

In 2011, the IMF lowered the GDP numbers a little bit, but the US is expected to see average growth - in the 1 to 2 per cent range for 2012, said Rich Nelson, Allendale director of research, in late January at the Allendale Ag Leaders Outlook Conference.

"The US is not going to be a big driver for growth, in terms of meat demand in the world right now. It is, of course, everybody else," he said. "The world as a whole is about 2.5 per cent on the low end up to 4 per cent in generated investments for GDP growth. This is overall growth in terms of the economy, not population. So population plus higher income is a very, very big driver."





Rich Nelson, Allendale director of research, speaks to over 200 farmers in Illinois in late January at the Allendale Ag Leaders Outlook Conference.Where is the growth coming from? Nelson said there are some new buyers, which have shown up in the past five years affecting meat demand. African and Arab nations are seeing dramatic growth right now, and that is expected to continue.

Japan is a traditional buyer and used to be the main customer for both US beef and pork. South Korea has shown strong growth, but most important to the US is China.

"No matter who you talk to regarding China, the issue is massive growth," Nelson said. "Yes they may be dropping from 8.9 per cent growth - to maybe 8.1 per cent, but we really don't care. They have tremendous growth in income and population."

As incomes climb higher, people change their diet from base breads to meats. Which begs the question, "What type of meat-based growth are we going to see now?" Nelson says the best growth over the next few years will be seen in poultry.

Per person consumption of poultry is roughly 25 pounds per year (carcass basis). Poultry consumption growth is likely to be 6 to 7 per cent over the next four years in China, South Korea and developing countries.

Higher per person consumption
The world has more people, with more income and they're eating more per person. Nelson said this is important for growth in the meat segment in general.

"More mouths will be eating more food is great for poultry. There are no problems with religious restrictions and poultry is grown in every area of the world," he said.

The second meat growth area is pork. Traditional customers like Japan and South Korea will grow, but China could be a developing customer. China normally supplies most of their own pork, but their 5 per cent growth expected over the next four years could require more pork than they can produce.

The next question is "Who's going to supply it - is it going to be the US, Brazil or the EU?"

Five years ago, 65 per cent of US exports went to three countries - Japan, Mexico and Canada. And today, 58 per cent of US exports go to China, Japan and South Korea.

Profits = Pork Industry Expansion
Expansion is the key issue for pork. Compared to prices from 2011, costs on a per head basis are dropping, providing a good opportunity for strong prices and strong profits.

"In 2010, we got $13.00/head profits. And in 2011, there were $6.00/head profits, which was not a whole lot," he said. "As of January 11, 2012, on a conservative basis, profits are at $11.00/head. So we've had three years of profits."

In the hog industry, traditionally after two years of profits, producers start to expand. So the only question right now is, "When will expansion start?"



"Expansion is the driver to watch. So, we're watching the breeding herd," Nelson said. "If you look at the past few years, we've had a problem - a dramatic liquidation in the industry due to high grain costs. The December Hogs and Pigs Report showed that we're running about 0.4 per cent over last year, which is not a big expansion for the hog industry."

Nelson noted that while US producers were sending lots of sows to slaughter, they were replaced with very productive gilts. Therefore, productivity is now running 1.5 to 2 per cent over 2011. Growth is coming from the breeding herd itself in terms of productivity.

"This tells us clearly for 2012 that we'll have more pork produced," Nelson said. "Here's what's interesting - as far as planned farrowings, the number has been down for the last few years, but September-November saw a slight increase. What really puzzled me was March - May expectations, which are actually running lower than last year. I don't think it's going to happen - it's certainly not what the profits imply."

Hog Expansion - How much and where?
Assuming the USDA survey was correct, expectations call for a moderate increase the first half of the year, and the second half of the year shows almost the same type of numbers, with a 1.3 per cent increase by the fourth quarter.

"A 1.5 per cent increase in production is outlined for 2012," he said. "Considering demand and the sharp drop in competing meats for this year, it's not a bad number. In fact, the amount of pork that's going to hit the US consumer is not going to be 1.5 per cent. It's going to be lower than that."

As for exports, expect a slight demand pull. China is the leader for production and their production dwarfs everybody else. In fact, it dwarfs the next three top people in line - EU-27, US and Brazil - combined.

"What's amazing is, even though they're converting to corporate-style hog production, China is still incredibly inefficient as an industry. Over half the hogs are what we call 'backyard pigs'," he said. "But China does have a 3.6 per cent increase expected for 2012 production."

Nelson believes the US will continue to have the same level of exports to China as in 2011 because of the dramatic growth still happening in China.

"They also have a corn crop, which they need the hogs for. So they have big demand for both corn and hogs," he said. "But more important for the US is that China's consumption is going to increase next year to 3.6 per cent - that's a massive jump, as far as the meat world goes."

The next large pork producer is the EU, and we are all aware of the serious financial problems they've experienced of late.

"As a whole, the EU is in a recession right now, and their producers are cutting back to match it," Nelson said. "As a result, our number two pork producer in the world is actually seeing lower production."

The US is expected to have a moderate 1.5 per cent increase.

Brazil, a serious pork producer and a serious competitor to the US, is expected to see a 2.1 per cent increase in production.

Overall, China's consumption is expected to match their increase. The EU will be down, leaving the US and Brazil to divide available export growth. From a US perspective, Nelson said this almost cancels out completely the pork expansion currently underway.

"Once the US has higher exports and starts selling to new customers, they will keep buying from us," he said. "We're not going to lose our old or new customers. In fact, our numbers - which are extremely conservative - are saying the US will have a moderate 2 to 4 per cent increase for pork exports."

How much meat for the US consumer?

Once you take exports out of the supply situation, how much meat will there be for the US consumer? That's really the key driver for the 2012 US meat picture.

"We have to admit to some problems for red meats. The US consumer has been shifting their buying to white meats - to chicken and turkey," Nelson said. "That's a problem, and we all must admit it. As for beef consumption, the US has been asking for a little less beef each year. What's more interesting is we're going to actually produce much less meat this year than consumers are asking for. So they may be asking for a little bit less, but we're going to drop much more."

Expectations for meat indicate pork will see a 1.5 per cent increase. Based on USDA expectations, beef will drop by 6 per cent. Again noting USDA numbers, chicken, pork's main competitor, will be down 4 per cent this year.

"The chicken industry has done a poor job of planning expansion and contraction the past four years. Right now, their shareholders are incredibly angry," Nelson said. "They started expanding right in the face of the 2011 grain price rally; they didn't have their grain hedged. They also expanded in front of the 2008 grain price rally. This recent mistake has kind of crippled the chicken industry for 2012."

Total meat consumption will be down 3 per cent. While it may not sound like a lot, it is.

"Keep in mind, even a 1 per cent drop is a big deal to the US consumer and the whole meat industry," he said. "As a result, even though we're in expansion right now for the pork industry, we're going to have a little extra price support. So expect a little artificially higher price for pork."

As a result of these drops in production, in 2012 the US will offer the US consumer the lowest amount of meat since 1984. Nelson says this will create a US meat deficit.

Of note, a key driver for the US market is the US consumer, who has a lot of debt. Unemployment is still fairly high, but Nelson believes the US is in recovery right now.

"We are starting to see slight drops in unemployment, and if you look at consumer spending, it shows that the people who do have jobs are actually back to spending again," he said. "Even though the US consumer is crippled, they're already of a mindset for economic expansion. We're going to offer people much less meat than they want. And they're willing to pay a lot more for it."


Sarah Mikesell, Senior Editor

Wednesday, February 15, 2012

Good Prices Continue for NZ Beef

NEW ZEALAND - Expectations are for a small lift in export volumes and continued good prices relative to recent years. This will be moderated by the strength of the New Zealand dollar, particularly against the Euro and British pound.


B+LNZ Economic Service Director Rob Davison says the Mid-Season Update contains few surprises.
 
"Statistics New Zealand's provisional livestock result, released in December, showed sheep numbers were down 4.3 per cent – a stronger decrease than the 2.1 per cent previously estimated. We have revised the export lamb slaughter on this basis. With fewer ewes, it's down 4.1 per cent from earlier estimates, to 19.7 million. The global lamb supply continues to remain tight overall."
 
This summer has been excellent for pasture growth around most of the country, reflected in high seasonal weights for lamb and beef, says Mr Davison. "Rarely do we see such good pastoral conditions and international prices at the same time."
 
Lamb prices for the season are expected to average $115 per head, slightly down (-2.2%) on 2010-11's record high. Last year saw prices climb as the season progressed. This season, expectations are for offshore prices to remain at good levels, though the estimated stronger New Zealand dollar against the Euro (+7.1%e) and British pound (+3.2%e) softens the price outlook at home. The recent strengthening of the NZ dollar against the US dollar is also a concern.
 
Mr Davison says global mutton supplies remain tight. Australia is expected to ship 4 per cent more than last year (+3,300 tonnes) while New Zealand supplies are estimated to fall 30 per cent (-31,800 tonnes). This decrease follows last year's exceptionally high mutton off-take, which was underwritten by record prices. A similar off-take this year would cut sheep numbers and is not expected.
 
The outlook for beef production is a lift in exports of 4.5 per cent, with the cattle slaughter up 1.7 per cent and heavier weights (+2.8%). The heavier weights reflect the excellent pastoral conditions so far, expected to continue into the autumn.
 
North American price prospects are underwritten by the US cattle herd falling 2 per cent to 90.8 million, its lowest level since 1952. With slow economic growth, the US hamburger boom continues. This is positive for the 50 per cent of New Zealand beef exported to North America.
 
Overall, the outlook is for farm gate export beef prices to remain similar to last year. However, there is concern about the current strengthening trend of the Kiwi against the Greenback, which lowers the New Zealand price.
 
Shorn wool production falls in line with decreased sheep numbers but this is offset by good pastoral conditions. An expected increased clip per head will leave wool production down 2.1 per cent on last year. Average wool auction prices for the season are expected to be similar to last year.
 
Mr Davison says the country's "average" sheep and beef farm profit before tax reflects the positive price outlook for meat and wool relative to recent years.
 
"Profit for 2011-12 is estimated at $133,800 per farm, up 17 per cent on last year. In inflation-adjusted terms this will be the highest profit since 2001-02, which in today's money terms was higher, at $156,200 per farm.
 
Back in 2001-02 the high farm profit was underwritten by a low US exchange rate – 43 cents to the NZ dollar. This year's farm profit reflects strong international prices that have so far outpaced the strong exchange rate relative to 12 years ago (80-plus cents to the NZ dollar).
 
Mr Davison says the current La Nina summer is expected to deliver wetter conditions to eastern Northland, coastal Bay of Plenty and Gisborne, while it could become drier in the south and southwest of the South Island.

Thursday, February 16, 2012
CME: Pork & Beef Demand up, Chicken Down in 2011
US - The release on Monday of USDA's estimates of carcass/ ready-to-cook weight data for December exports provided the last piece of information needed to compute demand indexes for December and all of 2011, write Steve Meyer and Len Steiner.


The top chart shows the indexes since 1970 for the three largest animal protein species. Pork and beef demand were up slightly (0.9% and 1%, respectively) in 2011 from their levels of 2010. Chicken demand ended the year down 0.7%, the fifth time in the past six years that the chicken demand index has declined since peaking at 146.2 in 2005. Remember that demand is not merely consumption.

These indexes use per capita domestic consumption and average real retail prices to compute an index relative to the base period, 1985, that represents the position of a downward sloping demand curve in the traditional Q-P space of a supply-demand diagram. A positive index change means the demand curve has moved up and to the right in that space. A negative change is just the opposite. The index value for a given year represents the position of the demand curve during that year relative to its position in 1985, the base year.

Indexes for all three species ended 2010 on a roll as the economy recovered and spending at both grocery stores and restaurants rebounded from the depressed levels of 2008 and 2009. That momentum continued into 2011 for both chicken and pork but slowed some in the first half of the year for beef. An improving economy in late 2011 appears to have positively impacted beef demand with the last five months (and seven of the last nine months) seeing year-onyear increases in the monthly indexes. Pork demand, though, struggled from August through November with monthly index figures as much as 5% below those of 2010. That all ended in December when the year-on-year comparison flipped to a positive 5%.

As can be seen above, chicken demand is still struggling mightily with all year-on-year comparisons since September 5% or more below the 2010 level. Reductions in per capita product offerings have been accompanied by LOWER, not higher, retail prices. Some of this may be due to the prevalence of long-term pricing agreements in the broiler sector and the time lags they cause for price responses. But it would be good to see some response - soon - to lower supplies.

Following up on our discussion of sow gestation stalls in yesterday's DLR there is one other system that is gaining in popularity in the U.S. 'Free-access' systems are a hybrid of stalled housing and group housing that give sows a choice of staying in a stall or moving around a group area. The stalls are equipped with gates that close behind sows when they enter and open whenever they want to leave. The closed gate protects the sow in the stall from being bothered by other sows. All feeding occurs in the stalls. Water is available in the stalls as well, allowing them to be locked shut to allow managers to observe sows, treat sick or injured sows, remove individuals who may need attention or even confine individual animals for short periods of time. The stalls themselves are roughly the same size, 2 feet by 7 feet, as fixed stalls but they do require more space since there is usually an 8-10 foot alley behind two rows of stalls. Assuming an 8-foot alley, this system would require 2 feet by 11 feet per sow or over 50% more floor space. Interestingly, sows spend most of their time in the stalls since they are protected there and can lay without being bothered. Virtually all sows do leave the stalls from time to time.

This system, like the others, has trade-offs. Gaining the mobility of group housing and the benefits of that mobility (muscle tone, joint flexibility, presumably less foot lesions, 'happy' sows, etc.) requires more floor space and equipment with a good number of moving parts. Mixing moving parts and 400-600 pounds sows is almost always a maintenance nightmare unless the equipment is very well built. This system would have the potential, like strictly group-housed systems, of more fighting and consequent injuries but providing the safety of a stall would mitigate the number and severity of those injuries. Producers who we know to have installed these systems are generally very satisfied with them even though they are more costly.

Thursday, February 16, 2012
Mexico Anticipates Grain & Livestock Production Losses

MEXICO - Mexico is currently facing the worst drought on record in 70 years. Out of 31 states, about 19 have been affected. This weather pattern, also known as La Nina, has adversely affected grain producers and exporters. Significant losses for both grain and livestock production are anticipated.


According to USDA's International Egg and Poultry Review, on 19 January, the Secretariat of Economy (SE) issued a preliminary determination of its antidumping investigation on fresh, chilled, or frozen US chicken leg quarters exported to Mexico. The SE also revealed the price discrimination margins for some producer/exporter businesses.

Mexico was recently declared Newcastle disease-free and according to the World Organisation for Animal Health (OIE), the issue has been resolved in the country. Some 900,000 birds were destroyed in the process and the appropriate measures were taken. No new reports have been reported ever since.

Mexico also lifted it's import ban on live poultry, poultry products and by-products from Missouri's Polk County in December 2011.

Mexico's National Health Service, SENASICA, has issued new Letterhead Certificates to accompany imports of raw poultry (fresh), poultry offal (other than organs), raw poultry offal (organs), thermally processed poultry, poultry edible fats, processed egg products, poultry dried meat, and poultry bacon. This came into effect on 15 December 2011.

Friday, February 17, 2012
Have Imports Clouded US Meat Production Efficiencies?
ANALYSIS - A special report in the February USDA Livestock, Dairy and Poultry Outlook produced by the USDA Economic Research Service maintains that the efficiencies in US production of beef, pork and lamb over the years have been clouded by the amount of meat and livestock that have been imported, writes TheMeatSite Editor in Chief, Chris Harris.

The report by Kenneth H Matthews Jr and Rachel J. Johnson says that since 1972 the US has been producing more beef and pig meat from smaller herds. The January US cow inventory put the US cattle herd at the smallest since 1952.

The report acknowledges that technical efficiencies and genetic improvement have helped to increase the amount of meat that is produced from each beef and pork animal, but it also says that the improvements are not as great as they first might appear, because the US has been increasing more product and animals from countries such as Canada and Mexico.

From 1972 to 2010 beef production rose per US cow by 44 per cent. In 2008, the most recent peak year, production stood at 26.5621 billion pounds. Of this 1.565 billion pounds came from Canada and Mexico.

The Mathews and Johnston report shows that 600 pounds was produced per US cow taken against the census figure of 41.692 million cows.

Similarly, dressed weights per cow have risen from 624 pounds in 1972 to 784 pounds in 2009.


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"The US depends on foreign sources for a significant share of its red meat."
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"The US depends on foreign sources for a significant share of its red meat," the report says.

"For beef, foreign sources have accounted for as little as 8.2 per cent (1974 and 1975) to as much as 18.2 per cent (2005). Even during 2003 through 2005 when cattle imports from Canada were subject to restrictions due to the discovery of Bovine Spongiform Encephalopathy, beef from foreign sources accounted for 14.6 to 18.2 per cent of U.S. beef supplies."

The report even acknowledges that imports from Canada fell massively between 2010 and 2011 while rising from Mexico and represented 11 per cent of total US beef production, although this as a percentage of production was down year on year.

While cattle and pig meat and livestock imports into the US were rising from the latter quarter of the last century through to the last decade, the report fails to account for the effect that the recent Country of Origin Labelling laws have had on these imports.

When they came into effect as part of the Farm Bill in 2009, imports from the main suppliers to the US, Mexico and Canada started to slide.

COOL started to differentiate not only between imported meat products, but also between cattle and pigs that had been brought across the border as calves and were raised, finished and slaughtered in the US.

The effect on trade in livestock and meat products between Canada and Mexico and the US was devastating for the Canadian and Mexican producers - to such a degree that the issue went before the disputes panel of the World Trade Organisation.

The repercussions were great. Even some US institutions such as the American Meat Institute spoke out saying that the COOL laws violated international trade regulations.

Mark Dopp, AMI Senior Vice President of Regulatory Affairs and General Counsel said that COOL is inconsistent with trade agreements because of its discriminatory effect on imported meat and imported live animals.

He added that the US had to ensure that the products of other countries "imported into the territory of [the United States]…be accorded treatment no less favourable than that accorded to like products of [US] origin in respect of all laws…affecting their internal sale."

Imports of meat were being treated as a B grade and animals that were raised and imported could not be called US.

However, the WTO has found against the US ruling that imported products were treated less favourably than US products, that COOL created unnecessary obstacles to international trade and that COOL did not fulfil a legitimate objective.

The effect of not only meat product but also livestock imports into the US - particularly those imported to be raised, fished and slaughtered in the US - and the influence that COOL has had on these imports over the last few years could completely skew the figures of what is truly US produced and the increases in productivity and could mask the real improvements that have been made in production efficiencies, livestock management and genetic advances.



Chris Harris, Editor-in-Chief

Monday, February 20, 2012
2011 a Fantastic Year for Meat Exports
US - Due in large part to a weak dollar, 2011 was a fantastic year for US meat exports, writes Ron Plain.
 
Ron Plain
Beef, pork, chicken, and turkey exports were each record high. In total, the US exported over 15 billion pounds of red meat and poultry last year, up 10 per cent from the 2008 record.

Pork exports totaled 5.2 billion pounds in 2011, 22.9 per cent more than the year before and 11.6 per cent above the old record set in 2008. Pork exports were 4.39 billion pounds greater than imports. In total, 2011 pork exports equaled 22.9 per cent of US pork production and imports equaled 3.5 per cent of our production.

In 2011, the five biggest foreign customers of US pork were Japan, Mexico, China, Canada, and South Korea, respectively. Together they purchased 80 per cent of US pork exports. The biggest growth market was China which bought 512 million pounds more US pork than in 2010.

The value of pork exports, $5.3 billion, was up $1.2 billion (30 per cent) compared to 2010. We exported a record $48 worth of pork and $7 worth of byproduct for each hog slaughtered in 2011.

US pork imports during 2011 were down by 56 million pounds (6.5 per cent) compared to 2010 and at the lowest level since 1998. The decrease in pork imports was due to a 55 million pound drop in pork coming from Canada. Canada and Denmark accounted for 79 per cent and 10 per cent, respectively, of 2011 US pork imports.

Hog prices ended the week roughly $1 lower than the previous Friday. The national average negotiated carcass price for direct delivered hogs on the morning report today was $79.30/cwt, down $1.58 from last Friday. The western corn belt averaged $84.87 this morning and the eastern corn belt had a morning average of $78.47/cwt. There were not enough sales in Iowa-Minnesota for a morning price quote. Friday’s top live hog price at Peoria was $58.50/cwt. Zumbrota, had a top of $58/cwt. The top for interior Missouri live hogs was $59.50/cwt, down $1.25 from the previous Friday.

USDA’s Thursday afternoon calculated pork cutout value was $86.32/cwt, up $1.50 from the previous Thursday. Loins, butts, bellies and hams were all higher. The western corn belt average hog price this morning was 98.3 per cent of the pork cutout value.

Hog slaughter totaled 2.149 million head this week, up 0.9 per cent from the week before and up 2.6 per cent compared to the same week last year. Barrow and gilt carcass weights for the week ending February 4 averaged 205 pounds, down 1 pound from both the week before and a year ago. Iowa-Minnesota live weights for barrows and gilts last week averaged 275.9 pounds, up 0.5 pound from the previous week and up 3.0 pounds compared to a year earlier.

Today’s close for the April lean hog futures contract, $90.37/cwt, was up $2.07 from the previous Friday. The May lean hog futures contract settled at $98.90/cwt, up $1.60 for the week. June hogs settled at $99.37/cwt. July hogs ended the week at $99.75/cwt.

Tuesday, February 21, 2012
LMC: Strong January Beef Expenditure in Great Britain

NORTHERN IRELAND, UK - In the last quarter of 2011, it became clear that the higher farmgate prices that were evident throughout 2011 right across the British Isles, were starting to generate upward pressure on retail prices.

The latest market research report from Kantar Worldpanel shows that the average retail price of beef in the four weeks ending 22 January 2012 was 11 per cent higher than the same period last year at approximately £6.80/kg. This has had some interesting consequences on beef sales in volume and value terms.
 
Volume sales of beef in January were down by four per cent compared to the same period last year. This is unsurprising. Higher prices generally lead to reduced demand. However, as we well know, supplies of beef generally have been weak on the domestic market in the last few months and this may well have contributed to reduced consumption.
 
Compared to the same period last year, a smaller proportion of shoppers purchased beef. According to Kantar 57 per cent of shoppers purchased beef this January. This equivalent figure last year was 58 per cent. The average weight per purchase was down from 1.7kg last year to 1.6kg this year.
 
In volume terms, only stewing showed an increase in sales (+1.2) relative to last January. Mince sales were down four per cent and roasting sales were down by nine per cent. Frying and grilling sales were down by 11 per cent year-on-year. However, despite these reductions in volume sales, revenue from beef sales was up by six per cent. This is quite positive and perhaps demonstrates a robust consumer base that can absorb price increases to some degree, given that the price increase was not matched by a proportionate decline in demand, meaning of course that expenditure remains strong.

Reduced Lamb Consumption

Retail lamb consumption continued to be under pressure in January 2012. At farmgate level, in mid-January, prices were about eight per cent higher than in the same week last year. Retail lamb prices for the four weeks ending 22 January were 13 per cent higher than in the corresponding period last year.
 
This is a significant increase and as a result lamb demand has fallen off significantly. In January demand was 23 per cent lower than last January. The proportion of consumers putting lamb in their shopping trolley fell to 18 per cent from over 21 per cent last year. Of those 18 per cent of shoppers that did buy lamb, the average weight purchased was just less than 1kg.
 
Lamb chop sales were back by 23 per cent year on year, with leg roasting sales down by 15 per cent.
 
Unlike the retail beef market, lamb sales fell more than proportionate to the increase in price and this meant that expenditure fell by 13 per cent year-on-year, which is an obvious concern. All eyes will be on the retail lamb trade in the coming months to see how it performs during the Easter trade which came under some pressure last year.

Wednesday, February 22, 2012
 
Year-End Consumption Data Good News for Pork

US - Beef and pork demand increased last year by 0.9 per cent and 1.0 per cent, respectively. Chicken demand fell by 0.9 per cent, writes Steve Meyer in his latest "Market Preview" from National Hog Farmer magazine.


The export data highlighted in last week’s report was the last piece of data needed to compute actual domestic per capita consumption and, thus, the demand indexes for December and for 2011.
 
The news for pork was good indeed. Ditto for beef. For chicken, not so much. Figure 1 shows the familiar chart of demand indexes since 1970. Remember, these are indexes, so they represent status of demand for each species relative to its level in the base year, 1985. In addition, remember that this is domestic per capita demand – it does not include exports. It represents the collective demand from a stable population; therefore, the positive demand impacts of population growth are removed. That growth, historically, has been about 0.8 per cent per year, but growth slowed to 0.7 per cent in 2010 and 2011, primarily due to the recession.
 


Beef and pork demand increased last year by 0.9 per cent and 1.0 per cent, respectively. Chicken demand fell by 0.9 per cent. Now consider this:
•Per capita beef consumption, on a retail weight basis, declined by 2.3 lb. (3.8 per cent).
•Per capita pork consumption on the same basis declined by 2 lb. (4.3 per cent).
•Per capita chicken consumption increased by 0.4 lb. (0.5 per cent) retail weight.
 
Many might be thinking: "That can’t be! How can demand increase when consumption is falling?" Well, it can be because (now let’s all repeat this together) - "demand is not consumption."

The decline in per capita pork consumption from 47.7 lb. in 2010 to 45.7 lb. in 2011 was due to higher US population and robust exports. Production was actually 1.4 per cent higher in 2011, but less of that product was available to US consumers.
 
Demand is higher in spite of lower consumption because consumers paid more for both beef and pork than the lower consumption levels would have required had their demands been stable. The lower per capita consumption figures were accompanied by 6.5 per cent higher retail beef prices and 6.9 per cent higher retail pork prices.
 
Conversely, the increase in per capita chicken consumption was accompanied by a 2.25 per cent reduction in real chicken price – a larger reduction than the higher availability/consumption would have suggested should occur if demand was stable.
 
Is Pork Consumption Sustainable?
 
Several people have asked: "How will consumption hold up as prices rise?" The answer is it will not because lower consumption is caused by lower availability and lower availability causes higher prices. But lower consumption at higher prices does not mean demand is being destroyed. It only means consumers are behaving rationally and allocating scarce resources (dollars) among competing uses. That is the essence of economics.
 
Am I concerned about declining per capita consumption? Absolutely. I am indeed concerned that people are eating less meat and poultry. But that is their choice.
 
My real concern is that those decisions are being made based on fear that meat and poultry is bad for you as part of a balanced diet or that meat and poultry production are, as some have alleged, a major cause of global warming or that kids really don’t need meat protein in their diets as long as they are force-fed enough vegetables. I don’t think any of those are true, but they are popular in today’s culture. So, the part of this reduction that is caused by misinformed consumers either not eating meat or eating less meat concerns me greatly.
 
But even more important to me is that we are simply pricing meat out of the diets of some people. The reason consumption has fallen is that production has fallen and the reason that production has fallen is that producers/processors cannot afford to deliver meat and poultry protein to consumers at the same price we once delivered it. It simply costs too much, so we deliver less product in order to get higher prices. The mechanism to get less product, of course, has been economic losses to producers that have driven some out of business and caused others to shrink.
 
Was it a conscious decision to drive up meat prices? Maybe. Maybe not. But the impact of the energy and grain policies of the 2000s, as well as increased regulation and regulatory scrutiny, has been to cause meat and poultry protein prices to explode. I, and many of you, have been blessed in that our consumption levels may not decline given those higher prices. We can afford what we want. But many, many people do not walk in our economic shoes and I feel bad that they will be forced to reduce their consumption of these delicious and nutritious products due, simply, to higher costs.
 

Thursday, February 23, 2012
CME: Beef, Pork & Poultry Stocks Down
US - The latest USDA cold storage report (released on 2/22) showed that total US beef, pork and poultry stocks remain below year ago levels, write Steve Meyer and Len Steiner.


The monthly survey pegged total beef, pork and poultry stocks as of January 31 at 1.974 billion pounds, 2.5% lower than a year ago and 2.6% lower than the five year average (see chart).

The lower stocks, however, were largely due to the sharp reduction in the supply of chicken in cold storage. Broiler producers have been cutting back for more than six months and this appears to have cleaned up the backlog of product that was created in the first half of 2011. While stocks of broiler leg quarters and wings have been tight for some time, we are now seeing breast meat stocks also decline sharply. The latest report pegged the supply of chicken breast in cold storage at 116.6 million pounds, 21% lower than a year ago and 14% lower than the five year average. While the USDA data may not capture all the supply of chicken in freezers across the US, the data does provide an indication of the year/year trend in cold storage supplies. The chicken data is important since this is the time when retailers and foodservice operators are looking at their spring and summer promotions and will try to book product ahead of what appears to be an inflationary grilling season. Chicken breasts have been seen as the value option so far but prices will likely not stay down for long given ongoing supply cutbacks and tight freezer inventories.

While the chicken data painted a generally bullish picture for protein, the pork data was ambiguous. Yes, stocks are up and that could be seen as bearish but we think a good part of the increase in stocks may have to do with more product being put away for export. Those that have a more bearish take on the report will likely note that it is not a good sign when cold storage stocks of pork loins, an item that generally finds good demand in January, rise 25% on year ago levels. Total pork stocks as of January 31 were pegged at 584.4 million pounds, 8.5% higher than a year ago and 8.3% higher than the five year average. However, inventories of hams do not appear burdensome at this time, about steady with year ago levels. Pork belly inventories at 53.7 million pounds were 4.6% higher than a year ago. Judging from the strong belly pricing, we will likely see belly stocks climb fast in February and March as end users try to use freezer hedges ahead of the spring and summer demand One indicator that some of the increase may be export related is the big jump in stocks of pork variety meats, up 33% from a year ago and unclassified pork products, up 29% from a year ago. Inventories of beef in cold storage were reported at 482.1 million pounds, 4.4% higher than a year ago and 5.6% higher than the five year average. Beef imports early in the year were better than the year before and that may have contributed to the modest increase in beef stocks.

Thursday, February 23, 2012
Chicken Being Sold at High Prices

PAKISTAN - Chicken meat was sold at a high price in the Punjab capital on Monday, as one kilogram chicken was available for Rs 220 to Rs 235.


The unusual raise in chicken prices is stated to be a result of short supply, according to Business Recorder. Market sources say over 50 per cent of poultry products are being smuggled to Afghanistan, Iran and some other neighbouring countries for profits.

According to a random survey purchase power of chicken meat has gone beyond the limits of common man. A railways employee Ayyub Khan told APP that chicken was the only commodity which they could buy because of its low price. But, he is unable to purchase chicken meat due to its high rates.

A house wife, Humaira Hassan said her husband used to bring chicken meat thrice a week but now he cannot afford chicken meat within a limited income. Meanwhile, a wholesale dealer Rafiq Bhatti at Tollington Market said poultry cartels are behind the high poultry prices.

They fix poultry rates on a daily basis. "We are at their mercy and the district administration is paying no heed to this end," he added.

When contacted, the All Pakistan Poultry Association's (APPA) former President Abdul Basit, said that in every poultry farm, owing to long spells of power outages, thousands of birds had perished.

Most of the owners, he said, had already closed their farms due to deficit.

Friday, February 24, 2012
Slight Rise in Beef and Pork Production in January
UK - During January, the UK produced 78,000 tonnes of pork, 84,000 tonnes of beef and 23,000 tonnes of mutton and lamb. While the figures rose slightly for pork and beef compared to December 2011, mutton and lamb production remained constant. However, it should be noted that January contained 5 weeks.


According to Defra's UK Slaughter Statistics, in January, the UK slaughtered 943,000 clean pigs compared to 743,000 the previous month. 59,000 cows and adult bulls were slaughtered, compared to 46,000 in December 2011. However, the number of sheep and lambs slaughtered dropped at 978,000 head compared to 1007,000 in December.

The average slaughter weight for clean pigs rose only very slightly at 79.1kg compared to 78kg in December. The same goes for cows and adult bulls and sheep and lambs at 318.7kg compared to 311.6kg, and 19.6 compared 18.7, respectively in December.

On a weekly basis, the UK slaughtered 189,000 clean pigs in January, compared to 186,000 in December. The number of cows and adult bulls slaughtered also dropped at 12,000 compared to 11,000 in the previous month. The number of weekly slaugherings of sheep and lambs in January dropped dramatically at 196,000 compared to 252,000 in December.

Wednesday, February 29, 2012

CME: Beef Export Demand Remains in Good Shape

US - Judging from the trade data for the first two months of the year, US beef export demand remains in good shape, write Steve Meyer and Len Steiner.
 

Total shipments continue to track above year ago levels despite sharply higher prices in the US market. A weaker US dollar has blunted some of the impact of higher US beef prices but not entirely. Overall US exports of beef muscle cuts (does not include cooked beef, or offal) in the first full seven weeks of the year (Jan 2 - Feb 16) totaled 99,800 MT, 6,244 MT or 7% higher than the comparable period a year ago. The increase in exports came despite lower shipments to S. Korea, Mexico and Japan and is evidence that diversification in beef exports should be able to sustain export growth in 2012 and beyond. The attached chart shows individual countries that contributed to the overall increase in exports in the first few weeks of 2012. Russia and Egypt led the pack, two somewhat unusual destinations for US beef. Russia has become more active in the US market in the last two years as their traditional suppliers in Argentina and Brazil have been unable (Brazil) or unwilling (Argentina) to fill Russian orders. Also supportive of US shipments to Russia has been the fact that the US dollar has declined about 7% vs. the Ruble since the beginning of the year (it still is stronger vs. the comparable period a year ago). Russian buyers at this time are finding US prices more competitive than offers from other supplying countries such as Australia and Uruguay and this is showing up in the trade data. As for Egypt, it tends to buy much of its beef from Brazil but in recent months US beef prices have become more competitive. Brazilian beef supplies have declined recently as producers there try to expand and supplies are not expected to recover until 2013/14 . Also domestic demand in that country is far outpacing the ability to expand production, pushing overall prices higher. Egyptian beef purchases were also disrupted last year by political events and byers there are trying to fill up the pipeline, this time with US beef.
 
While smaller markets are important, larger traditional markets also need to carry their weight. Exports to S. Korea have been lower than year ago levels. However, keep in mind that the year to year data is skewed vs. last year, as Feb –Mar 2011 shipments to this market spiked following the outbreak of FMD. Weekly shipments to this market peaked at about 5300 MT a week in early March 2011 but returned to around 2500 MT a week by April.
 
Also skewing the data may be the fact that S. Korean buyers were slow in placing orders ahead of the expected implementation of the US - S.Korea FTA, which will reduce the duty rate on year 1 from 40% to 37.5%. The duty will then continue to decline by 2.7% for the next 15 years. US competes directly with Australia in beef shipments to the S. Korean market. The lower tariff coupled with a weaker US dollar will likely make US beef much more competitive vs. Australian product and we expect US weekly shipments to Korea to be consistently over 3000 MT/week from April forward. A Japanese commission is currently reviewing the rules limiting US beef exports to Japan and we expect to get an answer sometime in early April and a possible July implementation date.

Thursday, March 01, 2012
Pig Slaughterings Up in January 2012
IRELAND - Pig slaughterings in Ireland rose by 12.8 per cent compared to January 2011.

According to the latest CSO Livestock Survey, the number of cattle slaughtered in January 2012 increased by 3.1 per cent compared to a year ago.

Sheep slaughterings in January 2012 increased by 15.5 per cent.

Friday, March 02, 2012
Meat Demand Firm in Uruguay
URUGUAY - Demand for meat is firm. In 2011 the share of beef fell from 64.8 per cent to 64 per cent compared to 2010, while increased consumption of poultry meat and pork in the previous year.


Global consumption in all meat in Uruguay reached 94.7 kilograms per person per year.

Beef consumption of 60.2 achieved kilograms, keeping our country on 1 in the ranking of beef consumption.

Consumption of poultry meat is in second place in the preferences of the Uruguayan population.

Pork has been observed to generate high consumption in its natural state.

Monday, March 05, 2012
CME: Cattle Slaughter Down & Hog Up from Last Week
US - US beef packers have tried hard to keep cattle slaughter under control for much of February and last week was no different. USDA reported that total cattle slaughter for the week ending March 3 was estimated at 621,000 head, 3.7% lower than the same week a year ago, write Steve Meyer and Len Steiner.


Based on preliminary estimates, steer and heifer slaughter for the week was 492k head, 3.3% lower than the same period a year ago. Cow and bull slaughter for the week was estimated at 128k (without bulls cow slaughter was below 120k), down 4.5% from a year ago. So far the reductions in steer and heifer kills have done little to slow down the rampant inflation in cattle prices. Live steer prices for the week averaged around $129/cwt., almost a full percentage point over the previous week and some 15% over year ago levels. The reduction in slaughter has been offset in part by heavier weight cattle coming to market. Steer weights are running well above year ago levels, thanks to warmer than normal temperatures this winter. Dressed steer weights for the week ending February 18 (latest data available on this item) were quoted at 854 pounds per carcass, up 2.4% from a year ago.

Total cattle carcass weights for the week ending March 3 were 788 pounds (this includes both heifers and cows which are much smaller than steers), up 2.2% from a year ago. Overall beef production for the wee was 488.5 million pounds, 1.37% lower than the same week a year ago. Cow slaughter has been lower than a year ago in recent weeks and the supplies available for marketing are some of the tightest we have been in recent years.

Hog slaughter for the week was reported at 2.150 million head, 0.5% higher than the same week a year ago. Sow slaughter has been running below both year ago and five year average levels for much of this year and for the week ending February 18 (latest data) sow slaughter was 57.1k head, down 2.3% from a year ago. Producers have limited the number of sows they sent to market in part due to decent out-front implied profits but also because the trim market has provided limited opportunities in recent weeks. The price of 42CL and 72CL trim is currently some 15-20% below year ago levels and this has negatively impacted sow carcass values.

Overall beef, pork and poultry production for the week was reported to be 1.681 billion pounds, 34.8 million pounds or 2% below the same week a year ago. Cutbacks in chicken production remain the primary contributor to the decline in overall protein supplies. Total chicken production on a live weight basis was 845.6 million pounds, 5.8% lower than a year ago. On a ready to cook basis (which is the number we use to add up overall protein pounds) broiler production was 634.2 million pounds, 34.6 million pounds or 5.5% less than the same period a year ago. The cutbacks in chicken supply are finally starting to show up in the price of chicken breasts, which should show significant increases in the next four weeks.

Wednesday, March 07, 2012
Uruguayan Meat Consumption Rises
URUGUAY - Meat consumption in Uruguay is on the rise, reaching 94.7kg per person per year in 2011.


However, while consumption of pig meat and poultry has risen, consumption of beef dropped slightly last year.

Consumption of beef went down from 61.2kg to 60.6kg while consumption of pig meat went up from 9.7kg to 10.5kg and poultry meat consumption rose from 19kg to 19.5kg.

Despite the drop in beef consumption last year, the demand for beef together with pork and poultry has been rising over the last five years.

Lamb consumption also fell slightly last year despite a continued upward trend over the last few years.

According to the national meat institute - the main meat marketing body in Uruguay - consumption trends in the country have been influenced by customs and habit, but the growth has also been attributed to a growing purchasing power of the consumer and the price of the product.

Consumption has been affected by the increases in beef prices compared to those of pig and poultry meat. Beef prices rose by 19.1 per cent while pig and poultry meat prices fell by 0.8 per cent and 10.9 per cent respectively, over the last six year.

At the same time, the Uruguayan population's purchasing power rose by 28 per cent.

Thursday, March 08, 2012
CME: Varying Future for US Poultry and Meat Exports
US - USDA’s Agricultural Projections to 2021 — also known as the USDA Baseline — that was unveiled at the USDA Agricultural Outlook Forum in February paints varying pictures for the future of US meat and poultry exports to the end of its title time horizon, writes Steve Meyer and Len Steiner.


The charts below show total exports for the major players in world pork, beef and poultry trade. Data for 2010 are final esimates while 2011 numbers are preliminary. 2012-2021 are forecasts generated by the USDA model. Note that the U.S. is depicted by the bright red line in each chart. Note also that USDA includes both chicken and turkey in the poultry numbers but chicken dominates the category. In 2011, turkey accounted for 9.1% of total chicken-turkey exports. USDA assumes that the U.S. population will continue to grow at a rate of 0.9% but that the rate will slow 0.8% beginning in 2015 and continue at that rate until the end of the forecast period. That assumption may, in fact, be a bit rosy since recent population figures show the US growth rate slowed to just 0.7% for the year ended last July. Slower immigration and a lower birth rate contributed to the slowdown and both can be attributed to the recession. The birth rate fell by one-third during the Depression years.

In addition, the value of the U.S. dollar was projected by USDA to fall during the forecast period. USDA did not include a any worsening of the Eurozone debt crisis in this forecast. Should that happen, the decline of the U.S. dollar would be slowed to some degree. The U.S. agricultural trade-weighted dollar index was forecast to fall from roughly 85 (2005=100) in 2011 to about 79 in 2021. We say “roughly” and “about” because the report did not include actual numbers and those figures are read from a graph in the report.

USDA projects growing exports for all three major species with pork being the largest winner. The projected increase of 503,000 metric tonnes for U.S. pork exports is over twice the increase of the other five listed exporters combined. The U.S. accounted for 35.6% of the total exports of the six listed exporters in 2011. That share increases to 39.2% by 2021 in the USDA forecasts. Note that pork exports by Canada, Brazil and China also increase during the period but at a much slower rate.

U.S. beef exports are also forecast to increase over the forecast period, gaining 14.2% from their levels of 2011. That increase would be more impressive if the U.S. industry did not have to backfill a projected significant reduction in beef exports in 2013 when lower cattle numbers will limit the amount of product available for both domestic consumption and export. The key story for beef trade, though, is quite obviously the continued dominance of Brazil and Asia — with India being the primary driver of the Asian numbers. USDA expects Asia to actually be the world’s largest beef supplier this year before a rebound in Brazilian output puts them back in their number one position in 2013. Both Asia and Brazil are forecast to see increases of 52% in beef exports by 2021.

Finally, USDA expects Brazil to separate itself from the U.S. and become the clear leader in poultry exports this year and for each year through 2021. Brazil’s poultry exports are expected to increase by 41.5% while those of the U.S. grow by 8.3% to 2021. Interestingly, China’s poultry exports are forecast to grow by 44.4%.

Thursday, March 08, 2012

Clear Labelling Needed for Non-Stunned Animals

UK - The President of the British Veterinary Association (BVA), Carl Padgett, has said that consumers need to be better informed in order to allow them to make higher welfare choices.


“The European legislation allowing non-stun slaughter for certain religious communities never intended these products to go outside those communities, but without clear labelling consumers simply do not know what they are buying.
 
“Too many suppliers, retailers and caterers, such as those in the leisure industry, believe the easiest and cheapest way to satisfy the market is to source all of their meat from slaughter without prior stunning.
 
“We want to see UK ministers in Europe pushing for proper implementation of the legislation and supporting our call for better consumer information that will allow people to make an informed choice in favour of higher welfare.”

Friday, March 09, 2012

FAO Food Price Index Rises Again

GLOBAL - The FAO’s Food Price Index rose by one per cent, or 2.4 points from January to February. The Index climbed nearly two per cent in January – its first increase in six months.
 

The increase in the February Index was mostly driven by higher prices of sugar, oils and cereals while dairy prices fell slightly after a marked rise in January. At its current level, the Index was 10 per cent below its peak in February 2011.
 
Increased imports due to a weaker US Dollar and plunging freight rates have also characterized world markets since the beginning of 2012. This, combined with unfavourable weather conditions in major exporting countries has supported world prices in recent weeks, FAO said in a brief accompanying the Food Price Index.
 
The FAO Cereal Price Index averaged 227 points in February, up two per cent, or 4.4 points, from January. International wheat prices rose most followed by maize, while rice quotations were generally lower.
 
The FAO Oils/Fats Price Index registered another gain in February to 239 points, two per cent or five points, higher than in January. Poor monthly production growth in palm oil, together with the prospect of a tight supply and demand balance for total vegetable oils were among the reasons.
 
The FAO Meat Price Index averaged 175 points in February, virtually unchanged from the previous month’s level. Prices of pig meat gained 3.4 per cent, sustained by strong purchases in Asia and recent disease outbreaks in the Russia Federation. By contrast, prices of poultry, bovine and sheep meat lost some ground.
 
The FAO Dairy Price Index averaged 205 points in February, down marginally from January, The decline was mainly caused by falling skim milk powder and casein quotations. However, prices of butter, cheese and whole milk powder remained relatively steady.
 
The FAO Sugar Price Index rose to 342 points in February, up 2.4 per cent, or eight points, from January, but still 18 per cent (76 points) lower than in February last year. Last month’s increase was largely driven by unfavourable weather conditions in Brazil, the world's largest producer and exporter of sugar.

Australian Agricultural Commodities Report – March 2012
Australian pig meat production is forecast to increase by one per cent in 2012–13 to around 352,000 tonnes and to increase gradually to 370,000 tonnes by 2016–17, according to the Agricultural Commodities report from the Australian Government.

Overview
The Australian pig industry has experienced considerable competition from imports in the domestic processed pig meat sector. Under Australia’s quarantine arrangements, all imported frozen pig meat must be processed (mostly into bacon and ham). Over the 10 years to 2010–11, pig meat imports as a share of total domestic pig meat consumption grew from 15 per cent to 48 per cent. Over the medium-term, competition from imports in the processed pig meat sector is projected to increase. As a result, Australian producers are expected to continue focusing their efforts on producing meat mainly for the fresh meat market.

The weighted average Australian over-the-hooks price of pigs is forecast to fall by two per cent in 2012–13 to around 275 cents a kilogram. Lower forecast prices of feed grains, which account for about 55 per cent of total production costs, are expected to support higher domestic production in 2012–13. While weighted average prices have fallen since their peak in 2007–08, lower feed grain costs have since resulted in an increase in the pig-to-feed price ratio, providing support for returns to Australian pig producers.


Australian pig-to-feed price ratios yearly, ended December 2011

Over the medium term, the weighted average over-the-hooks price of pigs is projected to fall to around 265 cents a kilogram (in 2011–12 dollars) by 2016–17. This reflects a projected increase in domestic fresh pig meat production, continued productivity improvements and the effect of increased competition with imported processed pig meat. With the Australian dollar assumed to remain relatively strong over the medium term, demand for imported processed pig meat is projected to rise.

Production for the Fresh Market to Rise
Australian pig meat production is forecast to increase by one per cent in 2012–13 to around 352,000 tonnes. Over the medium term, pig meat production is projected to increase gradually to 370,000 tonnes by 2016–17, partly as a result of projected lower feed grain costs and increased demand for pig meat.

The composition of domestic pig meat production is projected to change over the medium-term. According to Australian Pork Limited, fresh pig meat accounts for around 40 per cent of pig meat consumption in Australia. Over the medium term, domestic production of fresh pig meat is projected to increase to 315,000 tonnes by 2016–17, compared with 273,000 tonnes in 2010–11. Greater industry emphasis on the fresh market is expected to lead to a slight decline in average slaughter weights, as more young pigs are turned off.

Processed pig meat accounts for the remaining 60 per cent of pig meat consumption in Australia. Given the increasing emphasis on the fresh pig meat market, the proportion of domestic processed pig meat production relative to total domestic pig meat production has fallen – from 37 per cent in 2003–04 to 20 per cent in 2010–11. By 2016–17, this share is projected to decline further to around 15 per cent, as a result of strong import competition. This represents about a 20 per cent fall in production of Australian processed pig meat over the medium term from 69,000 tonnes (carcass weight equivalent) in 2010–11 to around 55,000 tonnes by 2016–17.

Australian pig meat consumption was rising by an average of around two per cent a year in the 1990s and early 2000s. However, growth in pig meat consumption has slowed in the past five years, with per–person consumption reaching around 25kg a year. Over the medium term, relatively higher projected retail prices for red meats, namely beef and sheep meat, are expected to support pig meat consumption. Per–person consumption of pig meat is projected to rise slightly to 25.6kg by 2016–17.

Imports Continue to Grow
Australian pig meat imports have grown steadily over the past 10 years, from 26,000 tonnes in 2000–01 to 132,000 tonnes in 2010–11 (shipped weight). In 2012–13, imports are forecast to increase by four per cent to 143,000 tonnes, up from 138,000 tonnes in 2011–12. Over the medium term, pig meat imports are projected to increase further, reaching 164,000 tonnes by 2016–17.

In 2010–11, pig meat imports fell eight per cent compared with the previous year. Coinciding with this reduction in Australian imports was an outbreak of foot and mouth disease in the Republic of Korea in late 2010, which led to the culling of more than a million pigs. Subsequently, Korean demand for imported pig meat rose strongly and imports from the United States, Canada and Denmark (Australia’s three largest suppliers) increased by 35 per cent. Although the United States was able to increase pig meat exports to Australia, exports from Canada and Denmark to Australia fell by 25 per cent and 18 per cent, respectively.

Export Growth to Slow over the Medium Term
Australian pig meat exports are forecast to increase by two per cent in 2012–13 to around 32,500 tonnes (shipped weight), compared with 32,000 tonnes in 2011–12. Singapore, Papua New Guinea and New Zealand are expected to remain Australia’s largest markets for pig meat, accounting for around two-thirds of total shipments. Over the medium-term, Australian pig meat exports are projected to remain around 15 per cent of domestic production (on a carcass weight equivalent basis), reaching about 36,000 tonnes by 2016–17.

Australian pig meat imports and exports

Tuesday, March 13, 2012
Stunning the Rule, Ritual Slaughter the Exception

FRANCE - When it comes to slaughter, stunning is the rule, ritual slaughter is the exception, said Agriculture Minister Bruno Le Maire, when shedding the light on the practice of ritual slaughter in France.

14 per cent of all animals slaughtered in France, are slaughtered ritually.

Knowing how an animal is killed is the legitimate right of the consumer, this requires clear labelling , he said.
 
Last week, a regulation which will increase the regulatory monitoring of ritual slaughter came into play.
 
It is hoped that this new law will improve animal welfare and transparency where ritual slaughter is concerned.
 
Slaughterhouses wishing to carry out ritual slaughter must now be authorised to do so.

Wednesday, March 14, 2012

Brazil Looks to US to Increase Beef Exports

BRAZIL - Brazilian beef exports are expected to reach $6 billion in 2012, an increase on 11 per cent on 2011 figures, which would return Brazil to the world leader in beef exports, lost to the US in 2011.


The Brazilian Beef Exporters Association (ABIEC) says that increased demand from Russia, Europe and Iran, as well as new markets such as the US and Indonesia will improve exports.
 
Russia has recently lifted a ban on Brazilian beef, which was established on health grounds, the EU has also opened up markets.

ABIEC Executive Director, Fernando Sampaio said: "We hope to return growth to these markets."
 
Brazil are also hoping to increase exports to China, which has recently given access for five large Brazilian units to export beef.
 
Access to US markets
 
With a Brazilian visit to the US coming up, Brazil is confident that the US will revise current regulations which restrict imports of Brazilian beef.

Brazilian President Dilma Rousseff is set to visit the US in April. Minister of Agriculture, Mendes Ribeiro Filho, said he was confident that the US markets would open up to Brazilian products.

Minister Filho has met with numerous US officials and says that he has left all the meetings optimistic, he will accompany the President on her visit to Washington.

Last week, US Deputy Secretary of State, William Burns visited Brazil, and was asked about the barriers imposed on certain Brazilian beef and a revision of the Treaty of Economic and Commercial Cooperation.

Over the next two weeks, representatives from the Brazilian government will visit Washington to establish lines of discussion in areas of trade and investment.

Thursday, March 15, 2012
 
End to Hormone Beef Trade War

GLOBAL - EU concessions to help put an end to the 20-year hormone beef trade war with the USA and Canada were approved by MEPs on Wednesday. The deal allows the EU to keep its ban on imports of hormone-treated beef, in return for increasing its quota for imports of high-quality beef from the US and Canada.

The deal would raise the EU's quality beef import quota to 48,200 tonnes.

The US and Canada have already suspended duties, imposed in retaliation against the EU's hormone-treated beef ban, on previously "blacklisted" products originating in 26 EU Member States (all except the UK), worth over US $ 250 million at today's prices.
 
"This long-lasting trading dispute will end today. This is a win-win resolution for the EU. Parliament has taken a step that will enable the EU agricultural industry to plan ahead again and that will strengthen transatlantic trade links," said rapporteur Godelieve Quisthoudt-Rowohl (EPP).
 
Parliament made no substantive amendments to the text proposed by the European Commission. The deal, approved at the first reading with 650 votes in favour, 11 against and 11 abstentions, had already been informally backed by the Council. The increase in EU import quotas will take effect from August 2012.
 
History of a trade war
 
The beef hormone dispute has affected transatlantic trade relations since 1988 when the EU, concerned for health of its citizens, banned imports of beef treated with certain growth-promoting hormones.

In 1996, the US and Canada, which were worst affected by the ban, challenged it under the World Trade Organisation (WTO) dispute settlement system and were subsequently authorised to impose trade sanctions on EU produce worth respectively US $ 116.8 million and C $ 11.3 million a year.
 
These duties hampered EU exports and led to a loss of market share for EU producers. The EU products affected by the sanctions included bovine and swine meat products, Roquefort cheese, chocolate, juices, jams and fresh truffles.
 
The main beneficiaries of the lifting of the US and Canadian sanctions are Italy, with produce worth over US $ 99 million, Poland, (US $ 25 million), Greece and Ireland (US $ 24 million each), Germany and Denmark (US $ 19 million each), France (US $ 13 million) and Spain (US $ 9 million).
 
Last week, the USDA also published proposals to remove import barriers on BSE products, which would further open up US markets for the EU.

NFU chief livestock adviser Peter Garbutt said: “The beef industry has gone through a difficult number of years but since 2006 more export markets have opened and beef exports have increased year on year driving returns for producers.
 
“This move would open up further export opportunities for UK producers and I believe we can be positive and optimistic about our market prospects in the future”.

Friday, March 16, 2012
Mixed Trends in Livestock Supplies to Date
IRELAND - To date this year, mixed trends have been evident for meat supplies at export meat plants, reports Peter Duggan, Strategic Information Services, Bord Bia-Irish Food Board.
 
Cattle supplies as expected have tightened further on the back of reduced availability of cattle for finishing as discussed in this 2011/12 Meat and Livestock Review. In contrast, an increase in sheep and pig supplies has been evident due to a combination of an increase in productivity and some increase in numbers.

According to the CSO, cattle supplies were three per cent higher at 124,700 head in January as strong prices encouraged some forward marketing of stock. AIM data for the 1 December 2011 shows a reduction of almost 130,000 head in the number of cattle in the 12-30 month age bracket compared to a year earlier. Up to first week of March, cattle supplies are back by over six per cent or 16,600 head to 256,300 head. For the year as a whole, a reduction of 70-90,000 head is anticipated. A strong decline in steer and heifer availability is only expected to be partly offset by higher young bull and cow disposals.

The December 2011 livestock survey showed an increase of over four per cent in the sheep breeding flock at 2.52 million head. Supplies at export meat plants to date are running five per cent higher at 276,400 head as increased numbers were carried forward into 2012. Irish sheep prices more than seven per cent higher at €4.90 excluding VAT.

In terms of pigs, export meat plant supplies are currently six per cent ahead of last year’s levels at 457,000 head, reflecting higher levels of productivity. For the year though, the pig supply base is not likely to show any change on last year’s levels. The breeding herd recorded a fall of two per cent in the December 2011 livestock survey.

Tuesday, March 20, 2012

Bacon Week Set to Sizzle Across Australia

AUSTRALIA - Bacon is set to sizzle across Australia this week as the third annual Bacon Week gets underway.


Minister for Agriculture, Fisheries and Forestry, Senator Joe Ludwig, launched Bacon Week and said it was an initiative of Australian Pork Limited to celebrate home grown bacon.

“The industry has come a long way in recent years and the future is bright,” Minister Ludwig said.

“Australian pig meat consumption continues to increase and production is forecast to rise by around 1 per cent to 347,000 tonnes in 2011-12 and by 7 per cent to 370,000 tonnes by 2016-17.

“This is good news for Australian pork producers who produce a range of products including bacon, ham and small goods.

“I encourage pork lovers to buy Australian.”

Minister Ludwig said the pork industry was innovative and working to tackle challenges as well as increase production.

“The innovative thinking of many in the sector has seen Australia’s pork industry grow in leaps and bounds – not only in terms of production and consumer popularity, but also in improved animal welfare and environmental outcomes,” he said.

“Last November I visited a piggery in Grantham where this industry was involved in the launch of the first methodology in the Carbon Farming Initiative, reducing methane emissions from manure by destroying gas or using it to generate heat and electricity.

“In other areas too, the Australian pig meat industry is working to ensure it has a bright future. The ABARES annual Outlook conference highlighted the achievements of agricultural industries, including responding to consumer demands in labelling and animal welfare.”

Minister Ludwig last week presented the 2012 National Bacon Awards for Excellence in Canberra, congratulating winners on the high quality of their short cut and full rasher bacon products.

Australian Bacon Week runs from 18 to 25 March 2012.

Wednesday, March 21, 2012
China Issues New Licences for Uruguayan Beef

CHINA and URUGUAY - China has approved new licences for Uruguayan beef exports said the Ururguyan Minister of Livestock, Agriculture and Fisheries (MCAP), Tabaré Aguerre.


"We received confirmation that the licenses requested were granted," Mr Aguerre told TheObserver.

The Minister stated that the Chinese market has been growing for Uruguay and currently represents 15 per cent of total exports of the meat sector but licence approval had been slow.

In 2011, meat placements to China reached $112 million. China is also an important market as it takes 50 per cent of Uruguay's offal production. It is difficult to find alternative markets for this product.

This year, Uruguay will face more than five audits from different countries as prospective buyers. This will, therefore, require a lot of work from the Animal Health and Livestock Services to support these audits.

Broiler Meat Consumption Revised Downward

CHINA - The 2012 forecast for broiler meat production has been forecast downward to 13.7 million metric tons.

The downward trend is attributable to a decline in average slaughter weight, according to the USDA's China Poultry & Products Semi-annual. Due to a drop in pork prices, concerns regarding oversupply, weak demand, and declining prices for broiler meats spurred some producers to slaughter birds prematurely, resulting in lower average slaughter weights.

The forecast for broiler meat consumption has also been revised downward by less than one per cent. Hong Kong's decision to suspend live bird imports from December 2011 to January 2012 due to the H5N1 outbreak has had no effect on consumption.

Broiler imports are no longer forecast to increase due to lower consumer demand for broiler meat stemming from a decline in pork prices. China’s export forecast remains unchanged.

Friday, March 23, 2012
Argentine Beef Exports Downward Trend Continues

ARGENTINA - Argentinean beef exports fell 16 per cent year-on-year in 2011, to 129,484 tonnes swt, continuing the downward trend of the past 10 years and registering the lowest yearly total since 2001, reports Meat and Livestock Australia.


The decline in export volumes during 2011 has resulted in Argentina slipping from the fourth largest global beef exporter to just inside the top 10.
 
The decline in export volumes coincides with a five per cent year-on-year reduction in beef production over the same period, to 2.5 million tonnes cwt. The fall in beef production and subsequent decline in exports reflects the intention of Argentinean producers to rebuild the cattle herd, which underwent liquidation during 2009 due to the severe drought.

In comparison to the record high export year of 2005 (437,547 tonnes swt) and to that of 2009 (379,290 tonnes swt), beef exports were 70 per cent and 66 per cent lower, respectively, in 2011. Furthermore, government intervention to increase the available domestic supply, combined with uncertainty over future government policies, has also underpinned the lower export volumes.
 
Total exports to Germany (25,127 tonnes swt) and Israel (24,330 tonnes swt) during 2011 declined five per cent and eight per cent year-on-year, respectively, while shipments to Chile (21,876 tonnes swt) increased 22 per cent over the same period. The rise in exports to Chile was almost exclusively in chilled product, with volumes increasing 24 per cent year-on-year, to 21,589 tonnes swt. Exports to Russia over the past few years have fallen considerably, particularly from the 171,000 tonnes swt sent in 2006 and the 139,000 tonnes swt shipped in 2009. Total volumes sent in 2011 were 15,431 tonnes swt – 47 per cent lower than 2010.
 
Despite the reduction in overall beef exports, chilled shipments surprisingly increased one per cent, to 62,846 tonnes swt.

Correspondingly, frozen beef exports fell 28 per cent, to 66,638 tonnes swt. Total export returns for 2011 increased 10 per cent year-on-year, to US$1.15 billion, with values improving across most major export markets despite the significant reductions in shipments.

USDA Poultry Slaughter: Ready-to-Cook Weight Up 4 Per Cent
The USDA's National Agricultural Statistics Service (NASS) reports a four per cent increase in poultry ready-to-cook (RTC) weights in its monthly Poultry Slaughter report.

Poultry certified wholesome during February 2012 (ready-to-cook weight) totaled 3.47 billion pounds, up 4 per cent from the amount certified in February 2011. The January 2012 revised certified total at 3.62 billion pounds, was down 1 per cent from January 2011. The January revision represented an increase of 2.69 million pounds from last month's preliminary pounds certified.
 
The preliminary total live weight of all federally inspected poultry during February 2012 was 4.60 billion pounds, up 4 per cent from 4.42 billion pounds a year ago. Young chickens inspected totaled 3.93 billion pounds, up 4 per cent from February 2011. Mature chickens, at 61.0 million pounds, were down slightly from the previous year. Turkey inspections totaled 586 million pounds, up 7 per cent from a year ago. Ducks totaled 13.5 million pounds, up 7 per cent from last year.
 
Young chickens slaughtered during February 2012 averaged 5.82 pounds per bird, up 1 per cent from February 2011. The average live weight of mature chickens was 5.52 pounds per bird, down 1 per cent from a year ago. Turkeys slaughtered during February 2012 averaged 30.8 pounds per bird, up 1 per cent from February 2011.
 
Ante-mortem condemnations during February 2012 totaled 9.56 million pounds. Condemnations were 0.21 per cent of the live weight inspected, as compared with 0.26 per cent a year earlier. Post-mortem condemnations, at 34.4 million pounds, were 0.98 per cent of quantities inspected, as compared with 1.09 per cent a year earlier.
 
February 2011 contained 20 weekdays (including 1 holiday) and 4 Saturdays. February 2012 contained 21 weekdays (including 1 holiday) and 4 Saturdays.

 
Published by USDA National Agricultural Statistics Service (NASS)

Philippines Improves Dairy Competitiveness

PHILIPPINES - The Philippines has partnered with the Babcock Institute for International Dairy Research and Development (IDRD) to upgrade farmers’ global competitiveness even as the country now produces Dutch-origin Gouda Cheese under a two-pronged livelihood creation and import substitution programme.


 ManilaBulletin reports that the Filipino dairy farmers linked with the Dairy Confederation of the Philippines have started collaborating for a training program with the IDRD in the University of Wisconsin (UW)-Madison to be able to acquire any global best practices in dairying.
 
The programme, supported with financing by the US Department of Agriculture and US dairy cooperative Land O’Lakes, sent in the second semester of 2011 eight dairy industry leaders to the IDRD.
 
The dairy training partnership programme included dairy herd improvement, marketing and value-added products, UW Cooperative Extension System, UW Center for Dairy Profitability, dairy cattle nutrition and feeding, Forage Center Activities, Basic dairy cattle health, Milk quality testing, and cow comfort and Facility Design and Biological Systems Engineering.
 
Government agencies have been supporting local dairy development as the sector has tremendous growth potential considering the huge market with the country’s dairy imports reaching $500 to $700 million annually.
 
A Gouda Cheese development programme is now under the Philippine Council for Agriculture Forestry and Natural Resources Research and Development’s (PCARRD) Technomart programme.
 
Here, dairy producers belonging to the Northern Mindanao Federation of Dairy Cooperatives (NMFDC) based at El Salvador City, Misamis Oriental are aided on raising their revenue as they produce Gouda Cheese, butter, lactoflan, and other flavored milk products.
 
With agencies like the National Dairy Authority (NDA) assisting in quality control of the dairy products, the Gouda Cheese of NMFDC has been purchased by the Dutch flag carrier KLM and has gained acceptance from recognised hotels.
 
“Fresh milk and other products produced and processed by NDA-assisted dairy farmers meet dairy industry standards. Customers-such as premium coffee shops and first-class hotels-are assured of quality items. Gouda cheese (Queso de Oro) has passed the discriminating test of cheese lovers,” reported NDA.
 
The NMFDC’s Gouda Cheese, stored at four to eight degrees centigrade for at least six months, have gained a market for its flavor. As storing process raises production cost, PCARRD has extended a help to the NMFDC through a biogas digester facility that has become a cheap source of energy for the storage facility. The power facility uses manure of dairy animals as gas source.
 
The programme has also identified a dairy expert called “Magsasaka Siyentista” (MS) to aid other dairy producers in adopting best practices. The MS, Crescencio Barros, has been able to prove that temperate purebreds Holstein, Freisian, Jersey, Guernsey, and Brown Swiss can thrive in the country.
 
The MS programme is helping other dairy producers address shortage of forage, produce concentrate feeds, and carry out rotational grazing.

Philippine Chefs Introduced to US Beef, Pork, Lamb

Philippine Chefs Introduced to US Beef, Pork, LambChuck roll. Boston butt. Top sirloin. Kurobuta pork loin. Lamb loin chops. Bone-in beef short ribs. Even the all-American hot dog. The agenda for the 33 chefs, restaurant owners and importers from the Philippines at the recent two-day US Meat Export Federation (USMEF) US Meat Culinary Training Camp was a meaty one, to say the least.
 

Starting early in the morning and going late into the evening, the 33 Philippine meat industry professionals who participated in the 21-22 February seminar at the Oasis Hotel in Angeles City outside Manila worked their muscles, their imaginations and their taste buds as they learned about US beef, pork and lamb, tested new recipes and learned firsthand about the qualities of US red meat.





Sabrina Yin and chef Alex Chong instruct seminar participants
 
“This two-day intensive training program was a valuable and enriching experience for the participants,” said Sabrina Yin, USMEF-ASEAN director and co-instructor for the program with Alex Chong, executive chef of the Heritage Hotel Manila. “These people are hungry to learn more about US red meat, and they brought home notes, meat charts, educational brochures and factsheets on US beef, pork and lamb.”
 
Topics covered during day one of the training, which focused on beef, included an overview of the US meat industry, discussion of the US beef grading system, storage and handling of chilled and frozen meat, a cutting demonstration, cooking tips and information on rubs and marinades.

The cutting demonstration covered the chuck roll, top sirloin, top blade muscle, short plate, shoulder tender and hanging tender. Chef Chong prepared a menu for the participants that included:
 •Slow-cooked beef chuck roast with white radish and shiitake mushrooms flavored with star anise oyster sauce
•Asia wok-fried hanging tender with udon noodles and crispy beef wonton
•Grilled top sirloin with shallot merlot reduction, blue cheese potato croquettes and white oyster mushroom fritters
•Malaysian-style marinated beef shoulder tender with tomato rice on banana leaf and percik sauce



Participants were encouraged to marinate samples of the meat and cook them using their own recipes
 
The participants also were encouraged to marinate samples of the meat and cook them using their own recipes at the evening barbecue session.

Day two of the program focused mainly on US pork as well as lamb. Topics covered included product cuts, qualities and specifications, and a cutting demonstration on Boston butt, Kurobuta pork loin and lamb loin chop. The group also viewed several videos including “US Pork: Production and Harvest, a Commitment to Excellence” and the National Pork Board’s “Pork. One Cut at a Time.”
 
In addition to a luncheon featuring US pork sausages, the participants enjoyed a day-two menu prepared by chef Chong that featured:
 •Bistro-style grilled Boston butt steak, crispy chips and Thai red curry sauce
•Simply “fusion” grilled Kurobuta pork loin with marinated baby vegetables, balsamic reduction, and mango and pineapple salsa
•Oven-roasted bone-in lamb loin chops with red lentil dhal, seared asparagus roast garlic jus
•Oven-baked chuck short ribs, beetroot and onion salad with mustard vinaigrette

“From the feedback we received, we know that the participants were impressed both with the quality of the US meat cuts as well as the opportunity to learn about alternative cuts,” said Yin.

“Since most of the participants were chefs, we know they’re looking for the hands-on experience of cutting and preparing the meat, and are looking for ideas they can bring home to their own restaurants. The session was a huge success.”

Support for the program was provided through the Beef Checkoff, Pork Checkoff and USDA Market Access Program (MAP), while most of the meat samples were contributed by three sponsoring meat importers.

The Philippines is one of the top destinations in the ASEAN region for US beef and pork. In 2011, it bought 38,883 metric tons (85.7 million pounds) of US pork valued at $92.2 million and 12,760 metric tons (28.1 million pounds) of US beef valued at $38.1 million.

Wednesday, March 28, 2012

Quality Beef Premiums Continue to Grow

US - Beef feeders can look for continued payment of quality-grid premiums from packing plants, said a University of Missouri Extension economist.


“This only happens because they really need quality cattle,” said Scott Brown, an agricultural economist who follows the beef markets. “With high demand and short supplies of quality beef, packers are more willing to share.”
 
Brown’s advice for beef farmers seeking to capture quality-grid premiums: “Shoot for prime. That’s where the money is. Don’t stop at choice grade.
 
“Choice-select spreads are attractive at times, but prime premiums are more consistent over time,” Mr Brown continued. “Now, prime premiums are increasing faster.
 
“Top grid premiums of over $35 per hundredweight of prime-quality carcass are paid to help meet the demand for high-quality beef.” Mr Brown spoke at an educational event for members of the Missouri Beef Industry Council.
 
Mr Brown expects premiums for USDA prime quality grade beef to continue to rise as the economy recovers.
 
Demand comes from US consumers, but especially from global buyers. US beef producers should be excited about the continued opening of new trade agreements, such as one just confirmed with South Korea, Brown said.
 
Even in the recession, US consumers increased their shopping for choice and prime cuts, he said. “Consumers will pay for prime. They want a quality eating experience.”
 
Mr Brown said consumers pay for quality, and not just in beef. “Who would think we’d pay over $2 a cup for a Grande Starbucks coffee? We could make a cup of coffee at home for 15 or 20 cents.”
 
With rising demand and shrinking beef supply, consumers may face higher prices at the meat case.
 
“I don’t know if we will meet consumer price resistance,” Mr Brown said. “I’m not a great believer that higher meat prices cause demand destruction. Consumers send signals about the meat they want through prices.”
 
Brown said an early indicator of the general economic recovery came from the restaurant index, which gauges optimism of food-service operators.
 
“Restaurants took a real hit in 2009, in the depth of the recession,” Mr Brown said. “But the index grew by 1.1 per cent in the February report after a strong January. Sustained growth will show consumer confidence and create more demand pull.”
 
Producing prime calves doesn’t happen by chance, Mr Brown told farmers. Prime quality can be reached by using protocols developed at MU Thompson Farm. Dave Patterson, MU Extension beef specialist, has proven that prime becomes possible on a regular basis by using proven, high-accuracy AI sires.
 
Using timed artificial insemination results in uniform lots of calves sought by feed yards and packing plants. Buyers pay more for groups of uniform calves of the same quality.
 
“The Show-Me-Select Replacement Heifer Programme brought better genetics to the state of Missouri,” Mr Brown said. “It shows how to get high-quality calves. The program not only produces quality replacement heifers, but steer mates are worth more at the packing plant.”

Friday, March 30, 2012

Saha Farms Sees End to Korea Poultry Ban

THAILAND & SOUTH KOREA - Saha Farms Co, a leader in Thai poultry, expects the South Korean government to lift the ban on Thai frozen chicken imports by July.


Bangkok Post reports that the move should boost the value of Thai poultry exports to South Korea, which has maintained a ban on Thai products for eight years after bird flu broke out in Thailand in 2004.

Manoonsri Chotitawan, the president of Saha Farms, praised the private sector's participation in the roadshow to the country with the Thai government.

The company joined the roadshow in an attempt to urge South Korea to lift the ban, noting the Thai government has improved management to control the spread of bird flu since 2010.

Dr Chotitawan expects a decision by July.

Saha Farms exported 12,000 tonnes of cooked chicken to South Korea last year and expects to ship 15,000 tonnes this year out of total Thai exports of 420,000 tonnes a year.

Thailand recorded a trade deficit with South Korea, exporting agricultural products, electric circuits, computers and components while importing high-technology electrical machinery, steel and metal.

Two-way trade between Thailand and South Korea over the past five years (2008-12) has averaged US$10.47 billion a year.

Last year, it rose to $13.8 billion. The average trade deficit per year during the period was $3.43 billion.

Average imports per year from Korea are $6.96 billion, with 2011 imports totalling $9.1 billion, up by 14.1 per cent from 2010.

Average exports per year are $3.53 billion, with 2011 exports totalling $4.57 billion, up by 26.8 per cent from 2010.

USDA GAIN: Mexico Livestock & Products Semi-annual
Mexico’s cattle inventories are falling as non-sensitive cattle are slaughtered or being exported due to long-term drought that is affecting the industry and driving up feed prices. The swine industry continues doing well; however, as the pig crop is greater than previously forecast. Imports of beef and pork meat are forecast to remain strong through 2012 as domestic production is not sufficient for demand and as imported product appeals to various segments of the population.



Commodities: Animal Numbers, Swine and Meat, Swine
Production:
The Post 2012 Mexican pork production forecast is 1.215 million metric tons (MMT), carcass weight equivalent (CWE), higher than the USDA forecast. This increase is driven by specific requirements from Mexican export markets, the incorporation of new breeding lines that are better able to adapt to the Mexican production system, and better farm management techniques. The Post 2011 pork production forecast has been increased slightly, as well, from the USDA estimate for the above mentioned reasons.

Traditionally, Mexican producers supply live swine for slaughter at a weight of 105 kilograms for the purpose of ensuring leaner meat carcasses. Beginning in 2011 and in 2012, however, some slaughter operations producing swine for export are holding hogs until they reach 120 kilograms. Additionally, better genetics in the breeding swine population are producing more live animals per litter and have resulted in hog herds that are able to gain the desired market weight in less than 180 days, which is the Mexican industry average. The United States’ recognition of Mexican States as free of classical swine fever (CSF) has been one of the key factors to opening foreign markets for Mexican pork. The new and additional market access that Mexico has gained and the demand for high quality pork products in Asian markets are other important factors that are encouraging higher production.

Nevertheless, the exceptional drought, mentioned previously, is affecting pork production profitability, as higher feed grain prices have stressed production. As in other producing countries, animal feed for pork is based on yellow corn and sorghum. Some northern Mexico producers, however, are feeding their hogs with white corn or wheat (if available due to temporal surpluses during Mexico’s growing seasons). In Mexico, feed represents approximately 64 percent of the production cost.

Consumption:
The Post 2012 pork consumption forecast is higher than the USDA forecast as purchasing power gains and demand, specifically, for hams and picnic remains strong. These are generally inexpensive cuts that can be consumed as deli meat by middle and upper income consumers. Moreover middle income consumers (a smaller fraction of the population) are shifting consumption habits from poultry and beef back to pork. The Post 2011 consumption estimate has been revised lower than the USDA estimate as higher pork prices encouraged consumers to consume less expensive animal proteins.

Trade:
Mexico’s imports consist of hams and mechanically deboned meat (MDM) for the preparation of sausages, deli hams, and other cold cuts. The Post 2012 pork import forecast remains the same as the USDA forecast (650,000 MT CWE). The Post 2011 revised pork import estimate of 594,000 MT (CWE) is lower than the USDA estimate as higher international pork prices and competing international demand increased prices so that lower-income consumers needed to switch to lesser expensive animal proteins.

Although Mexico is a net meat importer, it is expected that during 2012, exports of pork meat to Japan will continue. Industry sources report that they are able to receive greater profits by exporting higherquality cuts to overseas Asian markets. The United States represents a potential niche market for specialty pork cuts. This market could be attractive to Mexican pork producers, but producers would need to find a market for other parts of the carcass (e.g., head, legs, and shoulders). Mexico’s distribution channels for these products exist, but the material would be competing with current supplies and potentially force down margins.

Policy:
The GOM continues implementing a number of programs to support agricultural production. Among these, the Agricultura Por Contrato (Forward Contract Program) is of significant and special importance for the swine industry. Both crop producers and animal feeders are encouraged to contract for grain delivery through this Forward Contract Program. The GOM, specifically, SAGARPA, provides a subsidy towards the cost of hedging. The hedge along with the actual contract provides assurance for a set grain price for the animal producers. While the program is open to all producers, the larger and more sophisticated producers have shown a greater interest in participating in the program.

On October 21, 2011, the Secretariat of Economy (SE) published in the Diario Oficial (Federal Register) an announcement revoking the retaliatory import tariffs on 99 U.S. agricultural and industrial products. This elimination of tariffs was the second step in the cancelation of tariffs after signing a bilateral memorandum of understanding on July 6, 2011. The tariff on 2 harmonized tariff system (HTS) line items related to pork meat (HTS 0203.12.01 and 0203.22.01) was reduced to 0 percent with the October 21 announcement. (See GAIN Report MX1076 Mexico Eliminates Trucking Retaliation Tariffs)



Commodities: Animal Numbers, Cattle, Meat, Beef and Veal
Production:
The Post 2012 Mexican beef production forecast is 1.83 million metric tons (MMT), carcass weight equivalent (CWE), slightly lower than the USDA forecast as cattle continue to be slaughtered at slightly lower weights than prior years. Since late 2011, northern Mexican cattle feeders have started slaughtering cattle, including feeder calves and dairy cattle as a measure to cope with an exceptional long-term drought affecting most of the country. The cattle industry has been struggling with strong international grain demand during the last half of 2011 which generated tighter feed supplies and higher production costs. Thus, to cope with the lack of forage cattle, feeders were compelled to partially liquidate herds during the last quarter of 2011. This was accomplished through the slaughtering of nonsensitive (not for breeding) cattle and the continued export of calves to the United States and more recently to Turkey.

The development of Turkey as a new market destination for Mexican live cattle has raised concerns by the cattle feeders and packers as it could have a negative effect on meat production. During 2011, the export of calves to the United States, Turkey, and other established markets, reached 1.435 million head, slightly lower than the USDA estimate. Without a sharp, rapid and significant improvement in breeding to improve the efficiency of the calf crop, the export of calves could cause future limited availability of steers for slaughtering intended to supply the domestic beef market.

Consumption:
The Post 2012 beef consumption forecast anticipates consumption figures will be slightly lower than the USDA forecast. Beef prices are expected to increase as a result of tighter suppliers (i.e. increased Mexican beef exports and lower production volumes) and thus reduce domestic market demand in favor of other animal protein sources. Tighter supplies will affect lower-income households more than middle and upper income consumers (a smaller portion of the population) who will maintain or even be able to see a slight increase in their consumption levels. Middle and upper income consumers are reportedly increasing their purchases of imported beef as numerous news accounts have and government testing has found trace amounts of an unapproved compound in domestic product. As such, sources report they are altering consumption preferences and practices. The Post revised 2011 beef consumption estimate is increased from the USDA estimate due to increased purchasing power among all income groups and lower than anticipated exports.

Traditionally, most low to medium income households consume beef cuts known as “bistec” (muscle thin beefsteak). Demand for finer cuts is limited to upper-income consumers, a smaller segment of the population, and, as such, finer cuts are often available for export markets.

Trade:
The Post 2012 revised beef import forecast is 300,000 MT (CWE), which is higher than the USDA forecast. As indicated earlier, drought and increased Mexican beef exports are preventing the meat sector from keeping up with demand increases from specific sectors of the population. Moreover concerns regarding food quality and food safety have led middle and upper income consumers to purchase higher volumes of imported beef.

During 2011, Mexican industry members made a concerted effort to diversify export market destinations. As such, industry sources report Mexico is exporting beef to a number of developing economies. Additionally, Mexico continued exporting beef products to Japan, the United States, Russia, and Korea. Mexico’s meat processors and traders expect that these markets will purchase greater volumes of Mexican beef during 2012. Specifically, there is strong industry belief that Mexico will be able to increase exports to Japan as negotiations for an expanded tariff-rate quota and a lower duty volume on its beef exports were concluded recently. Mexican industry is also optimistic on exporting greater volumes to the United States as trade sources indicate that the drought and cattle herd reduction experienced in the southern United States is encouraging more purchases of Mexican beef.

Sources have stressed that the Mexican beef industry must develop added-value product exports to strengthen all aspects of the marketing chain. Sources indicate that this will allow producers to obtain greater profits. However, Mexico lacks sufficient grazing land for large herds and for animals closer to desirable market weights. As such, the export of live cattle is a trend that will likely continue for several years.

Policy:
On December 6, 2011, the Secretariat of Agriculture, Livestock, Rural Development, Fishery and Food (SAGARPA) National Service of Health, Food Safety, and Food Quality (SENASICA) Import and Export General Directorate announced that Mexico will only be accepting the latest version of the FSIS Letterhead Certificates that were agreed upon and included in various official communications with Post. If shipments are not accompanied with these new Letterhead Certificates they will likely be held up at the border until a new replacement certificate (also known as “in lieu of” certificate) can be issued. The Letterhead Certificates have been posted on USDA’s FSIS Export Library and the Spanish requirements are posted on SENASICA’s website under the Modulo de Consulta de Requisitos Zoosanitarios para la Importacion (MCRZI).

In order to support better herd management, SAGARPA is promoting a voluntary program called “Reliable Provider Free of Clenbuterol”. Currently, SAGARPA offers producers delivering cattle to Tipo Inspeccion Federal (TIF) establishments a subsidy of 220 pesos (approximately U.S. $16.40) per animal under this program. SAGARPA aims to discourage producers from using ß-agonists during the last stages of cattle production as the substances are not approved for livestock use in Mexico. The use is considered illegal and can be detected in random sampling programs conducted at TIF facilities as well as municipal slaughter houses. Industry and government sources have declared that 97 percent of the domestic meat supply is safe for human consumption.

Recently, Mexico removed beef feet and sweet breads from the list of banned U.S. products. However, a number of other products remain, including; ground beef, small intestines, weasand meat, and head meat. (NOTE: the additional market access for beef feet and sweet breads will not affect the Post or USDA Production, Supply, and Demand forecasts as these tables refer only to muscle meats and NOT variety meats nor offals).

Currently, many producers sell their calves at an early growth stage. Private sources are jointly working with government authorities to implement a new program called “Development of Suppliers”. The program offers training, financial support, and technical assistance to calf producers. Through this program producers would be eligible to obtain financing that should allow them to feed and sell animals at a higher weight and when they are ready for slaughter. Presumably, this should not affect forecasts as entities in the marketing channel were feeding out the animals. However, the policy change should allow greater producer returns and may provide added strength to rural agricultural production.

Outlook: Beef imports exceed exports in January
University of Missouri Extension   |   Updated: March 16, 2012


Beef imports exceeded exports during January for the first month since August 2010. Beef exports during January were the lowest of any month since April 2010. January exports were down 8 million pounds (4.4%) compared to a year ago, largely because Hong Kong purchased 7 million pounds less U.S. beef than in January 2011. January beef imports were up 43 million pounds (28.8%) compared to a year ago and the highest since June 2011.
 
In total, 8.6% of January beef production was exported. Beef imports equaled 9.0% of January production.
 
January domestic retail beef demand was up 8.1% compared to a year earlier; but export demand for U.S. beef was down 1.9%. Packer demand in January for fed cattle was up 3.8% compared to January 2011.
 
Fed cattle prices were steady this week with moderate sales volume. Through Thursday, the 5-area average price for slaughter steers sold on a live weight basis was $126.34/cwt, down 43 cents from last week, but up $12.05/cwt from the same week last year. Steer prices on a dressed basis averaged $202.23/cwt this week, up 41 cents from a week ago and up $17.45 from a year ago.
 
Beef cutout value was sharply lower this week. On Friday morning, the choice boxed beef carcass cutout value was $189.92/cwt, down $5.90 from last week. The select carcass cutout was down $5.77 from the previous Friday to $187.94 per hundred pounds of carcass weight. The choice-select price spread is only $1.98/cwt. A year ago, steer dressed prices were $2/cwt under the choice cutout value. This week dressed prices are $12/cwt above the choice cutout value.
 
This week's cattle slaughter totaled 619,000 head, down 1.9% from the week before, but the same as a year ago. The average dressed weight for slaughter steers for the week ending on March 3 was 850 pounds, down 4 pounds from the week before, but up 21 pounds from a year earlier. Weights have been above year-earlier for eight straight weeks. Year-to-date beef production is down 3.7%.
 
Feeder cattle prices this week were generally steady to weak with more auctions lower than higher. Oklahoma City prices were mostly steady with the ranges for medium and large frame #1 steers: 400-450# $208-$217, 450-500# $204-$210.50, 500-550# $177.75-$204, 550-600# $179-$196.50, 600-650# $167-$182.75, 650-700# $161.50-$171, 700-750# $155-$166, 750-800# $149.25-$164.35, 800-900# $140-$154.75, and 900-1000# $133.50-$142/cwt.
 
The April live cattle futures contract settled at $125.30/cwt today, down 72 cents compared to last Friday. The June contract closed at $122.70/cwt, down 90 cents for the week. August fed cattle settled at $124.52 and October at $129.87/cwt.
 
March feeder cattle futures lost 52 cents this week to settle at $153.40/cwt. The April contract ended the week at $154.30/cwt, down $1.55 from the previous Friday.
 
Source: Ron Plain

Monday, April 02, 2012

Education Needed on Lean Finely Textured Beef

US – Lean, finely textured beef “is meat” and a healthy form of protein, according to a Texas A&M University expert.
 
Dr Russell Cross, head of the Department of Animal Science at Texas A&M University.
 
Dr Russell Cross, head of the department of animal science at Texas A&M, said lean, finely textured beef is nutritious, and a production process he approved while serving as administrator of the U.S. Department of Agriculture-Food Safety Inspection Service in 1993.
 
“The simplest way to describe this is that it is meat, it’s beef,” he said.
 
“The protein content is similar to what is ground in a steak. This product is no different than meat; that’s the reason USDA calls it meat.”
 
Dr Cross said much misinformation has been reported and discussed in various media. That’s why it is important that the facts be told about the production of lean, finely textured beef, which comes from traditional carcase-harvesting-methods, he said.
 
“The carcase is chilled 24 to 36 hours and broken down into parts we call primal cuts, and put into vacuum bags and sent to retail stores. And that is cut into steaks and roasts,” he said.
 
“The trimmings taken from this process — the lean, finely textured beef — is separated from the fat and from the lean trimmings. These products are frozen and put into a 60-pound box and shipped to processing plants that generate ground hamburger meat.”
 
Dr Cross said there is no difference in taste, and that “it is perfectly natural to have trimmings that come from cutting out steaks and roasts from the carcase.”
 
“These trimmings have pieces of lean still attached to them,” he said.

“It is valuable; it’s meat. Lean, finely textured beef is a process of centrifugation. It separates the lean and the fat, resulting in a very nutritious and very safe product.
 
Dr Cross said every time an animal is harvested, 12 to 15 pounds of this product is generated and used in ground beef.
 
“It’s been used for more than 20 years,” Dr Cross said.
 
From a beef industry perspective, this adds value to the carcase, Dr Cross said.
 
“We try to harvest every single aspect of the animal during the process,” he said.

“This 12 to 15 pounds would be that amount of protein not on the market. The fact we are going through this exercise of removing it from the market has caused the price of lean trimmings to go up over 15 per cent. That’s going to cause the price of ground beef to go up, and we all know who is going to pay for that – the consumer.”
 
He said the Southwest just came off the worst drought in its history and the region “lost more than 35 percent of our cows in Texas alone.”
 
“We are going to have a shortage of protein and this is just adding to that shortage,” Dr Cross said.

“This is going to cause the price of a lot of our products to go up.”
 
Dr Cross said he and faculty members, as well as those who serve in dual roles with the Texas AgriLife Extension Service and Texas AgriLife Research, will continue to educate consumers on the facts of lean, finely textured beef.
 
“We have people who are very knowledgeable about this product both on the quality side and the food safety side,” he said.
 
“We will do what we always do – we will collect the right data and get it out to the public and to the industry so they can use it. We will make it a priority to get the real facts out to the public.”

Tuesday, April 03, 2012

Massive Growth for Meat Exports

UK - Exports of livestock products rose to £2.325 billion in 2011, an increase of 22 per cent from 2010, according to data released by EBLEX and BPEX.
 
In 2006, the first year following the resumption of beef exports, total livestock product exports represented only £1.032 billion.

Carcase meat exports make up the vast majority of these exports, with beef representing 18.8 per cent, lamb and mutton 16.3 per cent, poultry 13.1 per cent and pork 7.4 per cent of the total value. The fastest growing category is beef offal, sales of which have more than doubled over the last two years. The fastest growing export region is the Far East.

Jean-Pierre Garnier, export manager for EBLEX and BPEX, said: “These impressive figures vindicate our efforts and those of individual exporters to boost exports of livestock products over the last few years.

“Global forces such as tight supply and a favourable exchange rate have certainly played a part in increasing our export opportunities, however without strategic planning and hard work we would not be in a position to take advantage of the situation.

“We are particularly pleased to see such positive results from our activities around offal and by-products as well as our joint initiatives with Government to open new markets.

“With a strong export plan in place for 2012-13, we can foresee further expansion not only in our core Western European markets but also in the Far East, Sub-Saharan Africa and many other markets.”

“There is certainly a high level of enthusiasm and confidence among meat exporters which augurs well for the future.”

HMRC export statistics show carcase meat exports in 2011 totalled £1.713. EBLEX estimates exports of other livestock products, including offals and hides and skins, totalled £0.612 billion.

Wednesday, April 04, 2012
Massive Growth in Meat Exports
UK - Exports of livestock products rose to £2.325 billion in 2011, an increase of 22 per cent from 2010, according to data released by EBLEX and BPEX.
 

In 2006, the first year following the resumption of beef exports, total livestock product exports represented only £1.032 billion.

Carcase meat exports make up the vast majority of these exports, with beef representing 18.8 per cent, lamb and mutton 16.3 per cent, poultry 13.1 per cent and pork 7.4 per cent of the total value. The fastest growing category is beef offal, sales of which have more than doubled over the last two years. The fastest growing export region is the Far East.

Jean-Pierre Garnier, export manager for EBLEX and BPEX, said: “These impressive figures vindicate our efforts and those of individual exporters to boost exports of livestock products over the last few years.

“Global forces such as tight supply and a favourable exchange rate have certainly played a part in increasing our export opportunities, however without strategic planning and hard work we would not be in a position to take advantage of the situation.

“We are particularly pleased to see such positive results from our activities around offal and by-products as well as our joint initiatives with Government to open new markets.

“With a strong export plan in place for 2012-13, we can foresee further expansion not only in our core Western European markets but also in the Far East, Sub-Saharan Africa and many other markets.”

“There is certainly a high level of enthusiasm and confidence among meat exporters which augurs well for the future.”

Thursday, April 05, 2012

Beef Exports to US Hit Three Year High

AUSTRALIA - Australian beef and veal exports during March hit a three year high to the US, reaching 26,786 tonnes swt, with total shipments for March back five per cent year-on-year, at 83,373 tonnes swt.


Despite the year-on-year decline in March, Australian exports for the first quarter of 2012 were up 1.5 per cent on 2011, at 209,245 tonnes swt, according to Meat and Livestock Australia.
 
After going close in February, the US was Australia’s largest export market by volume, surpassing Japan (25,028 tonnes swt) for the first time in three years, by 1,758 tonnes swt.

However, the return of the US to Australia’s largest beef export market (albeit for only one month so far) is primarily a tale of two markets – with the volumes to the US resurgent on the back of record imported (mainly grinding) beef prices, while trading conditions to Japan continue to remain very tough.

Attracted by historically high US prices for beef so far in 2012, Australian beef shipments to the US increased 73 per cent year-on-year during March, to 26,786 tonnes swt.

The significantly higher shipments in March continued the export revival of recent months, with exports to the US up 76 per cent for the first quarter of 2012, to 61,900 tonnes swt.

However, it should also be noted that the sharp increase in exports so far in 2012 is compared with very low 2011 volumes, when exports for the calendar year were the lowest since the late 1960’s.
 
In contrast to the US, export conditions to Japan during March remained very difficult for Australian exporters – largely a combination of subdued consumer demand and increased competition from US beef, assisted by the weak US$.

At 25,028 tonnes swt, exports to Japan during March were down 21 per cent and 28 per cent on March 2011 and the five-year March average, respectively, along with being the lowest March total since 2003. For the first three months of 2012, Australian beef exports to Japan were down 17 per cent year-on-year, at 65,284 tonnes swt.
 
Similarly to Japan, an increase in the competitive position of US beef in the Korean market also impacted demand for Australian beef to Australia’s third largest beef export market.

Adding to the tough export environment, the supply of traditional Hanwoo beef has also reportedly increased in recent months, tempering demand for imported product. Australian beef exports to Korea for March were 7,921 tonnes swt – a decrease of 52 per cent on the very high March 2011 volume (16,555 tonnes swt).
 
With prices for imported beef to the US anticipated to remain high throughout April, the increase in Australian shipments is expected to be maintained in the coming weeks.

However, the outlook for both Japan and Korea is somewhat less certain, further complicated by the likely decrease in cattle throughput due to the Easter disruption to processing activities.

Positive Indicators for the US Turkey Market

The US turkey market enjoyed another profitable year in 2011 and could extend its success into this year, according to Joel Brandenberger, president of the US National Turkey Federation. Senior editor, Jackie Linden, reports from the Turkey Science and Production Conference, held on 22 and 23 March 2012 in Macclesfield, UK.

Among the positive indicators are slow and managed growth in output, less volatile feed costs, good export markets and a strengthening domestic economy, which is helping bolster demand at home, said Mr Brandenberger. There are warning signs, however. These include an increase in the volumes in cold storage, a softening of the ground turkey and parts market, long-term instability in production costs and a highly uncertain regulatory position.




Figure 1. US turkey production
 
Interesting to note from Figure 1 is that 2008 produced a peak in both turkey numbers and meat output, which led to a jump in the volume of turkey meat in cold storage and a slump in profitabilty the following year. Bird numbers and turkey meat production have since been stable, said Mr Brandenberger, and the volumes in cold storage have declined again to steady levels. There has been gradual growth in exports since 2009, approaching 600 million pounds for 2011, he indicated.

In the US, chicken consumption overtook that of beef in the 1990s to become the nation's favourite meat and the figures for last year indicate average annual per–capita chicken consumption at between 80 and 90lbs, which compares with between 16 and 16.5lbs for turkey meat. This is a good sustainable level for the turkey industry, explained Mr Brandenberger, and one which is profitable. Interestingly, years in which per–capita consumption has reached or exceeded 17lbs have not generated good returns for the industry.

Furthermore, the US regulatory environment is changing, said Mr Brandenberger, both on farm and in the processing plant. The biggest changes are being seen in food safety, driven by three main factors: recalls of ground turkey last year; the USDA’s desire to continue modernising the inspection systems and a shrinking federal budget.
 
2011 Turkey Meat Recalls
 
There were three major recalls of turkey meat in the US in 2011:
 •frozen turkey burgers for Salmonella Hadar in March
•fresh ground turkey for Salmonella Heidelberg in August, which became the biggest turkey meat recall in US history (36 million pounds), and
•fresh ground turkey for Salmonella Heidelberg in September.

Mr Brandenberger explained that National Turkey Federation members convened a ‘Turkey and Salmonella Summit’ three weeks after the biggest recall, during which the participants developed a comprehensive action plan to enhance Salmonella control in turkey.

The key components of the plan, he explained, were: reassessment of HACCP/Salmonella control plans; a comprehensive survey of ground turkey; clarification of MST definition; review of Salmonella performance standards, and identification of pre–harvest research needs.

The Government response came from the US Department of Agriculture (USDA), which developed a comprehensive response, covering both turkey only and all ground meats.

The biggest issue, explained Mr Brandenberger, was the USDA setting very strict criteria for the plant where the recall had occurred before it could resume grinding. This followed the Department’s finding that the plant’s initial response was inadequate. The government tried to set standards that would effectively have declared Salmonella Heidelberg an adulterant in raw ground turkey meat but the lack of a rapid serotyping test prevented what would have been a zero–tolerance policy for Salmonella.

USDA followed this with the first steps towards pre–harvest testing.
 
Current Situation
 
Ultimately, USDA settled for a plan that was more stringent but did not fundamentally change the regulatory structure, said Mr Brandenberger. In the meantime, the government continues to increase its scrutiny of grinding operations but it is struggling to address the issue of certain Salmonella strains. A meeting is planned for later this year on pre–harvest controls.

The turkey industry continues with its action plan and is beginning to focus on the Centers for Disease Control (CDC) in foodborne illness investigations and recalls.
 
Other Regulatory Issues
 
USDA is moving forward with a major modernisation of poultry meat inspection, said Mr Brandenberger, and it is focusing more and more on Campylobacter. The Food and Drug Administration (FDA), meanwhile, is on the verge of initiating a process to eliminate sub-therapeutic label claims for antibiotics in farm animals.

Environmental regulations remain a major issue, he added, as do non–tariff trade barriers. He mentioned that the issues with the EU remain unresolved.
 
Feed Costs
 
Starting with some background, Mr Brandenberger explained that Congress created the Renewable Fuel Standard (RFS) in 2005, which took effect the following year and was further expanded in 2007. At the beginning of 2006, corn (maize) sold for US$3 per bushel in the US. Now, it is around $6.00, he said.

According to Mr Brandenbeger, the diversion of maize from food/feed to fuel has led to the most fundamental restructuring of production costs and resulting food costs in a generation. In 2011, the volume of maize used for ethanol exceeded that for animal feed. Citing data from Thomas E. Elam, Mr Brandenberger showed that the ending stocks/use ratio in the US is forecast to be just seven per cent for the 2011/2012 year, adding that levels below 10 per cent have been critical historically.

From the same source, he showed how the average farm price from maize has risen alongside the proportion used for ethanol from around $2 per bushel in 2005/2006 to a projected $6 for 2011/2012. Over this period, the percentage of maize going to ethanol has increased from around 12 per cent to 40 per cent of the total harvest.
 



Figure 2. Major US feed ingredients
 (Data from Thomas E. Elam)
 
Another impact of the ethanol policy has been that the byproduct, distillers dried grains with solubles (DDGS), has overtaken soybean meal as the number two feed ingredient in the US behind maize.

However, the backlash has begun, Mr Brandenberger said, as Congress last year allowed two key ethanol supports to expire, while some in Congress are expected to begin pushing for additional ethanol reforms and action could start this year.

Finally, Mr Brandenberger turned his attention to other government issues. He highlighted the struggle between Congress and the USDA over the latter's efforts to regulate production poultry and livestock contracts. Furthermore, the Obama Administration and Congress will continue to wrestle over human nutrition issues, including obesity, which will likely have implications for the turkey industry in future, he said.
 March 2012

Cattle Outlook: Pink Slime Impacts Beef Prices

US - The publicity about Lean Finely Textured Beef (LFTB) and the unappealing new nickname associated with it is having a big impact on beef prices, writes Ron Plain, University of Missouri.

 
Ron Plain
 
The price spread between 90 per cent lean fresh beef trimmings and 50% lean trimmings during the last week of March was a record $134.77/cwt. Fresh 90 per cent lean trimmings averaged $217.71/cwt and fresh 50 per cent lean trimmings were $82.94/cwt. The price spread widened further this week.
 
The LFTB process has been used for years to remove fat from beef trimmings. The recent adverse publicity from calling the product "pink slime" has caused the value of high fat beef trimmings to plummet. Yesterday, fresh 50% lean beef trimmings averaged $54.80/cwt. Five weeks ago, these trimmings averaged $100.66/cwt.
 
The beef cutout value was lower again this week for the fifth consecutive week. On Friday morning, the choice boxed beef carcass cutout value was $177.41/cwt, down $6.40 from last week. The select carcass cutout was down $8.17 from the previous Friday to $174.98 per hundred pounds of carcass weight. The choice-select price spread is $2.43, up from $0.65/cwt a week ago.
 
Fed cattle prices were sharply lower this week and are now below year-ago for the first time since early January 2010. Through Thursday, the 5-area average price for slaughter steers sold on a live weight basis was $121.91/cwt, down $3.81 from last week and down $1.21/cwt from the same week last year.

Steer prices on a dressed basis averaged $193.39/cwt this week, down $8.49 from a week ago and down $3.03 from a year ago. Steer dressed prices are $15.98/cwt above the choice cutout value. This week's cattle slaughter totaled 622,000 head, up 3.3 per cent from the week before, but down 1.3 per cent from a year ago. The average dressed weight for slaughter steers for the week ending on March 24 was 844 pounds, up 2 pounds from the week before, up 17 pounds from a year ago, and above a year earlier for the 11th consecutive week.
 
Feeder cattle prices were generally lower this week. Oklahoma City prices were mostly $4 to $8 lower with the ranges for medium and large frame #1 steers: 400-450# $213-$220, 450-500# $201-$214, 500-550# $188-$200, 550-600# $177-$191, 600-650# $169-$175, 650-700# $152-$168, 700-750# $149-$156.50, 750-800# $143.50-$152, 800-900# $134.25-$147, and 900-1000# $128-$134.25/cwt.
 
For the fifth consecutive week, live cattle futures contracts were lower this week. Because of the Good Friday holiday, the futures markets ended the week a day early. The April live cattle futures contract settled at $118.32/cwt on Thursday, down $2.13 compared to last Friday and down $12.60 from 5 weeks earlier. The June contract closed at $115.82/cwt, down 33 cents for the week. August fed cattle settled at $118.47 and October at $123.97/cwt.

Fat Replacers Market Booming in US

Increasing health concerns, ageing population, mounting demand from end-use markets and alarming rise in obesity levels are triggering growth in thethe US fat replacers market.

A new report from Global Industry Analysts shows that the surge in popularity for low-calorie, low-fat, healthy and functional foods in developed markets such as the US is providing an added impetus steering the market towards a volume figure of 394,900 tonnes by 2017.
 
The report says that the US fat replacers market is highly mature and corners a reasonably stable niche in the global low-fat food trade.
 
Consumer trends continue to influence the industry, with low-fat and fat-free products being the current craze.
 
The fat replacers market is poised to exhibit healthy growth over the ensuing years, with majority of the sales to be sourced from mature markets for carbohydrate and protein-based fat replacers, GIA says.
 
In particular, functional fat replacers have been growing at a healthy pace over the years, triggered by increasing health concerns and demand for food ingredients with enhanced flavor and texture. Potential opportunities for fat substitutes exist based on hasty commercialisation of olestra, the largest selling fat-based fat replacer.
 
The market research report says that carbohydrate-based fat replacers continue to lead the market for fat replacers because of their status as US FDA recognized GRAS substances.
 
Fat replacer ingredients that offer dietary and processing advantages are likely to witness a healthy growth, with carbohydrate-based fat replacers poised to display a healthy CAGR of 5.7 per cent up to 2017.
 
Lately, the US market for hydrocolloid-based fat replacers have been growing robustly over the last few years, driven by the consumers increased awareness and quest to stay fit and healthy.
 
Burgeoning consumer and industry concerns over non-metabolized fat replacers have slowed down further improvements in the fat-based fat substitutes market.
 
Fat replacers are anticipated to log significant growth in the meat and dairy sector, as low calorie and reduced-fat foods such as low-fat ice creams, spreads and meat products are gaining huge popularity in these markets.
 
The declining demand for zero-fat food products is negatively influencing the overall demand for protein-based fat replacers, expected to grow over the years at a tepid pace.
 
Manufacturers of protein-based substances are more focused on dietary applications of protein ingredients such as dietary beverages and sports nutritional products instead of fat substitute applications, mainly due to the extremely profitable market for dietary and nutritional products.
 
The fat-free and low-fat foods market is facing stiff competition from alternative sweeteners and other products containing sugar alcohols.

The impact of rising competition is evident from the heightened levels of product development and burgeoning promotional expenditure.
 
Falling volumes was a major issue for manufacturers, despite surging values.
 
Fat replacer manufacturers are increasingly resorting to investments in improved process technologies and newer product developments to withstand the competition.

The manufacturers are all geared up to enhance the quality of functional fat replacers to provide improved taste in low-fat foods.
 
Major players profiled in the report include Advanced Food Systems Inc., Ashland Specialty Ingredients, CP Kelco, California Natural Products, Carrageenan Company, FMC BioPolymer, Grain Processing Corporation, Gum Technology Corporation, Kraft Food Ingredients Corporation, National Starch Food Innovation Group, P&G Food Ingredients, PGP International Inc, TIC Gums Inc., and Z-Trim Holdings Inc.
 
The research report “Fat Replacers: A US Market Report” reviews the fat replacers markets, the impact of recession, current market trends, key growth drivers, recent product introductions, recent industry activity, and profiles of major/niche global as well as regional market participants.

Thursday, April 12, 2012

Record February Lamb Production

AUSTRALIA - Australian lamb production during February rose 23 per cent year-on-year, to 37,325 tonnes cwt, on the back of higher slaughter across the eastern states (Australian Bureau of Statistics).


Meat and Livestock Australia says that this was the highest national February total on record, with all-time highs in NSW (9,292 tonnes cwt) and SA (8,302 tonnes cwt).
 
WA production remained limited by the historically small state flock and the improvement in seasonal conditions, declining 16 per cent on last year, to 3,418 tonnes cwt. WA slaughter was down 18 per cent year-on-year, at 155,156 head.
 
Victorian slaughter, in particular, was higher than last year, up 34 per cent during February, to 700,934 head.
 
Dry conditions across much of the west of the state influenced turnoff rates, with a slight decline in average carcase weights resulting in production increasing 33 per cent to 15,150 tonnes cwt.

NSW, on the other hand, processed significantly heavier lambs, with predominantly good growing conditions resulting in delayed turn-off for many producers. NSW slaughter jumped 24 per cent year-on-year, to 395,975 head, while production lifted 34 per cent.

Robot to Detect Tainted Meat

PHILIPPINES - A team of Philippine high school students is to enter a robot that can detect double dead meat - or "botcha" - in an international competition.
 

The “Meat’s Anti-Germs and Infection Solution" or MAGIS Version 2 will represent the Philippines in the 2012 1st Lego League, which will be held in St. Louis, Missouri from 25 to 28 April.
 
According to a report on ABS-CBN News, the Department of Science and Technology – Science Education Institute (DOST-SEI) said MAGIS Version 2 was created and designed using Lego NXT controllers.
 
It added that the robot is equipped with thermal and colour sensos, which can recognise whether meat istainted or still good for consumption.
 
The team from is Dr. Yanga’s College Inc. (DYCI) in Bulacan.

LMC: Strong Retail Red Meat Sector Last Year in NI

NORTHERN IRELAND, UK - While the vast majority of NI beef is exported to GB or mainland Europe, the retail beef and lamb market in NI remains a small but essential market for the NI industry.

With the retail volume sales of red meat market under pressure in recent months in GB, it is worth considering how the NI retail market is performing by comparison.

In terms of volume sales, the NI meat market generally has been under pressure over the last year (52 weeks ending 18 March 2012). According to Kantar data for NI, volume sales of all meats combined are down by nine per cent. The good news is that despite this decline in overall meat volumes, sales of beef and lamb have been relatively robust.

Volume sales of beef were up by almost one per cent in the 52 weeks ending 18 March 2012, and although lamb sales in NI fell by 3.4 per cent over the same period, this looks positively robust when compared with the 13 per cent decline in volume sales of other meats.

Perhaps the obvious reason for the reduced volumes is higher prices. The average retail beef price in NI rose by 11 per cent to £6.57/kg over in the year ending 18 March, compared to the previous year. The average retail lamb price rose by 13 per cent to £7.54/kg over the same period. By comparison however, the average price of all other meats rose by 80p/kg or almost 20 per cent to £5.09/kg. The rate of price increase for these other meats was clearly much stronger and that helps to explain the improved relative position of beef and lamb which is encouraging.

The net result of rising prices and reduced volumes sales meant that in the year ending 18 March total consumer expenditure on meat generally was up by six per cent, despite the nine per cent decline in sales. Over the same period, retail expenditure on beef and lamb rose by 11.3 per cent and 9.3 per cent respectively. Expenditure on all other meats rose by a modest 3.4 per cent. These figures plainly show that in the NI retail meat market, beef and lamb demand is holding up very well, relative to other meats. Red meat has in fact eaten into the market share of some of those other meats over the course of the last year.

In terms of volumes, beef’s share of total meat sales increased from 28 per cent in the year ending 20 March 2011, to 31 per cent in the year ending 18 March 2012. Lamb’s share of the total meat market was steady at just four per cent of total volume sales in the last year. Beef accounts for just over a third of total retail expenditure on red meat.

 In the 52 weeks ending 18 March 2012, beef expenditure accounted for 36 per cent of all meat sales, up from 34.4 per cent the previous year.

In the last year, 99.5 per cent of shoppers purchased meat. This figure was unchanged from the previous year. Despite strong performance in terms of volume sales and consumer expenditure, beef penetration in NI has been under pressure. The proportion of consumers that purchased beef has fallen by 1.5 percentage points to 92.2 per cent of consumers in the year ended 18 March 2012. The proportion of NI consumers buying lamb has fallen by 2.2 percentage points to 52.1 per cent in the last year.

Wednesday, April 18, 2012
Chinese Olympics Athletes Stop Eating Meat
CHINA - Chinese athletes are avoiding eating meat ahead of the Olympics Games out of fear that domestic pork, beef and lamb could contain substances banned under anti-doping rules.


According to Channelnewsasia.com, they are instead relying on protein powder and fish to meet the high protein needs of top-class athletes, the Yangtze Evening News reported, as China goes after another successful haul of medals.

At least 196 competitors under China's National Aquatics Centre, which governs swimming, diving and other water sports, have been off meat for the past 40 days, the report said. The London Games are 100 days away.

China's food production industry is notorious for frequent scandals involving producers who illegally or excessively use various additives in the raising of livestock.

Authorities are particularly concerned that athletes could unwittingly consume clenbuterol, which is banned for food production in China but has been found in contaminated pork.

Clenbuterol can speed up muscle-building and fat-burning to produce leaner meat but has also been used by athletes as a performance-enhancer. It is banned by the World Anti-Doping Agency.

China's 2008 Olympic women's judo gold medallist Tong Wen was banned in 2010 for two years for testing positive for the substance.

Chinese media reported earlier this year that national sports authorities had banned athletes from consuming meat outside of state training facilities.

Officials with the National Aquatics Centre and the sports ministry could not immediately be reached for comment.

Authorities have tightened supervision at training centres to ensure no clenbuterol-tainted food slips through and have launched checks of local produce near such centres, the Yangtze Evening News said.

"The kitchen is probably the most secure place at the Jiangsu province sports bureau... locks are installed on entry doors and only (kitchen) workers can enter," it said.

Thursday, April 19, 2012
Brazil Beef Export Revenue to Grow 20 Per Cent

BRAZIL - Brazil beef exports will bring in $6 billion this year, says the Brazilian Association of Meat Exporters (ABIEC).


President of ABIEC, Antonio Jorge Camardelli said that this is an increase in revenue of 20 per cent compared to 2011.
 
Volume exported is estimated to increase by 10 per cent.

Mr Camardelli said he is extremely optimistic about the export market for beef.
 
"In the first quarter of 2012, despite a slight drop in value and volume of beef exported, the price of beef per tonne, increased 1.74 per cent."
 
He said that the three pillars, on which beef exports rely, the market, supply and foreign exchange rates are all improving.

As for foreign exchange rates, the US dollar is becoming more and more favourable to Brazilian exporters.

Mr Camardelli said that despite European demand for meat not increasing, output is falling, which leaves plenty of opportunities for Brazilian exports. "We are also looking at other markets, such as the Middle East," Mr Camardelli said.
 
Monthly slaughter in Brazil is currently around 1.8 million head per month. Beef production in Brazil is increasing, he said.

Despite having a positive outlook, the value beef exports to Iran fell 92 per cent in the first quarter of 2012, however Mr Camardelli said that beef export values to the US were up 200 per cent.
 
Mr Camardelli also said that demand for beef was growing in Egypt, Libya, Venezuela and Angola.

Friday, April 20, 2012

Mexico-US Poultry Talks Collapse

US & MEXICO - Behind the scenes negotiations to settle a poultry anti-dumping case filed by Mexican producers against their US counterparts have collapsed, leaving the trade dispute in the hands of Mexican government officials.


According to The Journal of Commerce, it is unclear what triggered the end of the bilateral talks.
 
Last year, Mexico’s largest poultry producers filed an anti-dumping complaint against US chicken leg quarters, alleging they were being dumped in Mexico at prices lower than they were sold in the US. A Mexican government agency in August made a preliminary finding in their favor and ruled US chicken meat should be subject to an import duty of 129.5 per cent. Although it had the power to do so, the Mexican government did not immediately apply the tariff.
 
Representatives of the US poultry industry spent months trying to negotiate an import quota level with its biggest customer that would allow it to avoid the expense of the trade litigation while retaining access to much of the market.
 
Such a quota does place a ceiling on future growth of US poultry sales in Mexico, but it would allow the trade to continue uninterrupted. In addition to the cost of putting on a legal defense in a trade case, the industry also stands to lose market share if a high duty is imposed.
 
“This system isn’t universally loved, but it is effective,” the industry representative said. “We have that system in place as part of the CAFTA (Central America Free Trade Agreement), and it has worked well.”
 
After the talks broke off, a bipartisan group of 16 senators wrote to US Trade Representative Ron Kirk, urging the US government to intercede and protect the US poultry industry.

Monday, April 23, 2012

DA Orders Inspection of Markets for Smuggled Meat

PHILIPPINES - After receiving reports that pork and poultry smuggling has affected local suppliers, Agriculture Secretary Proceso Alcala has ordered a tighter inspection of meat sold in markets.


According to a report of radio dzBB's Allan Gatus on Monday, Mr Alcala ordered the National Meat Inspection Service (NMIS) to check markets for smuggled meat.

According to GMA News, the report said Mr Alcala will meet with hog and chicken raisers to find solutions against meat smuggling.
 
They will also discuss the possibility of exporting local meat to the Middle East, Japan, Malaysia, and South Korea.
 
Last week, agriculture and Customs officials assured hog and poultry growers that they are working to address their concerns about meat smuggling.
 
DA Assistant Secretary Salvador Salacup said growers complained about technical smuggling or the wrong declaration of prime cuts by unscrupulous parties to avoid paying higher tariffs.
 
Earlier reports said hog raisers were threatening to go on a “pork holiday” to protest against the technical smuggling of pork.
 
"Rest assured the government, particularly the DA and Department of Finance's Bureau of Customs, we're working out the mechanism to hit on that major issue of technical smuggling," Mr Salacup said in an interview over dzBB radio on Friday last week.

Thursday, April 26, 2012

Access for Irish Beef to Libya Expected Shortly

IRELAND - The Minister for Agriculture, Food and the Marine, Simon Coveney TD, said that he understood the Libyan authorities are about to lift their 16 year ban on the importation of beef from Ireland and other EU countries.


The Minister is optimistic that official confirmation of this will be received imminently.
 
The Minister said that the progress reflected the intensive efforts over many years at political, diplomatic and technical level and represented the continuing improvement in relations between Libya and the EU. It also was a recognition by the Libyan authorities of the quality and safety of Irish and EU beef. In a recent written communication with the Libyan Minister for Agriculture and Animal and Sea Resources, Minister Coveney said that he had emphasised the fact that Ireland applies the highest animal health standards and the strictest veterinary public health controls along the food chain and that these are the bedrock of our agri-food industry.
 
He added that the next step now is to agree veterinary health certificates with the Libyan authorities which will set out the conditions under which the export of Irish beef can take place. It is hoped that these will be agreed soon.
 
The Minister concluded by saying that: "This is a very exciting time for Irish agriculture and food. My visit to China last week was tangible evidence of the fact that there is unlimited potential in the global market place for Irish food exports. We are seen globally as a serious producer of high quality food and as a centre of excellence in terms of food safety, sustainable production systems, animal breeding and genetics. I remain committed to working to ensure that Irish producers have access to as many world markets as possible. With this in mind, my Department will continue to work closely with the Department of Foreign Affairs and Trade and Bord Bia to develop and expand our agri food exports".

Friday, April 27, 2012

IFA Says Price Cuts Undermining Lamb Market

IRELAND - Severe lamb price cuts are undermining the market and eroding confidence in the sheep sector, according to IFA National Sheep Committee Chairman James Murphy.


He called on the factories to immediately stabilise prices and steady the market.

Mr Murphy said with little or no increase in production forecast for 2012 and very strong offal and skin prices, lamb prices must be maintained at last year’s levels. He said this is essential to the recovery of the sheep sector and its ability to regrow.

Mr Murphy said early lamb producers are disheartened and angry with the factories over the excessive price cuts on spring lamb. He said they are particularly angry when they see the factories lorrying in thousands of imports and at the same time sending out the message to local farmers that they don’t want lambs. These producers have worked hard all spring and witnessed their top quality lambs being cut by €10 per head in a week.
 
The IFA sheep farmers’ leader said the severe lamb price cuts and contradictory market signals from the factories this week highlights the real need for a much clearer roadmap and strategy for the sheep sector going forward.

"Sheep farmers and especially early lamb producers cannot work in a market which inflicts price cuts of up to 10 per cent in a week."

Monday, April 30, 2012
Pakistan Poultry Price Increase

PAKISTAN - The price of poultry products has gone up in wholesale and retail markets of Karachi at the rate of Rs 25 to Rs 30 kg in the wake of increasing demand and consumption of the commodity due to ongoing marriage season.


The retail price of poultry meat has soared up to Rs 290 per kg at the retail outlets during the last few days, compared to Rs 240 to Rs 250 per kg previous week.
 
Similarly the retail price of broiler (live) also went up to Rs 158 per kg from previous price of Rs 125 to Rs 130 per kg.
 
Talking to Daily Times, Abdul Maroof Siddiqui, central convener, Pakistan Poultry Association (PPA) attributed the steep rise in price of the commodity due to upsurge in its demand during the last fortnight.
 
“Not only are large scale orders received by the wholesalers and retailers of poultry product from caterers but fast food outlets and five star hotels are also placing substantial orders for catering their daily needs which pushed their prices up."
 
Abdul Maroof Siddiqui said in the wake of ongoing marriage season, demand of the poultry product has surged considerably which created demand and supply gap resulting in increase of its rates, reports the Pakistan Daily Times.
 
Other major reasons for the enhanced prices of the commodity include declining production by the farmers and it has become gradually difficult for them to meet its ever-growing demand.
 
Furthermore extra ordinary increase in prices of beef and the mutton, which is currently priced at Rs 380 to Rs 400 per kg and Rs 550 to Rs 560 per kg respectively, have compelled consumers to turn to their attention to chicken meat.
 
High prices have resulted in less domestic consumption of poultry meat as it has proved too expensive for consumers.

Abdul Maroof Siddiqui said current prices would remain the same for at least two months and it would start declining by the end of next month when hatching and production processes would normalise.

GLOBAL POULTRY TRENDS – Slow Population Growth but Rise in Processed Egg Uptake in Europe

With the population likely to remain fairly constant, the key feature of the egg market in Europe in the coming years is the rise in the consumption of egg products by the region’s residents, according to Terry Evans in the last part of his analysis of the European egg industry. Some estimates point to the proportion reaching as high as 40 per cent in certain countries by 2025.

 



By 2015, the population of Europe will have increased by a mere 15 million compared to 2000. However, while the number of people within the EU is expected to increase from 482 million to almost 507 million, the total living elsewhere in Europe is forecast to decline from 245 million to nearly 235 million. While amendments have been made to the human population estimates (table 1) the FAO has not updated its consumption data.
 
Previously in these regional reports, it has been explained that the consumption figures per person – either in weight or numbers of eggs – are the most unreliable of all the industry statistics. From the data in table 1, it would appear that that average egg consumption in Europe is about 50 per cent above the global figure and also that, unlike the other regions reviewed in this series, there is far less variation in the uptake levels between countries.



While consumption per person in the European Union seems to have declined a little, outside the Community, it has increased quite considerably such that while, prior to 2003, the European average was below that for the EU, since then it has been above it.
 
Currently, world average egg consumption looks to be a little above 9kg per person, which would point to the European figure being around 13.7kg in 2012 (Figure 1).
 
Data published by the International Egg Commission (IEC) on egg consumption gives a mixed picture with the uptake per person in 2010 falling in some countries but rising in others. At first sight, it appears that movements between years simply reflect changes in available supplies which, in turn, are the result of actual or likely future changes in the levels of profitability of egg production. Without the corresponding price data it is not possible to assess whether the demand for eggs has altered.

 


Figure 1. Trends in egg consumption in Europe compared to the global average
 
However, one feature which appears to be common among most IEC member countries is that the consumption of eggs in egg products is on the increase. In 2010, egg products, as shell egg equivalent, was highest in Italy with the average at 75 eggs per person, which represented 36 per cent of a total annual consumption of 210 eggs per person. Belgium came a close second with a products uptake of 74 eggs per person but, in this case, the products represented 44 per cent of a total consumption of 170 eggs.
 
Certainly, it is the products sector of the market that will offer the greatest opportunity of an expansion in egg use in the foreseeable future, with some estimates pointing to the figure reaching as high as 35 to 40 per cent of production by 2025, depending on country.
 
April 2012

Friday, May 04, 2012

Canadian Pork Producers Fight for Open Border

CANADA - The WTO Appelate Body has completed its hearing on the United States appeal of it loss of the WTO dispute panel on its Country of Origin Labeling regime (COOL) as it applies to imported livestock, specifically Canadian hogs and beef cattle.


"The Canadian Pork Council and its members, together with the Government of Canada and the Canadian Cattlemen’s Association, have been contesting mandatory COOL since its inclusion in the 2002 US Farm Bill”, said Jean-Guy Vincent, CPC Chair, “and we are very pleased with how Canada’s dispute with COOL has been argued at the WTO – first before the Panel and now in front of the Appellate Body.”
 
“The Government of Canada team has very effectively argued that the (COOL) law is a protectionist measure”, said Jurgen Preugschas, a pork producer from Mayerthorpe, Alberta. “Despite claims by the United States that COOL was a response to requests from consumers, the legislation was in fact a result of lobbying by a splinter group of US livestock farmers whose intent was to restrict imports from Canada.”
 
In addition to Mr Preugschas, the Canadian hog industry was represented in Geneva by Martin Rice, CPC’s executive director; Andrew Dickson, General Manager of Manitoba Pork Council; and Peter Clark, CPC’s international trade counsel. The CPC Team also coordinated closely with Jim Laws, Executive Director of the Canadian Meat Council. Jim’s valuable knowledge and insights were greatly appreciated.
 
Mr Dickson noted “Canada has effectively argued that the COOL labeling requirements have seriously harmed and continue to harm Canadian exports of cattle and hogs to the United States. The COOL measure has been devastating to Manitoba hog producers. COOL has been particularly devastating to Manitoba hog farmers, many of whom have had to cease or significantly curtail their operations.”
 
“The Canadian legal team and their colleagues from DFAIT and Agriculture Canada were impressive and effective in their efforts to turn back the US. challenge” said Mr Preugschas. “A positive result is needed by all Canadian hog producers whether they are selling feeder pigs or slaughter hogs – the US. market has been skewed for far too long to our disadvantage.”
 
“We look forward to working with our counterparts in the US. on a legislated return to normalcy”, he added.
 
Peter Clark explained: “The formal meetings are over – and Canada’s summation was concise but complete and compelling. The Appellate Body will now consider the record evidence and arguments to reach its conclusion which we expect towards the end of June.“
 
He went on to note that in dealing with the COOL appeal the Appelate Body will almost certainly clarify rules which will be important with respect to COOL and to properly disciplining the proliferation of technical measures around the world.
 
The CPC serves as the national voice for hog producers in Canada. A federation of nine provincial pork industry associations, our organisation’s purpose is to play a leadership role in achieving and maintaining a dynamic and prosperous Canadian pork sector.

Jobs Go as Plants Close of Lean Finely Textured Beef

ANALYSIS - The media furore over the use of lean finely textured beef in beef products in the US took its most severe and possibly final toll this week as the company at the forefront of the debate was forced to close three of its plants.

Beef Products Inc had been promoting the safety and nutritious value of the products at the American Meat Institute Expo in Dallas.
 
The exhibition and conference also held a special seminar session to show to the media and the exhibition visitors that the product was safe.
 
However, the pressure of the campaign against the product that has resulted in many organisations, food service outlets and retailers demanding its withdrawal from their products has forced BPI to close its plants in Amarillo, Texas, Garden City, Kansas and Waterloo, Iowa with the loss of 650 jobs.
 
A plant in South Sioux City, Nebraska, will stay open but run at reduced capacity.
 
Iowa Governor Terry Branstad said: “The fact that a false, misleading smear campaign can destroy a company’s reputation overnight should disturb us all.
 
"My office will never stop fighting for every single job in this state, and I continue to hope that as consumers learn about this safe, healthy and lean product, they will understand what a great product lean, finely textured beef truly is."
 
In Brazil, meat processing giant JBS SA is to lease the assets of Brazilian poultry processor Frangosul, a company controlled by the French group Doux.

JBS said the move is another step to become the largest producer and meat processor in the world.
 
The company is already the second largest operator in the global poultry segment.
 
Under the agreement signed, JBS said it will not assume any pending, charges, restraint, seizure or inability of any other nature.
 
This is a lease asset and JBS said it will hire all current Frangosul employees and continue all contracts with the integrated service providers and third parties.
 
With this new Brazilian chicken operation, JBS will boost its production capacity by 15 per cent to approximately nine million birds per day.
 
A new report from the agri-business analysts, Rabobank, has linked the price of pork in China to the movement in the Consumer Price Index.
 
The report "Is the CPI the China Pork Index?" says that "a large portion of the China food CPI is due to pork’s large share in the CPI basket and its high price volatility".

 Chris Harris, Editor-in-Chief

Food Outlook – Meat and Meat Products
Friday, May 11, 2012

Global meat markets in 2012 are expected to see a recovery of supplies in traditionally importing countries and strong competition for markets, according to the latest Food Outlook report from FAO. Near record prices are constraining consumption growth.

Meat Prices Hover at Near–Record Levels
 
Global meat markets are likely to face heightened trade competition in 2012, at the same time that recovering meat production in Asia is set to dampen growth in global import demand. Overall, meat trade is expected to expand by two per cent, to 29.2 million tonnes, much of which is anticipated to be taken up by developing country exporters, which could increase their share of the global trade to 44 per cent.
 
Disease outbreaks in 2011, drought–reduced cattle inventories and high feed costs sustained international meat prices to near record levels in the first quarter of 2012. In April, the FAO meat price index edged up to 182 points, surpassing the record 181 points registered in November 2011.


 

Variable feed prices influence pork and poultry price movements

 

World meat market at a glance
 
Indications of slowing import demand, especially for pig and poultry meats, portents a potential moderation of meat prices in the coming months, which, along with high feed costs, is raising concern about the profitability of the meat sector in 2012.


 

Beef prices strong while easing feed prices translate into lower pig meat and poultry prices
 
Pig Meat

As disease concerns in Asia abate, the pig meat sector is poised for a quick recovery
 
After last year’s drop, global pig meat production is expected to rebound by 2.6 per cent in 2012 to 111.7 million tonnes, underpinned by gains in Asia due to reduced incidence of disease. In the region, policy support, growing investments and favourable market returns, particularly in China, are behind an anticipated four per cent expansion in the region’s output to 62.8 million tonnes. The sector may also recover in Japan, following a rebuilding of sow inventories and a return to normal piglet births in provinces affected by the nuclear fallout in 2011. Investments in breeding and feed industries in Viet Nam will support output growth, while a rebuilding of FMD-depleted inventories in the Republic of Korea is stimulating a 20 per cent production recovery.
 
In South America, high beef prices are indirectly supporting the expansion of the pig meat sector in Brazil, Chile and Colombia while, in Argentina, sporadic restrictions on pig meat imports from Brazil are creating incentives for investment. The recognition of Mexico as free of classical swine fever has opened new market access opportunities which, combined with investment in new breeding lines, supports an increase of the country’s production and exports in 2012.
 
Anticipation of new EU environmental regulations that will become effective in 2013 has catalysed a restructuring and concentration of hog operations that may translate into fewer pigs and lower production in 2012.
 
Despite tight margins, a shift by consumers in North America from beef to lower priced meat products is expected to strengthen demand and translate into higher production. Investment–driven gains in the Russian Federation are foreseen to boost production by five per cent despite persistent occurrences of African swine fever.

Pig meat trade may decline in 2012 as Asian import demand falters
 
After witnessing double-digit increases in Asian import demand in 2011 due to its disease-reduced output, improved production in the region is forecast to result in global pig meat trade falling to 7.0 million tonnes in 2012.
 
Reduced purchases by China, the Republic of Korea and Japan, amid large supplies, underlie this expected contraction. This is despite the expected ratification by the Russian Federation of the WTO accession treaty later this year and the signing of a free trade agreement between the Republic of Korea and the United States. It is clear that the Russian Federation will only ease restrictions on pig meat imports when it officially joins the WTO in mid-2012. Until then, imports by the country will be negatively affected by a reduction of its tariff-rate import quota from 470,000 tonnes in 2011 to 400,000 tonnes this year, which may result in smaller pig meat purchases.
 
By contrast, imports by Chile, Colombia, Mexico and Uruguay look set to increase, while Argentina’s “off-and-on” restrictions on imports of Brazilian product may lower deliveries to the country.
 
Declining trade prospects in 2012 set the stage for considerable competition among the major exporters – the United States, the EU, Canada and Brazil – which together account for nearly 90 per cent of global trade. Lingering Russian restrictions on imports of Brazilian products may contribute to lower exports from Brazil in 2012, while benefiting smaller international suppliers, such as Chile and Mexico, but also the United States and Canada.

Monday, May 21, 2012

Markets Opening to EU and UK Beef Products

ANALYSIS - The UK market for both beef and lamb has been declining for several years, but now it appears to be stabilising and prices are rising, writes Chris Harris.
 



Domestic consumption for beef has been robust but the home consumption of lamb has been suffering, Dr Phil Hadley the southern senior regional manager for the English Beef and Lamb Executive told the EBLEX Northern Conference.
 
He said that the global supply is changing and the competition and demand for beef and lamb is increasing, while the price gaps are narrowing.
 




Dr Phil Hadley EBLEX southern senior regional manager
 
In this market, English beef and lamb has a solid export base and demand is growing and this is offering a great opportunity in new markets Dr Hadley said.
 
One of the major opportunities for the British and specifically the English beef and lamb sector is that adding value to fifth quarter products along the chain will be a key element in breaking into new markets and finding new consumers.
 
UK cattle slaughtering last year slid to 2.126 million and this year the slaughter figures are expected to fall slightly to 2.07 million this year and go down further next year to 2.052 million.
 
The dairy herd in the UK has seen numbers fall from 2.339 million in 2000 to 1.8 million last year. The beef herd has also fallen, but not as steeply from 1.783 million in 2000 to 1.642 million last year. The prediction is for the numbers to stabilise and to run flat over the next two years.
 
Lamb slaughtering are expected to remain flat at about 12.5 million from last year through to 2013.
 



UK Prime Cattle Slaughterings

Source: EBLEX

Dr Hadley said that there has been a major shift in global production. The US has reduced its herd numbers to such a degree that they bare at their lowest for 60 years, South America has ceased being a major exporter to the EU, because of concerns over disease and traceability and production difficulties. New Zealand has seen a drop in beef cattle numbers and the Australian market has been hit by both drought and floods.
 
All this has come together to allow the EU to once again become a net exporter. In 2011, the next surplus of exports reached 312,000 tonnes.
 
While this shift in the dynamics of the global beef market have been taking place, world beef prices have been rising and sharply since 2010. At the same time the US calf crop has been falling.
 
"Although there is a slight slowing down in the drop in the US herd, it is still going down," said Dr Hadley.
 
South American beef imports into the EU hit their highest point in 2005-2006, but they have slumped to have that number now largely because of strategic political changes in the Mercosur states.
 
Even in the lamb imports into the EU, New Zealand, once considered a threat to UK and Irish lamb exports has seen the amount coming into the EU down so that it is not always fulfilling its quota.
 


EU Becoming a Net Exporter
 
With the EU becoming a net exporter, the UK is seeking new markets and many of these are in the developing and emerging nations that have gross domestic product rising at about eight per cent.
 
The opportunities that are presenting themselves for new exports are because these developing countries have 40 per cent of the global population with increasing wealth. It is estimated that China and India will have a middle class increasing to 1.2 billion by 2035 and this increase in wealth consumers will produce a greater demand for meat.
 
Dr Hadley said that it has been estimated that a 10 per cent rising n income produces a five per cent rise in beef consumption.
 
However there is a limited increase in production compared to the rise in demand. There is also expected to be a narrowing of the price gaps between the meat producing nations around the world.
 
The main regions that are going to see an increase in consumption and consequently will become market targets for beef exporters will be Asia, in particular China, and the Middle East and North Africa (MENA).
 


China Seeing a Rise in Demand for Protein
 
China, which has an increasing population and increasing wealth, is already seeing a rise in demand for protein. Already the country has a total meat consumption twice that of the US - although consumption per capita is lower.
 
China consumes 25 per cent of the total meat production. The favoured meat in China is pork and the country has 50 per cent of the world's pigs and consumes 50 million tonnes a year.
 
However, China has also been seeing tight supplies of pig meat, resulting in rising prices. Pork prices have risen 25 per cent year on year producing protests from consumers.
 
The rise in the demand for protein opens the market for beef and lamb into China and in particular fifth quarter products. There is also demand for hides and skins with the UK exporting 11 million sheep skins and 800,000 hides.
 
Dr Hadley said that the OECD and FAO forecast that the real price of meat is expected to rise by 30 per cent between 2011 and 2020 and this is on the back of a 50 per cent rise between 2001 and 2010. Beef and sheep prices are expected to rise by between 18 and 20 per cent up to 2020.
 
"The narrowing of global prices will make the EU and the UK more competitive particularly in the new markets," Dr Hadley said.
 


UK Opening Up More Non-EU Markets
 
The UK has already opened up 40 new non EU markets since 2010 and it is looking to particularly sell fifth quarter products to the Asian region. The amount of fifth quarter material on each animal - 50 kg on a beef animal and between 3kg-4kg in sheep - makes this market potentially very lucrative to the UK industry.
 
Currently the fifth quarter products are worth between five and eight per cent of the carcase value for UK processors, but processors in the Netherlands are able to make up to £36.50 more per carcase on the fifth quarter than the in the UK.
 
"This amounts to a loss to the industry of £96.5 million a year," said Dr Hadley.
 
He said that part of the problem and the loss of income is a poor perception of the value of fifth quarter products and poor treatment of the products in the abattoir often by meat inspectors, who do not respect the products.
 
UK domestic offal consumption has risen by 67 per cent from 2003 to 2008 with a market value of £62 million according to market analysts Mintel. The Agricultural and Horticultural Development Board puts consumption stable at 16,500 tonnes a year worth about £40 million.
 
Liver consumption in the UK is up by eight per cent and worth approximately half of total marketplace.
 
Between 2008-2010 the UK managed to turn the £2.2 million that is cost to dispose of unwanted or unfit offal and fifth quarter products into an income of £13.3 million - a £15.5 million turnaround following a project by MLCSL Ltd.
 
This small turn around in profit has shown the UK industry the potential value the fifth quarter could hold and in seeking new markets in Asia as well as well-set markets in Continental Europe, the industry could exploit the full value of the carcase with products that are not generally sold on the domestic market.

 Chris Harris, Editor-in-Chief

CME: Little to No Good News for Meat Sectors
23 May 2012

 

US - USDA’S monthly Cold Storage report was released today and it contained little good news for the meat and poultry businesses and was particularly ugly for the pork sector, write Steve Meyer and Len Steiner.

The chart below shows inventory levels for the four major meat species as well as the total.
 


The table on page 2 (please see link below) contains all of USDA’s data regarding the amounts of the various cuts in the US freezers on 30 April. Some important features of the report are:
 •Total frozen meat and poultry inventories stood at 2.249 millin pounds on April 30. That is 5.9 per cent larger than last year and 7.5 per cent larger than on March 31. It is also the largest stock of frozen meat and poultry at the end of any month since August 2009. YTD meat and poultry production is DOWN 2.3 per cent.
 

•The total inventory of pork, at 659.532 million pounds is the second largest on record. It falls just short of the 663.443 million pounds that was in freezers at the end of April 2008. This year’s April 30 inventory is 20.1 per cent higher than last year and 8.1 per cent higher than last month.
 

•Hams are the largest contributor to the grown in frozen pork stocks, coming in 46 per cent higher than last year and 40.6 per cent higher than last month. There are 35.6 million more pounds of hams in U.S. freezers than one year ago — and 32.5 million more than last month! Hams have been a challenge all winter and spring after the holidays passed with significant volume still on hand. It doesn’t appear that we are very near working through the backlog yet.
 

•Bellies were the second big contributor to freezer stock growth, coming in 40.6 per cent higher than last year and 13.2 per cent higher than last month. That 40.6 per cent means that there are 21.6 million more pounds of bellies available this year.
 

•Based on weekly data, April 30 pork stocks amounted to roughly 36 per cent of April pork production. That is the highest percentage of monthly production in month-end cold storage since April 2000.
 

•Chicken inventories grew by 5.6 per cent in April but remained 18.2 per cent lower than one year ago. April stocks are the second lowest (to March) since March 2007. Wing inventories are barely half of their April 2011 level but did increase by 10.3 per cent last month — maybe those prices are getting a bit too high to keep them moving? Stocks of breasts and breast meat fell to 119.97 million pounds, 18 per cent lower than last year and 2.7 per cent lower than last month. This is the lowest level of breast meat in freezers since November 2010. The only hiccup for chicken was a buildup of leg products in April with drumstick, leg, leg quarter and thigh/ thigh quarter stocks growing by 19.5 million pounds or 18.7 per cent.
 

•Total beef stocks, at 517.5 million pounds, were 16.8 per cent larger than last year and 2.9 per cent larger than last month. Those percentage increases were, to a great degree, equally shared between boneless beef and beef cuts. The April 30 total was the largest since November 2006 and marks only the 6th time that month-monthend beef inventories have exceeded 500 million pounds. It should be noted that monthly beef output in April 2011, based on weekly data, will be about 2 billion pounds. It was 2.2 billion in November 2006 and in the range of 2.2 to 2.5 billion pounds in the fall of 2002 when beef stocks were also over 500 million. This year’s stocks represent a larger share of production than did similar levels in the past.
 

•Finally, turkey inventories are sharply higher this year. April’s 438.5 million pounds was 20.3 per cent larger than last year and 16.9 per cent larger than last month. As can be seen in the chart above, monthly gains in turkey stocks through June or July are the absolute norm as producers and end-users build the inventories necessary to handle holiday sales. This year is no different except that the pace of the buildup is considerably faster than the past two years. While whole birds, as expected, counted for the largest volume of April’s increase, every other cut category except mechanically de-boned turkey saw larger percentage increase relative to last year.
 
So what does this mean? The data suggest that meat and poultry movement in April was nothing to shout about. That’s especially true of pork. That slow spring movement has left enough product in freezers to perhaps blunt any cash rallies that could start when hog numbers finally decline this summer — In history we trust!
 
When we look at year-on-year changes, we have to be a bit concerned about beef, whose stocks have increased even though production has moved lower. If exports remained below 2011 levels in April, these mean beef movement was indeed slow.
 
Maybe it is time to move away from record-high and near record-high retail prices long enough to clean up some of these inventories. Grilling season is here and some aggressive features could attract a lot of retail traffic and move a lot of product.
 

Alberta Promotes Beef, Pork in Japan
29 May 2012


CANADA - In early April, an Alberta delegation travelled to Japan to promote Alberta’s beef and pork industries to the Japanese meat industry at two events. A Canada/Alberta meat promotion seminar was held, in Tokyo, Japan, on April 3, 2012, with keynote speakers from various Alberta companies, agencies and associations to showcase Alberta’s beef and pork industry to targeted Japanese meat industry representatives.

In addition to the promotion seminar, delegation members also participated at the Japan Meat Industry Fair event from April 4 to 6, 2012, exhibiting within the Canada/Alberta tradeshow booth, and showcasing Alberta beef and pork to tradeshow attendees. Alberta participants were impressed by the quality of contacts they made at both the promotion seminar and the tradeshow with ongoing follow-up exploring new export opportunities for Alberta beef and pork exports to the Japanese market.
 
“The opportunity to promote Alberta’s agri-food industry within the Canadian context is crucial for increasing retail and foodservice sales and therefore increasing consumer recognition and awareness of our high quality products available to them in Japan. Our international competitors do a great job in branding their products under their national umbrellas for greater recognition by Japanese consumers, and we need to do the same,” says Lana Gudmundson, trade development officer with Alberta Agriculture and Rural Development.
 
The Canada/Alberta meat promotion seminar and Japan Meat Industry Fair tradeshow participation were organised and supported by Alberta Agriculture and Rural Development, the Alberta Livestock and Meat Agency (ALMA), the Alberta Japan Office, Canada Beef Inc., Canada Pork International and the Embassy of Canada.

Sustainability Theme to World Meat Congress
06 June 2012


FRANCE - The World Meat Congress opened its doors on Tuesday (5 June) with its eyes firmly set on the subject of sustainable production, writes Chris Harris in Paris.
 
The conference welcomed the new French agriculture minister, Stephan Lefoll, following the recent elections in France and is also playing host to several other minister including the Uruguayan agriculture minister.
 
The congress, which is being attended by more than 700 delegates from around the world, was opened by the International Meat Secretariat president Arturo Llavallol.
 
He told the congress that the IMS sustainability committee had been working closely with the Food and Agriculture Organisation of the United Nations over sustainability issues particularly with regard to cattle breeding.
 
He said that the FAO had already been working with the egg, poultry and dairy industries on sustainability issues and he said now was the time for the meat sector to find solutions.
 
He said the IMS has also become a global stakeholder in championing animal welfare issues. He said the industry has to focus on economic issues in countries around the world and focus on the development of production "so we can feed the billions of people in the world".
 
At the same time, he said that consumers are demanding good quality products.
 
President of the congress, Guillaume Roué, said that the programme of the congress is focusing on the demands of the market.
 
He said it will be tackling questions of sustainability, welfare, the environment, nutrition, health and marketing.
 
He said the industry has to strike a balance between the demands of these issues and the demands of business.
 
He said the industry has the "noble ambition of feeding the global population, but we also have to remember we are farmers".
 
"We are working as a food industry to provide food with quality and security, but as a farmer, we have to earn some money at the same time," he said.

Labelling Law for Beef and Pork Impeding Canada-US Trade
08 June 2012


CANADA - A simplified "Product of Canada and the USA" labelling system should apply to beef and pork as well as livestock raised, processed and traded between Canada and the United States, a new study released by the Fraser Institute, Canada's leading public policy think-tank, and the Competitive Enterprise Institute of Washington, DC recommends.
 
The study found that regulatory differences in North America's integrated supply chain for red meat are costly and unnecessary.

In particular, the Mandatory Country-of-Original labelling (MCOOL) law in the United States imposes substantial costs on producers by requiring beef and pork products to be labeled according to the origin of the animal, where it was raised, and the country in which it was slaughtered and processed.

"Canadian cattle and hog exports to the United States have decreased by 42 and 25 per cent, respectively, since MCOOL went into force in 2009," said Alexander Moens, Fraser Institute senior fellow and co-author of MCOOL and the Politics of Country-of-Origin labelling.
 
"These excessive labelling requirements do not increase food safety or improve health standard for consumers. MCOOL is simply a trade barrier, a product of the 'Buy American' shift."
 
Over the past several decades, Canada and the United States (as well as Mexico) have developed an integrated supply chain for many red meat products in which calves and pigs may be born in one country, raised in another, and slaughtered on either side of the border.

In 2011, Canada-US trade in agriculture was worth more than $38 billion US, $4.1 billion of which came from hogs and cattle, and pork and beef products.
 
"The nature of modern meat production makes this labelling requirement very costly. As often happens when special interests get special treatment, the real losers are consumers who must pay higher costs for what are termed 'benefits' but are of dubious validity," said Fred L. Smith, Competitive Enterprise Institute president.

Despite nearly identical standards and regulations for red meat processing in both countries, MCOOL imposes a tracking, segregating, and recording system that increases production costs.
 
American producers are now avoiding the onerous and expensive labelling requirements by choosing 100-per-cent US products.

The resulting drop in trade puts thousands of Canadian jobs in the livestock industry at risk, and many American processors and packers are faced with a lack of supply.

To boost trade between the two countries, the report recommends the creation of a single regulatory area by:
•Implementing bi-national food and animal safety standards for beef and pork;
•Installing a bi-national inspection regime on both sides of the border at various stages of the production process, including in slaughtering and processing plants;
•Blending or harmonising meat grades designations;
•Adopting a single, bi-national country-of-origin label, specifically "Product of the USA and Canada"; and,
•Removing all border inspections.

"Regulatory cooperation would create a single red meat regime in which both Canadian and American products can be priced according to their quality and in which the origin of the animals is irrelevant," Mr Moens said.

"This would benefit consumers through lower prices, help keep beef and pork competitive among increasing food choices, and also make North American meat more competitive in the global market."

Mr Smith added: "Free trade is one of the basic means of ensuring a pro-consumer competitive economy. If the United States treats its closest neighbor and trade partner in this way, what grounds can we have for urging the rest of the world to eschew protectionism and embrace free trade as a governing principle?"

April Pork Exports Remain Strong
12 June 2012

 

US - April exports of US pork were up slightly in volume (183,618 metric tons) from a year ago and four per cent higher in value ($509.2 million), keeping 2012 exports ahead of 2011’s record pace. Through the first four months of the year, pork exports stand six per cent higher than last year in volume (781,676 metric tons) and 16 per cent higher in value ($2.17 billion), according to statistics released by the USDA and compiled by the US Meat Export Federation (USMEF).

On a per-head-slaughtered basis, April pork exports equated to $57.69 – down slightly from the first quarter of this year but still more than a dollar higher than in April 2011. For the first four months of this year, exports equated to $58.84 per head.
 
April exports of pork muscle cuts equated to 24 per cent of production, 27.7 per cent when including both muscle cuts and variety meat. These ratios were roughly the same as April 2011 and slightly lower than the first quarter of this year.
 
Individual market highlights for US pork included:
• Though April was the slowest month this year for exports to Mexico, volume was up 30 per cent over April 2011 and value was 18 per cent higher. Through April, 2012 exports to Mexico were up 19 per cent in volume (207,095 metric tons) and 18 per cent in value ($377.4 million) over last year’s record pace.

 
• April exports to the China/Hong Kong region were the second-largest so far this year, pushing results for the first four months of the year one-third higher in volume (154,884 metric tons) and 84 per cent higher in value ($312.8 million) than the same period in 2011. However, exports to this region have slowed considerably from the peak volumes shipped in the final months of last year.

 
• January-April exports to Japan were down slightly in volume (161,933 metric tons) from last year but were 14 per cent ahead of 2011’s record value pace at just under $700 million.


 • Composed almost completely of muscle cuts, April exports to Russia were the strongest in more than six months. This pushed Russia’s 2012 results 20 per cent higher in volume (25,903 metric tons) and 28 per cent higher in value ($78.7 million) than a year ago.

The recovery of South Korea’s swine herd from the 2010-2011 foot-and-mouth disease outbreak has caused US exports to slow from last year’s record pace. Through April, exports to Korea were down 31 per cent in volume (67,061 metric tons) and 20 per cent in value ($192.7 million) from a year ago. For perspective, however, it is important to note that other than 2011, these results still outpace any other year’s exports to Korea by a wide margin and were nearly double the volume shipped in the first four months of 2010.
 
“Considering the recovery of domestic supplies in markets such as Korea and China, pork exports have performed remarkably well through the first four months of the year,” said USMEF President and CEO Philip Seng.

“Despite fierce competition in Japan, we have increased our market share further this year and nearly topped $700 million in value. USMEF marketing efforts are also contributing to growth in the Western Hemisphere markets – especially in the processing and retail sectors – with Mexico leading the way. Even in our Latin American markets that are quite price-sensitive, US pork is appealing to more customers than ever before.”
 

New Report Identifies Multi-Million-Pound Boost for UK Meat Industry
12 June 2012



 
UK - Potential benefits to the country’s meat industry to the tune of around £40 million per annum have been identified in a new report for the Royal Agricultural College by Stewart Houston, reports senior editor, Jackie Linden.

The report, A Creative Study Into the Scope for Increasing Value from Fallen Livestock and Animal By-products was presented by Stewart Houston, CBE FRAgs, at the House of Lords in London today, 12 June.
 
Board member of the Agricultural and Horticultural Development Board (AHDB) and Chairman of the British Pig Executive (BPEX), Mr Houston prepared his report for the Royal Agricultural College (RAC) 100 Club. His study was sponsored by PIC and the National Fallen Stock CIC (NFSCo).
 


Stewart Houston
 
He explained that, as the Earth’s natural resources are limited and the demand for food grows, all industries – among them, the UK meat sector – need to seek better and more efficient ways of producing goods and services. It was with this in mind that NFSCo proposed the study, which was dedicated to increasing value from fallen stock and animal by-products.
 
Taking the broad approach, Mr Houston looked within and across livestock production sectors – poultry, pig, beef, sheep and equine – and included fallen stock collectors, renderers and by-product manufacturers. Among his key findings is that, to extract value from fallen stock and animal by-products, it is important to consider the whole chain from the farm, through collection, processing and into product quality and design. Poor management in one stage of the process can impact the success of the whole chain, he said.
 
While animal by-product waste from abattoirs historically incurred a disposal cost, some of the same waste material now attracts a payment from processors, such as petfood manufacturers, seeking high-quality ingredients for their own products.
 
Mr Houston also highlighted the potential for the use of good quality animal by-product in new and emerging markets, such as renewable energy and aquaculture feeds.
 
In coming to his total annual potential value of these by-products of £40 million to the UK meat industry, he estimated that livestock producers could realistically reduce costs of fallen stock disposal by as much as 25 per cent (or £10 million across all sectors) by taking further steps to reduce mortalities, as well as to boost the value from unavoidable fallen stock and animal by-products by up to a further £20 million. Mr Houston’s report identifies areas for further research and knowledge transfer to reach the total figure.
 
Furthermore, these improvements would be accompanied by a number of environmental and social benefits, he said.
 
Acknowledging the teamwork that has been the cornerstone of this study, Mr Houston thanked particularly Ian Campbell (Director of NFSCo), Stephen Woodgate (Director of FABRA), Bob Bansback (Professor at Harper Adams University College) and independent consultant, Duncan Prior.
 
Finally, he made a series of recommendations for action, whilst warning that progress may be slowed by the need for changes in legislation and gaining consumer confidence over certain aspects, which include the possible return of processed animal protein (PAP) to the feed of farm livestock in the European Union.
 
Summarising his report – the first comprehensive study into raising the value of fallen livestock and animal by-products in the UK – Mr Houston wrote: “There appears to be a real opportunity for moving things forward and making progress in a number of areas.”

 Jackie Linden, Senior Editor

News Round Up

 Compared with the same period of last year, the EU achieved export growth of 14% in fresh and frozen pigmeat during Q1 2012. Total shipments rose by 45,000t to 367,250t. Growth was helped by greater deliveries to Russia, the EU’s principal customer, which increased by 12.5% to 83,000t, while the EU more than doubled its exports to China. Strong growth into the Chinese market meant that deliveries took a 9.5% share of total EU exports, compared with less than 3% in Q1 2011. By contrast, shipments to Korea declined by 11.5% to 43,500t as its domestic production continues to recover from the FMD outbreak at the start of 2011. At 28,000t, Hong Kong bought marginally less pork than a year earlier.

 French exports of pigmeat fell by 2% year-on-year in Q1 2012 to 115,300t. However, sales revenues increased as the average price rose by 9%. The decline in volumes exported was driven by lower shipments to Russia and Asia as other EU Member States bought the same volume of French pigmeat on aggregate as they had in Q1 2011. In the EU, strong growth in deliveries to Germany and Belgium were offset by a decline in sales to Italy, Greece and Spain. France imported more pigmeat than a year earlier during Q1. Spain is France’s largest supplier and it increased its deliveries by 10% to 68,400t, maintaining a 75% share of the market. The change in French pigmeat trade volumes reflects lower production volumes coupled with increased domestic demand. A 3% lower output of pigmeat in Q1 and a 1% increase in consumption limited the volumes of pigmeat that could be exported, and meant that more product had to be bought from fellow EU Member States.

 In Sweden, pig production fell sharply in Q1 2012. Slaughterings were down 10% on the year at 683,000 head, well below the level anticipated by the EU Commission. Production volumes have been restricted this year by significant herd liquidations during 2011 as producers left the industry due to the struggle to compete with cheaper imports from countries such as Denmark and the Netherlands. The Swedish pig sector’s competitiveness has also suffered from the strong performance of the national economy as this has strengthened its currency against the Euro. However, the EU-wide sow stall ban at the beginning of 2013 may provide some support to the competitiveness of the Swedish pig sector, as its welfare regulations are currently more stringent than in many other Member States.

 A sign of the rebalancing of the EU pig sector ahead of the sow stall ban has come from the Czech Republic. According to its agriculture ministry, the Czech Republic is now 94% compliant with the future regulations and most farmers not willing to invest in new housing have already left the industry. Census data showed that the Czech pig herd contracted by 10% in the year to April 1 2012 and its sow herd declined by 11%. A smaller pig population meant that pigmeat production fell in Q1 with volumes down 9% to 60,000t, and tighter supplies pushed producer prices up by 20% year-on-

Report Calls for Integrated Pig Meat Supply Chain
27 June 2012


UK - The British pig industry should follow a more integrated route to achieve better returns for producers.
 
A new report from the University of Manchester Centre for Research on Socio-Cultural Change says the UK's pig supply chain is in long term crisis and to turn it around the industry needs to organise itself through vertical integration to ensure the participants take responsibility for the health of the chain.
 
The better way, which delivers on broader economic and social objectives, is represented by the integrated national models of the Danish and Dutch pig industry) or the directly owned processing operations of Morrisons supermarket chain, which competes on price in the mass market and uses a higher proportion of British meat than any of the other major supermarkets, the report says.
 
"The Morrisons model aligns the interests of firm, supply chain and society through directly owned processing plants which run at full capacity and proves the benefits of plant loading," says the report.
 
"Our accounting research shows that Morrisons increases margins and reduces costs.
 
"Society gains through reduced import dependence, stable employment and the capacity to address animal welfare and climate change."
 
The research team, based at the ESRC funded CRESC research centre at the University of Manchester, says that the size of the national pig herd has declined by around 50 per cent over the past decade, while the UK has gone from 80 per cent self-sufficiency in pig meat to less than 50 per cent self-sufficiency.

The report says that the situation in the pig industry is a snapshot of the general economic ills facing the UK and that the situation in the pig industry worsens the UK's trade deficit and diminishes UK employment.
 
"This is a classic example of UK failure in tradable goods against North European competitors. The UK's growing volume of pig meat imports does not come from Eastern Europe or Asia, but from Denmark and the Netherlands, which provide over 50 per cent of the UK's bacon and produce more cheaply despite wages in meat processing, which are nearly double those in the UK."
 
The report calls for Government policies to recognise that ownership can lever changes in business practice by creating incentives and structures for new kinds of chain thinking.

"First, vertical integration of supermarkets with processors should be encouraged by targeted tax breaks for retailers who increase their value added," the report says.
 
"Second, horizontal integration should be encouraged by support for the creation of producer co-operatives and marketing assistance for artisan producers.
 
"These radical policies should be backed by increased powers for the Grocery Code Adjudicator to enforce contracts that give food manufacturers the security they need to improve their productivity and lower costs; and also to ban many forms of supermarket promotion which harm supermarket suppliers and do not benefit consumers."
 
The report has been broadly welcomed by the British pig sector.
 
"The report contains a number of innovative approaches to unlocking an obstacle to achieving a sustainable domestic pig meat industry which has existed for nearly two decades," said a British Pig Executive spokesman.
 
"While some recommendations may present difficulties politically to achieve, producers would be keen to engage.

"BPEX is investigating the possibility of a voluntary supply chain charter with retailers and foodservice companies which are genuinely working to develop partnerships with suppliers.

"The charter might contain specific tangible attributes such including clear objectives and how risks and rewards in achieving that objective are shared."

Monday, July 02, 2012

Lower EU Sheep Meat Imports


The EU imported 17 per cent less sheepmeat during the quarter compared to the same period a year earlier. March shipments were down 10 per cent despite an earlier Easter in 2012.

Shipments from New Zealand were back by 15 per cent to 37,400 tonnes, reflecting tighter domestic supplies with lamb production running 3 per cent lower at 243,000 tonnes for the first seven months of the 2011/12 marketing season up to the end of April.
 
While overall volumes have fallen, imports of chilled sheepmeat were up 6 per cent to 18,000 tonnes.

Shipments were up from most suppliers with New Zealand accounting for nearly 90 per cent of total supplies. However, this was still almost a third below 2010 levels. Frozen shipments fell by 29 per cent on the year to 24,000 tonnes with shipments from most regions significantly down.
 
Overall import values per tonne were almost 19 per cent higher than 2011 up to the end of March. This was helped by the increased volumes of chilled product while the average price of frozen sheepmeat was almost 16 per cent higher than comparable 2011 levels.

Friday, July 06, 2012

Australian Beef Production Falls in May

AUSTRALIA - Adult cattle slaughter during May declined three per cent year-on-year, to 666,000 head, with total beef production also declining three per cent over the same period, to 190,395 tonnes cwt, reports Meat and Livestock Australia.


Despite the year-on-year decline in both slaughter and production, May is traditionally a large production month, with May’s volume the highest so far in 2012 (Australian Bureau of Statistics).
 
Underpinning the overall decline in adult cattle slaughter was a three per cent year-on-year reduction in Queensland, which reached 329,000 head. Despite falling on last year (highest monthly total in 2011), slaughter in May 2012 increased in comparison to the other months as a result of the higher seasonal turnoff as producers offload stock as winter approaches.
 
Adult cattle slaughter in NSW (124,500 head) fell 18 per cent year-on-year, while Victorian slaughter (124,400 head) surged 12 per cent year-on-year in May, the highest since March 2010. Female slaughter continues to track lower than the same time last year, falling one per cent year-on-year, to 308,700 head.
 
Average national carcase weights in May increased slightly on the corresponding month last year, to 286kg/head. Despite easing one per cent year-on-year in May, Queensland average carcase weights hit 300kg/head, with the biggest improvement in carcase weights attributed to NSW, which gained four per cent or 11kg/head on last year, to average 285kg/head.
 

CME: Changes to Forecasted Meat, Poultry Output Muted
13 July 2012

 

US - Spreading drought conditions prompted a number of changes to the latest USDA estimates of corn, soybean and wheat production. But even as USDA reduced corn feed use by some 650 million bushels (12 per cent), the changes to forecasted beef, pork and poultry output were more muted, write Steve Meyer and Len Steiner.

This is in part because the earlier June meat forecasts were not as aggressive as the grain estimates (e.g. 166 bu/acre). USDA made modest adjustments to its forecasts for beef production in 2012 and 2013 and the overall trend continues to be towards steady reductions in both beef output and per capita disappearance. Broiler and pork production is expected to increase, albeit at a slower pace than earlier expected.
 


Below is a recap of the latest USDA projections:

Beef: USDA currently projects total US beef production for 2012 at 25.274 billion pounds, 1.018 billion pounds or 3.9 per cent lower than the previous year. This projection is about 90 million pounds higher than the June number, in part due to more cows now forced to slaughter from deteriorating pasture conditions. The forecast is for 2013 beef production to be 24.656 billion pounds, 618 million pounds or 2.4 per cent lower than in 2012. USDA made only modest changes to US beef trade forecasts. The latest estimate is for beef exports in 2012 to be 2.588 billion pounds, some 200 million pounds or 7.2 per cent lower than a year ago. Beef export data through May showed exports were down 10 per cent from a year ago and USDA does not expect a major recovery in US beef exports in the second half of the year. High prices, a stronger US dollar and slower global economic growth is seen keeping US beef exports in check. Currently USDA is forecasting US beef exports in 2013 to increase by 2.4 per cent but it will largely depend on how the broader global economy progresses, particularly in emerging markets. A stronger US dollar has been an impediment so far this year and it will remain a key driver going forward. Per capita beef disappearance has been on a downtrend for more than a decade and the latest balance table continues to show further erosion in beef supply availability in the domestic market. Per capita consumption in 2012 is forecast at 56.1 lb/person, down 2.1 per cent from the previous year. Per capita beef disappearance is expected to decline another 2.9 per cent from a year ago. Since 2007, just before the bottom fell out of the housing market, US per capita beef disappearance is down 17 per cent. And with ongoing liquidation of the beef cow herd, it will be very difficult to increase beef production any time soon.
 
Pork & Broilers: As corn futures are flirting with $8 per bushel and projections of hog breakevens surge higher, USDA expects US pork supplies to increase both in 2012 and 2013. Total pork production for 2012 is forecast at 23.315 million pounds, some 540 million pounds or 2.4 per cent higher than a year ago. The forecast was slightly lower than the June estimate. USDA now is forecasting pork production for 2013 to be 23.697 billion pounds, 1.6 per cent higher than a year ago. USDA shaved almost half a percentage point from its previous forecast but will likely wait until the feed supply picture becomes clearer before being more aggressive in projecting pork supplies for next year. Pork exports remain the big story as they now account for about 22 per cent of US pork production. The forecast is for pork exports in 2012 to be 5.404 billion pounds, 4.1 per cent higher than a year ago. Exports are expected to be less than 1 per cent higher in 2013. As for broiler production, this remains the biggest wild card given the dramatic increase in both corn and soybean meal prices. USDA did not change its estimate for broiler production in 2012, pegging it at 36.495 billion pounds, 0.8 per cent lower than a year ago. However, USDA reduced expected broiler output for 2013 by almost 400 million pounds, now forecasting just a 0.6 per cent increase from 2012.
 

USDA Livestock Slaughter

Reports» USDA Livestock Slaughter» USDA Livestock Slaughter - July 2012

20 July 2012
USDA Livestock Slaughter - July 2012
June commercial red meat production is recorded down from last year.


 

Commercial red meat production for the United States totaled 4.02 billion pounds in June, down 5 percent from the 4.22 billion pounds produced in June 2011.
 
Beef production, at 2.25 billion pounds, was 5 percent below the previous year. Cattle slaughter totaled 2.87 million head, down 8 percent from June 2011. The average live weight was up 28 pounds from the previous year, at 1,290 pounds.
 
Veal production totaled 8.9 million pounds, 20 percent below June a year ago. Calf slaughter totaled 56,000 head, down 23 percent from June 2011. The average live weight was up 4 pounds from last year, at 270 pounds.
 
Pork production totaled 1.75 billion pounds, down 4 percent from the previous year. Hog slaughter totaled 8.55 million head, down 4 percent from June 2011. The average live weight was up 1 pound from the previous year, at 274 pounds.
 
Lamb and mutton production, at 12.4 million pounds, was down 1 percent from June 2011. Sheep slaughter totaled 168,900 head, 8 percent below last year. The average live weight was 147 pounds, up 10 pounds from June a year ago.
 
January to June 2012 commercial red meat production was 24.3 billion pounds, up slightly from 2011. Accumulated beef production was down 2 percent from last year, veal was down 9 percent, pork was up 3 percent from last year, and lamb and mutton production was up 2 percent.
 
June 2011 contained 22 weekdays (including 0 holidays) and 4 Saturdays.
 June 2012 contained 21 weekdays (including 0 holidays) and 5 Saturdays.

Thursday, August 02, 2012
Canada Gears Up Beef Promotions in Japan

CANADA - Anticipating the possible relaxation of the 20 months age restriction, Canada has launched a series of beef promotions in Japan, reports Meat and Livestock Australia.

The Canada Beef International Institute (CBII) was quoted by the trade news Chikusan Nippo this week that it will focus its marketing activities on barbecues and outdoor settings and re-enforce “clean air, pure water, big nature” images among Japanese consumers.
 
The CBII has already been working with other Canadian food suppliers to collectively promote the country, by conducting barbecue events in western Japan and other areas. Activities with major retailers, independent butchers and camping sites will also be launched during this year.
 
Japanese imports of Canadian beef peaked in 2001 at 22,638 tonnes swt - prior to the BSE discovery in 2003 and subsequent import ban.

Shipments resumed in 2005, with the same restrictions imposed on US beef. Imports for the first six months of 2012 total amounted to 3,395 tonnes, up three per cent from the corresponding period in 2011.

CME: Pork, Beef Prices Down Despite Drought
10 August 2012

 

US - While there is broad expectation among US market participants that the surge in grain prices will eventually push beef and pork prices higher, for the moment beef and pork prices at the wholesale level are below year ago levels, write Steve Meyer and Len Steiner.

The reality is that it will take time and plenty of pain along the supply chain to reconcile higher feed costs with what the consumer is willing to pay. On the pork side, it is important to recognize the importance of the export market and the outsize impact it has on the overall pricing structure. The share of US pork going to export markets has been increasing steadily, underpinning US hog prices and helping avoid the kind of structural changes needed to cope with $6, $7 and now $8 dollar corn prices. In 2007, just as corn prices were starting to ratchet higher, pork exports accounted for about 14% of US pork production.
 
By the third quarter of 2011, however, pork exports were 23% of overall US pork output, a dramatic increase that helped put the pork cutout over $105/cwt. (see chart).
 
In the first half of 2012, pork exports continued to be very strong, accounting for almost 25% of all US pork output. That does not necessarily mean stronger demand given that pork prices were soft, rather, that at the lower price levels exports were able to absorb more US product. Going forward, it will be critical for export demand to hold up, otherwise major reductions in hog production capacity will be needed.
 
The US pork cutout on Thursday was quoted at $92.8/cwt, $16.6/cwt or 15% lower than a year ago and also 8% lower than what it was at the end of June. Much of the argument for the lower year over year price decline centers around the softer outlook for US pork exports in the second half of the year and that is likely a driver. However, we would argue that softer domestic demand for pork this summer clearly is a major factor. Two items have been particularly problematic in recent weeks, loins and ribs. This past July was the hottest on record and apparently that negatively impacted the willingness of the US consumer to spend time barbecuing in the backyard. The loin primal cutout is currently running some 24% below year ago levels while the rib primal is down 26% from last year. On the other hand, the belly primal is down just 2% from a year ago while the ham primal is down 13%.

The choice beef cutout on August 9 was quoted at $1.8250/ cwt, $4.5/cwt or 3% higher than a year ago. Strong promotions of choice beef at retail helped the cutout hit annual highs in June but then prices slipped in July as hot weather took its toll. The expectation is for choice beef to track near or above 2011 prices into the fall as cattle and beef supplies continue to decline. There is plenty of talk about cattle herd liquidation but it is important to put that portion of the beef supply in context. Most of the cattle coming to market are feedlot animals. Feedlot cattle slaughter currently is running at a weekly pace of around 500-520k head per week compared to cow/bull slaughter of around 127—133k head per week. So even as cow slaughter is expected to increase to around 140- 150k per week into September and October, limited fed cattle kills will keep overall beef supplies in check, likely down about 5% for Q3 and –3.6% for Q4.

GLOBAL POULTRY TRENDS - Chicken Output to Exceed 40MT in 2013 in the Americas

If chicken meat production maintains the expected growth this year and next, total output for the region will exceed 40 million tonnes in 2013, according to industry watcher, Terry Evans, in his latest analysis of the global poultry industry.

 



Global chicken meat production growth could well slow to around two per cent a year in the next decade, which contrasts with around four per cent in the 10 years to 2010. Nevertheless, the total is likely to approach 91 million tonnes this year and possibly 93 million tonnes in 2013. This compares with less than 59 million tonnes back in 2000 (Table 1). In broad terms, chicken meat production currently represents almost 88 per cent of poultry meat output compared with less than 86 per cent some 12 years ago.
 
Regarding international chicken meat data, it should be noted that the figures released by the FAO are for all chickens (i.e. table birds and culled layers) while the data published by other authorities such as the United States Department of Agriculture (USDA) and the Food and Agricultural Policy Research Institute (FAPRI) do not include estimates of the meat from culled layers.
 
The five major regions (Table 1) have exhibited differing rates of growth. Based on FAO figures, over the period 2000 to 2010, both Africa and Asia have recorded increases of around 4.5 per cent a year, while growth in the other regions has been below four per cent, averaging 3.9 per cent in Europe, 3.7 per cent in Oceania and 3.5 per cent in the Americas. Since 2010, all the regions have recorded slower growth rates reflecting lower profitability in the face of higher costs (principally feed), while in some countries, disease outbreaks have also played a role in this scenario.



Since 2000, production in the Americas has escalated by a little more than three per cent a year from 27.2 million tonnes to an estimated 39.4 million tonnes this year. This has been slower than the global total of around 3.7 per cent hence this region has seen its share of world output slip three percentage points from 46.3 per cent to 43.3 per cent. For 2013, a 2.0 per cent gain would push total production above 40 million tonnes.
 
The year 2010 is the latest for which figures are available for all countries (Table 2) and these reveal that there were seven countries in the Americas producing at least a million tonnes of chicken meat a year and combined, they accounted for over 35 million tonnes or more than 91 per cent of the total (Tables 2 and 3). However, just two countries – the US and Brazil – were responsible for 27.7 million tonnes or 72 per cent! While production in the USA grew by some three million tonnes or 22 per cent in the decade to 2010, Brazil’s industry expanded by a massive 4.7 million tonnes or 79 per cent.





According to USDA economists (Table 4), broiler production in the top seven producing countries in the region grew at an average 3.7 per cent a year between 2000 and 2012 from 24.5 million tonnes to an estimated 37.8 million tonnes. If the envisaged expansion of two per cent is achieved next year, output from these seven countries will climb to around 38.6 million tonnes. As the data for Peru has been taken from FAO statistics, a small proportion of the annual totals for this country will include culled layers. It looks as though broiler output in the US will approach 17 million tonnes in 2013. In Brazil, the figure should exceed 13.5 million tonnes, while in Mexico, third in the ranking table, output might hit the three million tonnes mark.

 


Figure 1. Leading chicken meat producers in the Americas – 2000 to 2013 (forecast)
 
The US is the world’s largest chicken meat producer, output (i.e. total production less condemnations) having climbed to a record near 16.7 million tonnes in 2011. However, the impact of higher costs on profit margins is expected to produce a near one per cent cut–back this year to 16.6 million tonnes.
 
A more optimistic view is taken of 2013 with production recovering by 1.7 per cent to 16.8 million tonnes. The actual extent of any increase will be influenced primarily by two factors, namely the degree to which processors consider that chicken demand will reflect any recovery in the US economy and also, how integrators feel about changes in the costs of production, especially feed prices. According to US economist Dr Paul Aho, there were a couple of factors that could lead to lower maize prices but recent drought conditions (up to mid–July) make that scenario unlikely. If there were to be a good maize crop this year, the proportion going for ethanol production would drop; the opposite will be true should the harvest be poor.
 
The dramatic rise in maize prices has boosted production worldwide. In 2000/01, maize production outside America was less than 340 million tonnes while the US produced some 250 million tonnes, giving it a 42 per cent market share. This year, production outside the US could reach 600 million tonnes compared with an early estimate of 350 million tonnes within the US, reducing its market share to 37 per cent or less.
 
However, should the recovery in the US economy slow down, the rate of expansion in chicken output could be curtailed somewhat. Tough economic conditions through 2011 resulted in several companies either having to close or be acquired by competitors. Dr Aho considers that as much as 80 per cent of US production could eventually come from just three or four companies. USDA long-term forecasts point to production increasing by only 1.3 per cent a year from now until 2021 when broiler output is expected to reach 19 million tonnes.



While, as for all countries, the estimates of chicken meat production vary somewhat according to source, there can be no doubt that the industry in Brazil has recorded a rapid increase since 2000 with an annual rate of growth in the six– to seven per cent range. Currently, it is considered that the rate of increase has been halved to around three per cent, reflecting uncertainties regarding the likely growth in exports, domestic consumption and higher production costs. Chicken meat output this year is likely to amount to some 13.3 million tonnes. USDA forecasts anticipate a growth of around 2.4 per cent a year which would put the 2020 total at around 16 million tonnes. In contrast, a Brazilian Ministry of Agriculture/Brazilian Agricultural Research Corporation study expects a much more optimistic 4.2 per cent a year increase to 2021/22.
 
Late in 2011, the Brazilian anti-trust regulator approved the merger of Sadia and Perdigão to create Brasil Foods SA (BRF), which now supplies 35 per cent of the domestic market and accounts for nearly half of Brazil’s exports. BRF is currently building a processing plant in the United Arab Emirates capable of producing 80,000 tonnes a year of further-processed chicken products.
 
Continued vertical integration in Mexico is helping offset the negative impact of high grain prices, according to a USDA report and as a result, it is anticipated that production this year will show a small gain over 2011 at a shade over 2.9 million tonnes, while three million tonnes could be achieved in 2013. As well as the worst drought for 70 years, the industry is having to contend with high grain prices as well as increased competition for feed from the pork and beef sectors. The country was also been hit by a series of outbreaks of highly-pathogenic avian influenza from the end of June 2012. The initial focus of the outbreaks was in Jalisco, the country’s leading egg-producing state with the resulting cull soon running into the millions. If the infection spreads to other regions, Mexico’s chicken meat industry could suffer production and trade difficulties for some time to come.
 
Although a much smaller industry than in the US or Brazil, chicken production in Argentina more than doubled between 2000 and 2011, reaching close to 1.8 million tonnes with an average growth rate of 6.7 per cent. Continued expansion is anticipated, boosted by increasing consumption allied to an expanding export trade. Consequently, production in 2013 is expected to come close to two million tonnes.
 
Canada operates a supply-management scheme for broiler production via a quota system, the quantities being reappraised on an eight–week cycle. In the decade to 2010, output expanded at 1.6 per cent a year but since then, growth has been limited to only 0.6 per cent and in general, it is considered that future growth will primarily be linked to population increases and to a lesser extent, dietary preferences.
 
The two other countries with annual broiler outputs in excess of a million tonnes, according to the USDA (Table 4) – Peru and Colombia – recorded good annual growth rates of 6.5 per cent and 5.4 per cent, respectively, from 2000 to 2010. If Peru has managed to maintain that momentum, annual output will have exceeded that of Canada. However, in Colombia, production has since slowed to around one per cent per year.
 
August 2012