The Meat Trader’s Journal #32

USDA Pork Crisis in the Philippines, Imports, Record Australian Beef Export, US Pork Expands in Chile, Walmart Beef Price Surge

🔓Market Movers & Shakers Intel

Global Pork Market Summary & Japan

The frozen pork meat trading landscape in Q3 2024 has experience some shifts compared to Q2 2024, influenced by various market dynamics and external factors:

Supply and Pricing Dynamics

• Tight Supply and Price Increases: In Q3, hog prices continued to rise due to tight supply conditions. This was partly a result of herd liquidation in previous months and producers delaying slaughter to gain weight, which tightened the supply of fresh meat. Consequently, live hog prices increased significantly, contributing to higher wholesale pork prices.

• Frozen Meat Stock Levels: There was a decline in high frozen meat stocks, which had been slowly decreasing, leading to a tighter supply and demand balance. This reduction in stock levels contributed to a more constrained market environment.

Market Trends and Consumer Behavior

• Seasonal Demand: Q3 typically experiences lower slaughter numbers due to high temperatures, which can impact productivity and lead to a slight decline in pork production. This seasonal effect, coupled with ASF, affected the supply chain.

• Consumer Preferences: Despite the tight supply, demand for imported chilled pork was expected to rise, driven by seasonal demand increases seen in Q2 but there is lack of supply.

Geopolitical and Economic Factors

• Import Dynamics: Pork imports, particularly into regions like China, were affected by policy changes and antidumping probes on EU pork imports. Although these factors had limited immediate impact, they introduced uncertainty into import decisions and could influence future trade dynamics.

Then, What about Japan? Is Japan’s Insatiable Appetite for Pork Belly Driving Up Global Prices and Creating Shortages?

Japan's relentless demand for pork belly, especially the frozen variety, isn't just a local preference—it's a global market disruptor.

High Demand for Pork Belly

Cultural preferences play a major role. In Japan, pork belly is a favorite ingredient in dishes like “buta no kakuni” (braised pork belly) and “tonkatsu” (breaded and fried pork cutlet). This love for pork belly creates a high demand that domestic production alone can't satisfy, leading to the need for imports.

Limited Domestic Production

Japan simply doesn’t produce enough pork to meet its demand, particularly for specific cuts like pork belly. This shortfall means Japan relies heavily on imports from other countries to fill the gap.

Import Dynamics

To ensure a steady supply of pork belly, Japan strategically sources its imports from various countries in South America and Europe. By diversifying its suppliers, Japan reduces the risk of supply disruptions. Additionally, Japan’s willingness to pay premium prices makes it a strong competitor in the global market, standing alongside other major importers like China and the Philippines.

Impact on Other Markets

Japan’s significant demand for pork belly can have ripple effects globally. As it secures large portions of the available supply, other countries might face shortages and higher prices for this popular cut.

In summary, Japan’s demand for pork belly is driven by cultural tastes, limited local production, and strategic import strategies. This demand doesn’t just affect Japan; it can also influence the availability and cost of pork belly in markets around the world as we are experiencing through all this year and it is expected that it will keep going.

If you can bit Japanese buying price, better do it now because later, once suppliers allocate all production, importers won’t have any product left to bid or buy.

I will send in the What’s App Group Chat, the update of Pork and Beef Imports Summary for Korean Market. Like the pictures it comes once a month.

If you are not in the group, check here.

Example:

🏆Highlighting the relevant stories from top-down
TL;DR:
→ Pork crisis in the Philppines
→ Record Australian beef exports
→ US pork expands in Chile

Pork crisis in the Philippines

Publisher: Manila Standard, 13/08/2024

Philippine pork producers seek state aid amid African Swine Fever (ASF) crisis.

Key Points:

• ASF has severely impacted pork production, leading to significant supply shortages.

• Producers are urging the government to declare a state of calamity to access emergency funds.

• The crisis has led to increased pork prices, affecting both local and international markets.

Laura's POV: The ASF crisis in the Philippines could lead to increased pork imports, reshaping regional supply chains and impacting global pork prices. Currently the prices are very high and European prices are not very competitive in the global market. I wonder who is going to lead this new fresh demand in the Philippines?

Record Australian beef exports

Publisher: Farmers Journal, 13/08/2024

Australia achieves a new monthly record in beef exports, driven by high demand.

Key Points:

• Increased demand from Asia and the Middle East has fueled export growth.

• Favorable trade agreements and competitive pricing are key factors.

• This trend underscores Australia's growing influence in the global beef market.

Laura's POV: Australia's export success highlights the potential for strategic market expansion and the importance of maintaining competitive pricing structures.

US pork expands in Chile

Publisher: Swine Web,13/08/2024

A new partnership aims to increase US pork availability in Chile.

Key Points:

• The partnership focuses on enhancing distribution networks and market presence.

• Chile's growing demand for diverse pork products offers significant growth potential.

• This initiative could lead to increased US pork exports and market share in South America.

Laura's POV: Expanding into Chile presents a strategic opportunity for US pork producers to diversify markets and enhance export resilience.

🗺️Trends - Discussion

👀 Is Walmart’s beef price spike pure greed or just part of a bigger economic storm?

The recent jump in ground beef prices at Walmart, highlighted by a viral TikTok, has upset many shoppers. They believe the price increase is a sign that big companies are taking advantage of economic troubles to make more money. For these people, the higher cost of a basic food item feels like corporate greed.

However, it's essential to remember that price increases are complex. Inflation is influenced by various factors, such as supply chain issues and rising production costs. Blaming Walmart alone might ignore these broader economic challenges affecting all retailers.

Some people think that focusing on Walmart misses the bigger picture, like wage stagnation and the high cost of living. While price hikes are frustrating, they are symptoms of deeper economic issues. Instead of just blaming retailers, some suggest we should push for solutions that address the root causes, like fair wages and affordable living, to help consumers in the long term.

For more detailed information, you can read the full article on here.

Below there is the TikTok that went viral.

@itsqueenelizabeth.to.you

I am thoroughly confused 😖#groceryshopping #wtf #inflation #foryou #viral

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💎Did you know?

Is McDonald’s Now a Luxury?

From Happy Meal to Unhappy Meal.

Even though inflation is slowing down, Americans are still cutting back on fast food. McDonald’s, in particular, has seen a drop in customers, especially among lower-income groups. To win them back, McDonald’s introduced a $5 meal deal that includes a sandwich, nuggets, fries, and a drink. This deal, initially temporary, became permanent due to its popularity. Despite this, McDonald’s, along with other fast food giants like Burger King and Taco Bell, continues to face lower demand. This trend shows that many consumers are now choosing cheaper alternatives as they deal with rising living costs and economic uncertainty.

Globally, McDonald’s is feeling additional pressure. Boycotts in countries with large Muslim populations, sparked by the conflict in Gaza, have hurt the company. This has led to a drop in sales, especially in France and emerging markets. Even though inflation is easing, more people are still choosing to spend less, not just on fast food, but on many products. This shift towards thriftiness is also hitting big food manufacturers like Mondelez, which saw significant drops in revenue as shoppers turn to cheaper, private brands.

So I wonder, where people go to eat? How they spend their money?

As consumers turn away from McDonald's due to rising costs, they’re exploring more affordable and satisfying alternatives. Wendy's and Taco Bell offer budget-friendly deals that attract price-conscious customers. Many are also heading to grocery stores for prepared meals or frozen options that stretch their money further. Cooking at home is becoming increasingly popular too, offering a cost-effective and healthier alternative to eating out. This shift reflects a broader movement toward smart spending and thoughtful dining choices in challenging economic times.

Do you know what is Smart spending? Isn’t cooking at home very expensive with the price of ingredients going up?

Smart spending is all about making the most of your money, especially when prices are rising everywhere. Yes, cooking at home has also become more expensive as grocery prices have surged. This creates a dilemma for consumers who are trying to save money but find that both dining out and cooking at home are costly (I think about this every single day).

As a result, it seems that people are getting more creative with their spending habits. They’re turning to discount grocery stores, buying in bulk, and choosing less expensive, generic brands. Additionally, many are opting for simpler, budget-friendly meals that use fewer ingredients. The focus is shifting to maximizing value wherever possible, whether that’s through careful meal planning, cutting out non-essentials, or finding new ways to stretch their money.

This is the reality that we live in.

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Stay tuned for more updates next week.

Warm regards,

Laura Valls