Evening Report | April 24, 2024

Check our advice monitor on ProFarmer.com for updates to our marketing plan.

Livestock producers: Extend feed coverage... Soybean meal futures are breaking out above the top of the three-month consolidation range, suggesting there’s more near-term upside. Corn is likely to follow higher. As a result, we advise livestock producers to extend soymeal and corn-for-feed coverage another four weeks in the cash market through May.

USDA issues interstate transport testing, reporting order for H5N1 in dairy cattle... USDA’s Animal and Plant Health Inspection Service (APHIS) will require testing for the H5N1 virus in dairy cattle crossing state lines. Any detection of the disease must also be reported. The following measures go into effect April 29:

• Prior to interstate movement, dairy cattle are required to receive a negative test for the Influenza A virus at an approved National Animal Health Laboratory Network (NAHLN) laboratory.
• Owners of herds in which dairy cattle test positive for interstate movement will be required to provide epidemiological information, including animal movement tracing.
• Dairy cattle moving interstate must adhere to conditions specified by APHIS.
• A positive test would prohibit animals from being moved during a 30-day waiting period and until they test negative.

USDA says forthcoming guidance will be released, but these steps will be immediately required for lactating dairy cattle, while these requirements for other classes of dairy cattle will be based on scientific factors concerning the virus and its evolving risk profile.

USDA will also require labs and state veterinarian offices to start mandatory reporting of Influenza A nucleic acid detection diagnostic results, which is PCR or genetic sequencing, in livestock. Previously, H5N1 in livestock was not a reportable disease.

APHIS will provide reimbursement for testing at National Animal Health Laboratory Network labs, including samples submitted for (1) dairy cattle suspected of disease due to clinical signs, (2) pre-movement testing, (3) producers interested in the disease status of their asymptomatic animals, and (4) samples taken from other animals on dairies associated with this disease event.

As we reported in “First Thing Today” this morning, FDA found H5N1 virus particles in some samples of pasteurized milk. USDA Secretary Tom Vilsack said milk with the H5N1 particles came from asymptomatic dairy cows. He also reiterated the U.S. milk supply is safe “based on the information we currently have available.”  

Cold Storage Report: Mixed signals for beef, pork demand... USDA’s Cold Storage Report showed frozen beef stocks declined more than average during March, signaling demand remains strong. Pork inventories built contra-seasonally last month.

Total beef stocks at 432.2 million lbs. declined 15.1 million lbs. from February, which was more than the five-year average drop of 12.4 million lbs. for the month. Frozen beef inventories fell 45.6 million lbs. (9.5%) from last year and were 58.0 million lbs. (11.8%) under the five-year average.

Pork stocks rose 6.5 million lbs. to 464.2 million lbs., whereas the five-year average was a 10.3-million-lb. decline during March. But pork inventories dropped 69.7 million lbs. (13.1%) from year-ago and 75.0 million lbs. (13.9%) from the five-year average.

Poultry stocks totaled 1.120 billion lbs., up 1.1 million lbs. from February but down 74.3 million lbs. from last year. Chicken breast meat stocks declined 11.7 million lbs. (5.0%) from last year’s record to 221.3 million pounds.

OMB completes review of controversial USDA Cattle EID tag rule... The Office of Management and Budget (OMB) has completed its review of a proposed USDA rule that would require visually and electronically readable identification (EID) tags for cattle and bison. This rule aims to enhance animal identification and traceability during disease outbreaks. However, the proposal has sparked controversy, particularly regarding the financial implications for the cattle industry.

During the review process, the Livestock Marketing Association (LMA) and Representative Harriet Hageman (R-Wyo.) both raised concerns about the financial burden the rule would impose on the industry. LMA highlighted that transitioning to the EID system could be nearly nine times more costly than the current low-cost options. They noted that while USDA currently provides certain identification devices at no cost, the proposed rule could shift significant expenses onto producers.

Additionally, concerns were voiced about the rule’s potential to accommodate future technological changes in eartag technology, which could introduce further costs. Despite these issues, the fiscal year 2024 appropriations for USDA include $15 million intended to support the EID effort, suggesting some financial assistance for the industry.

Of note: Given the substantial discussions and the funds allocated in USDA’s budget, it appears unlikely the rule will be withdrawn. The focus now shifts to whether USDA will modify the rule to address these concerns or if further legislative actions will be taken to ensure the costs of the EID system and infrastructure are not fully passed onto producers.

Canadian competition bureau has major concerns about proposed Bunge/Viterra merger... Canada’s Competition Bureau said it had identified major competition concerns around the proposed merger between U.S. grains merchant Bunge and Glencore-backed Viterra. In a statement, the bureau said the deal was “likely to result in substantial anti-competitive effects and a significant loss of rivalry between Viterra and Bunge in agricultural markets in Canada.” It also determined the transaction was likely to harm competition in markets for grain purchasing in Western Canada, as well as for the sale of canola oil in Eastern Canada.

The report was sent to Canada’s transport ministry, which has until June 2 to review the deal. The federal Canadian government will take a final decision.

The bureau said last June it would review the merger, which would create an agricultural trading giant worth about $34 billion, including debt. The deal would bring the combined company closer in scale to leading rivals ADM and Cargill. Bunge has filed for regulatory approvals for the merger in major jurisdictions in North America, South America, Europe and China.

China’s MARA acknowledges harmful impact of low food prices on farmers... China’s Ministry of Agriculture and Rural Affairs (MARA) has acknowledged the negative impact of persistently low food prices on farmers, signaling a shift in policy focus. At a press conference addressing the agricultural economy, MARA admitted that months of declining food prices are beginning to harm farmers more than benefit consumers. Lei Lugong, the director-general of the Market and Informatization Department, highlighted that the food price slump has adversely affected farmers’ incomes and, in some cases, even impacted production.

China’s consumer price index (CPI) turned negative in October and continued to fall for four consecutive months, with flat year-on-year prices in the first quarter of this year. The decline in food prices, particularly for staples like pork, has been a significant driver of this deflationary trend.

Lei attributed the freefall in prices to various factors, including efforts to bolster domestic production for food security, sluggish recovery in consumption leading to lower demand for catering services and cheap global prices for agricultural commodities.

China’s central government has previously focused on increasing farm output and reducing food waste to enhance food security. However, with officials now recognizing the risks posed by oversupply to the farm economy, observers say there will be a reassessment of policies in this regard.