Market Updates for August 16, 2019
Dairy | Cheese
Due to the cheese inventories report coming out bearish, the CME Block and Barrel Markets grew strength. Speculators still feel there is enough cheese available to keep the market from falling to the bulls. Focus will continue on crop reports and weather reports as we go through the coming months.
Block - Up
Barrel - Down
Block - Up
Barrel - Up
Dairy | Eggs
The national flock size is down. This is for the most part due to summer flock rotation. Retail demand has also increased.
Medium -No change
Small -No change
Dairy | Butter
Butter production continues to be active and inventories continue to grow; expectations are for butter pricing to stay relatively stagnant on the spot market over the next few weeks prior to the butter inventory is reset with current levels and previous inventory is ‘wiped out'.
Butter -No change
Grocery & Bakery | Wheat
With plenty of wheat available, prices are trading just above their feed value versus corn. The USDA raised its corn production estimate this week sending corn and wheat prices 10% lower.
Grocery & Bakery | Soybean Oil
Soybean oil prices have firmed up to the 29-30 cent-per-pound area; the USDA reduced their estimate of 2019 soybean production.
Grocery & Bakery | Sugar
2019's beet sugar crop is 70% sold and processors are starting to increase their offering prices. Larger cane sugar crops are expected which should narrow the premium to beet.
Meat | Beef
A fire last Friday closed a Tyson beef harvesting facility indefinitely reducing U.S. fed beef processing capacity 6%. Cattle futures prices dropped 7% and beef prices were 7% higher so far this week as displaced Tyson customers scramble to cover their Labor Day needs.
Prices for the most popular Labor Day grill item popped 23% since last Friday. The number of retail ads is up from last year so most plants were already fully committed; displaced Tyson customers are searching throughout the supply chain for product.
Retail ads are out and supplies are cleaned up; prices are higher.
Brisket prices have actually slipped a little ending the rally that started in mid-July.
Round prices are higher as retailers chase scarce spot supply.
Prices were already trending higher when the Tyson fire hit; we are now up 21% from mid-July lows.
Tender prices firmed a couple of weeks ago after the Omaha and Kansas City mail-order steak guys loaded up for their holiday needs. Now the Tyson fire has pushed prices 9% above July lows.
Thin meat prices got a little lift from the Tyson event, but it would not be surprising to see them resume their downtrend in the next week or so.
Meat | Pork
Pork prices crested last week and started the usual seasonal process of adjusting lower as hog supplies increase into the fall.
Butt prices are finding a little support from Labor Day and Mexican buying.
Mexican buying was the catalyst of July's rally but domestic processors took prices to 2019 highs last week. Now the window for Labor Day processing has closed and prices have come tumbling down.
Belly prices started their summer rally much later than usual. Low prices in June allowed retailers to book features through August which could support prices longer than usual.
Sparerib and backrib prices are inching higher as we get closer to Labor Day.
Bone-in and boneless loin prices are steady due to consistent retail interest. We expect to see improved demand for boneless loins as home-prepared meals increase following back-to-school.
Poultry | Chicken
Chicken output remains high which is keeping pressure on prices. So far smaller whole birds have been sold at mostly steady money, but there is some concern about Costco's small-bird chicken plant opening next month.
Chicken breast is mostly steady but there is adequate availability across most lines. Tender prices continue to slide lower.
Medium and jumbo prices are steady, small wings have firmed up with some sales at price premiums.
Leg quarters have started to back up a little, prices are trending lower. Leg and thigh meat prices are still negotiable.
Poultry | Turkey
Whole turkeys and bone-in breasts are held with confidence; larger weight-ranges are relatively tight.
Seafood | Finfish
Alaskan cod remains firm in cost with adequate supply as we await the start of the B season.
The 1x frozen Atl. cod loins came up short for the season this winter,however we were able to supplement with Icelandic product of the same spec and qualilty to cover demand. The new season for CAN has started but to date we are awaiting our first orders. Note costs have firmed over last season on all offerings and are expected to remain elevated at least through the end of the year. For now Limson has supply on all sizes.
New B season Pollock is being processed at this time as we await the first of many shipments out of Alaska. For now expect costs to remain firm for most of the season. Currently supply is adequate for solid demand.
Haddock costs are firm on product out of Russia, Iceland and Canada. Note the fishing quota is also down by 25% compared to last year at 15,000 MT for 2019 out of Canada. Currently fishing is good in CAN so they do expect to catch the qouta. Overall supply has been adequate but at firm costs for all COO's
At the end of March the Lake Erie Committee (LEC), set a total allowable catch (TAC) for 2019 of 8.552 million pounds of yellow perch and 8.531 million walleye. Yellow perch are allocated in pounds and walleye are allocated by number of fish. This TAC represents a decrease for yellow perch from 10.498 million pounds of fish over last year, (about a 20% decrease overall) and an increase in walleye from 7.109 million fish (about a 20 % increase overall). As a result perch prices have risen quickly and product has been short especially on the smaller Mi sizes but specifically the Mi splits. For now product is hand to mouth on this size as we progress through the summer. Expect perch to remain short until next year and the start of the 2020 season overall, with a potential for another qouta cut at that time. Walleye has experienced softening on costs with the increase in quota. Supply is plentiful at this time on all sizes Whitefish currently has ample supply with the new season that resumed in June. Smelt for both battered and dressed has started to tighten slightly on supply so expect costs to firm as well. The Canadian blue gill continues to be a struggle as catches and supply have come up short. What is being offered is minimal but firm on cost . The next best option is the same species but produced out of China. Supply is available but another increase will follow as all imports now out of China are impacted by the tariff.
Supply is ample and costs have softened over time on the zander and pike perch as a better valued option compared to the walleye. As of late and due to the increased demand from the US and lack of raw material overseas euro perch costs have started to increase. They are still a value to the domestic perch but costs are firming as demand ticks up.
Mahi Mahi costs for this season softened closer to 2013 and 2014 levels earlier in the year but as we moved through Lent and as the S American season has wrapped up costs have increased slightly. Note the fishing season for 2018-2019 is over and will not reopen until October in S America. The next available resource is Taiwan and that season has been underway since May at slightly firmer costs. Currently we have adequate supply for steady demand on all sizes with some added opportunity to move the 2-4 oz size at a competiitve cost of goods
Vietnam : The new regulation about health certificates required for all imported frozen raw material has impacted on prices of local fresh raw material, seeing more demand and higher price level since it became effective. Demand (June) was strong because of Ramadan holidays in Indonesia, where plants are just going back to work after several days out. Indonesia : Several importers increased their sourcing in Indonesia on the previous months because of new Vietnam regulation, this impacted on product availability & prices. There are also more strict regulations from the local government towards their MSC certification. This will have a positive impact on the long term sustainability, but has also increased some prices. May & June production decreased because of Ramadhan holidays. They’ll go into their peak season soon, so product availability should improve on the incoming months.
Due to sales being slow for the bulk of 2019, there is now an overabundance of supply in the US. As a result costs have softened and general sales have been flat.
Seafood | Shrimp
The seafood industry reports seeing pressure on inventory and higher pricing on black tigers. Large-sizes 26-30 count and larger are under a lot of pressure due to seasonal demand and lower raw material availability.
The seafood industry reports seeing pressure on inventory and higher pricing on vannamei (white) shrimp. Large-sizes 26-30 count and larger are under a lot of pressure due to seasonal demand and lower raw material availability.
The current catch is producing larger shrimp in the 16/20, 21/25 and 26/30 range. This goes along with the reports that all the fresh water coming out of the Mississippi has pushed the smaller shrimp out into the Gulf of Mexico. Smaller shrimp will have a lot of pressure on availability and price. The brown season is now open. Inventory on larger sizes is starting to improve which has brought some price relief.
Smaller PUDs are becoming tight and driving up prices, as they have been pushed into the Gulf of Mexico with the influx of water coming out of the Mississippi River.
Inventory and pricing are stable.
Seafood | Lobster
Landings were initially reported to be down 30-40% in early December out of Nova Scotia. It was assumed a 2 million lb + shortfall of meat, as well as 4 million lb + shortfall of tails . As a result costs remained firm through the spring and have continued to do so going into the summer on tails . We do not expect much relief on availability or cost until the Maine season resumes the latter part of July. To date poor weather had resulted in poor landings and supply is lacking . Large sizes in the 6/7 and 8/10 oz range are very short with very few cases being offered to keep up with demand and costs are firm. Meat costs are more stable and are a better lobster option as they softened earlier this season but as of late have taken a slight uptick.
New season Brazil tails have arrived this week but with a firmer undertone compared to 2018 supply. The hope is that once Brazil gets in full production and the Bahamas, and other regions start to harvest that costs will adjust. Until imports bulk up on supply, costs will be firm.
Seafood | Crab
Following up on Canadian Snow Crab. The 2019 Canadian snow crab season is nearly finished now. Most of the major fishing areas have already stopped at this point. The remaining 5% of the Canadian quota that has not been caught yet will trickle into the plants over the next month or so. We have seen consistent demand from all segments compared to last year and overall size breakdowns appear to be slightly smaller as well. We certainly saw less 10+ oz and 12+ oz produced in Canada. As a result, we have a historically large price gap between 5-8 oz and 8-10 oz this year, which is likely to persist. Large volumes of 5-8 oz clusters were purchased in May by retail and Japanese buyers, followed by some large foodservice contracts. This put a firm bottom in the market and it has been pushing higher as plants have been trying to fill commitments and keep up with demand. However, the snow crab biomass in Alaska has been growing and indications are there will be a large quota increase announced this fall. This should be good news for buyers that have struggled with shrinking supplies and higher prices over the last few years. The new Alaskan snow crab will likely begin to arrive in Seattle in February 2020.
Imports of King Crab out of Russia are starting to arrive to the states on a more consistent basis. First reports indicate that the smaller sized crab 14/17 on up will be short with the 20-24 almost non existient at this time. For these sizes prices are firm and are expected to remain so for the next 6-8 weeks. For now the 9/12 size is a good bargain as costs are expected to level out in August. Little to no supply is available out of Alaska at this time.
A new 10% tariff on all seafood items should go into effect in August. The market is still uncertain however, between high market prices, and limited supply, cost might go up. This coupled with the void in the market on red swimming crab only strengthens this possibility. We are still expected to start receiving shipments on red crab in October. The main crab harvest is October – December.
Prices are still high with great inventory. There has been a slight decrease in pricing from Indonesia while Philippines and India move up to be more in line with Indo. For the next 60-90 days prices will stay level to a possible dip however, Q4 is expected to pick back up. With the red swimming still high with limited supply, this too drives the price up. Overall prices will come down a bit.
Seafood | Scallops
For domestic scallops, the expectation was that costs would soften this summer, however the demand as of late has dictated an increase on the 10-20 and 20-30 items as there was a lot of trading at the auction as they entered the holiday weekend. Heavy fresh buys at this time also increased demand. The U10- and U 12 actually softened as they pulled a good portion of these out of the Georges 1, Channel and other regions. There is still a significant amout of the qouta left to be cuaght, so will need to see how July plays out and impacts the rest of the summer.