Ever since the positive cases of bird flu in U.S. dairy cattle were reported, we have seen stricter testing procedures for the virus announced. This was amplified when remnants of the virus were discovered in retail samples of fluid milk. While the USDA claims the chances of bird flu making it through the pasteurization process are minimal at best, they have also stated they are testing 297 products from 38 states for the virus. Now the USDA announced it would be testing ground beef from dairy animals from infected states.

So far, the only country who has stated it will halt U.S. beef imports following the outbreak of bird flu in dairy cattle has been Colombia, but even then, it is only from states with confirmed cases of the virus in cattle.

Consumer spending remains high in the United States, but a noticeable shift in where money is being spent is taking place. Data for the month of March showed retail demand increased 0.7 percent from February while trade was only expecting a 0.3 percent growth rate. Retail sales, excluding automobiles, for March were up 1.1 percent on the year, with the street expecting an increase of just 0.4 percent. Data also showed that while retail spending is growing, it is at lower end discount sellers. This ongoing spending growth further reduces the odds of significant interest rate cuts this year.

We have also started to see a major shift in demand in the U.S. red meat industry. Over the past several weeks, the U.S. consumer has started to slow down its purchase of high-end cuts of red meat, mainly in beef. Consumers have also started to purchase less specialty raised meat as prices become too high. It is no secret the U.S. economy has started to tighten due to high inflation and consumers are altering where they can spend their food budget.

Consumers are still buying both beef and pork but are taking lower grade cuts. This is one of the reasons the USDA is predicting higher beef imports this year as U.S.-raised beef tends to be higher grade.

When it comes to global hog production, all interest falls on the world’s leading pork producer, China. Chinese feeders are seeing elevated pork demand following the massive culling that took place last year to prevent the spread of African swine fever. Firming hog values in China has also led to elevated selling.

New Hope, one of China’s largest hog feeders, claims its hog sales were up 17 percent from February to March of this year at 1.5 million head. New Hope’s March hog sales were still down 10 percent from March 2024, however. China’s Wen is another larger hog producer who states March sales totaled 2.6 million head, the third largest monthly total on record behind December 2023 and January 2024.

Not only are hog sales up in China, but so are returns. Hog values in China increased 3.5 percent from February to March of this year. Hog values are still down 4.7 percent from last March given the larger pork supply in the country. Hog weights are up considerably in China year over year, and this is lowering hog values as grades slip on heavier weight animals.

Even though the Brazilian soybean harvest is moving into its later stages, we continue to see a wide spread in crop estimates. The Brazilian firm Safras has the crop estimated at 151.25 million metric tons, up from its previous estimates as late season weather benefited the crop. This is still less than the USDA’s estimate for a 155 mmt, but well above others who feel the crop is closer to 140 mmt, and some even lower. The primary reason for this wide difference is planted acreage, as field collected data is coming in higher than from firms that only use historical trends in their projections.

There is also a sizable difference in Brazil’s corn production estimate. Safras currently has the crop at 126.13 mmt, above the USDA estimate for a 124 mmt crop. Others believe the crop may be no greater than 114 mmt. Firms with higher outlooks are looking at input sales for the safrinha crop, mainly for seeds, and seeing total sales are not much lower than last year. The firms with lower estimates are looking more at economic returns and how they indicate plantings should decrease.

The real question is how much export competition the United States will see from Brazil on corn and soybeans. There is little doubt that Brazil has taken some business away from the U.S., but now Brazil is seeing elevated domestic demand, mainly for feed and ethanol manufacturing. The combination of these may cap Brazil’s ability to increase exports, even with larger crops.

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