Market Updates for June 29, 2018
Grocery & Bakery | Wheat
We are halfway through winter wheat (bread flour) harvest with farmers confirming lower yields but indicating good quality and higher protein levels. The spring wheat crop (pizza and pasta flour) is off to one of the best starts ever which has pressured both costs below where they were last year. It is too early in the growing season to start counting bushels, but we have ample soil moisture today. Forecasts for ongoing hot weather are a little concerning...
Grocery & Bakery | Soybean Oil
The balance between large supply and good demand will keep moving prices around the the USDA projected $0.30-$0.34/lb price range. Right now excellent crop conditions are keeping prices at the low end of the range.
Grocery & Bakery | Sugar
Forward bookings for new crop beet sugar are at prices 10% below spot market. The sugar beet crop is off to a good start. Weather has not been as kind to the sugar cane with only 47% of Louisiana's crop rated good/excellent. New crop cane prices are only fractionally lower than the current market.
Meat | Beef
Packers continue to be the gatekeepers of beef output with an ample supply of cattle available through at least August. Beef prices are down 5% so far this month and typically trend lower all summer. Packers will strive to keep margins high by limiting supply and letting cattle back up to pressure cattle costs lower.
Larger output and continued competition from pork and chicken is keeping ground beef prices well below last year. This is a great feature opportunity for food service...
Ribs are now into their seasonal summer-long decline. Prices have been adjusting lower every day, but last weeks forward sales were at a significant discount to today's spot prices.
Brisket prices have also declined from mid-month peaks, but forward sales suggest we have more downside.
Round prices appear to have made their lows with flats exhibiting some price strength. Big forward bookings in previous weeks suggest we may see more retail feature activity soon. Processors have also been using rounds in ground beef formulations.
Strips appear to be on their usual summer/fall downtrend. Packers forward sold strips for mid-summer delivery at a steep discount to the current market.
Tender prices are down so far this month and appear to be on their way to summer lows.
Good food service demand has supported the price for sirloin cuts, including ball-tips. Skirts are finally adjusting lower from record levels this Spring; flank steak prices are steady so far.
Meat | Pork
Hog supplies are typically at their lowest level for the year right now. After bidding hog prices up earlier this month, packers slowed output in an effort to get margins positive. With pork output down 4% since the first of the month, pork prices have jumped 8%.
Butt prices have leveled off and may start inching higher as they often do this time of year. Reduced export interest due to new tariffs may become a limiting factor.
Ham prices bounced back to price levels more typical for this time of year. The uncertainty created by Chinese and Mexican tariffs makes it harder to predict future price trends.
Belly prices are on the same uptrend as usual for this time of year. Prices peaked between mid-July and early August in each of the last three years.
Rib prices are on track to hit the same July 4th peaks we made last year.
Bone-in and boneless loin prices have increased, but remain below previous years. There is more product available domestically and it has to compete with low-priced chicken breast and ground beef.
Poultry | Chicken
Small-sized whole bird/cut-up chicken supplies are increasing as hot weather in the chicken belt retards weight gains. Prices are easing off record levels.
Retail features at super-cheap price points have cleaned up breast meat supplies, prices are moving higher. Tender prices are also stronger. Please note, however, that even after recent price increases jumbo breast meat is still at 10-year lows for this time of the year.
QSR features have boosted demand for jumbo wings; prices have been rising by 1-2 cents/week. Medium and smaller wings are more available, but are still at premiums to jumbos.
Jumbo leg quarters have leveled out after a banner month of exports to Mexico. Leg and thigh meat supplies continue to be limited by labor shortages; prices are unchanged.
Poultry | Turkey
Whole turkey prices have inched higher as processors dial production back. Buyers are starting to come back to the market.
Seafood | Finfish
Alaskan A season opened in January but supply remains tight and costs have firmed, this is partly due to decreased quota in other regions of the world. Costs have remained elevated even after Lent and are expected to remain this way through the end of the year.
The 1x frozen cod loins are firming on costs with the recent announcement of a 25% reduction on quota compared to 2017 out of the Newfoundland and Labrador regions in Canada. As the season just resumed the first shipment is en route. Note the start of the season has yielded more of the larger sized loins, but with added shipments will ramp up supply to cover all needs as the season progresses in all sizes.
Fishing in Northern Europe has concluded. Total catch this season is poor and raw material is in short supply for 2018 until early 2019 when fishing resumes.
Heavy restrictions on total allowable catch in certain Alaskan fishing grounds. Raw material is now more expensive than Atlantic cod and expected to firm continuously for all of 2018.
Costs have softened slightly on some sizes of the 1x fz Pollock but most remain steady as we are now in the summer season. Many anticipated with the rising cost of cod that Pollock would be the next lower cost option. For the most part that "switch" has not materialized to the degree first thought.
Slight firming of pricing. Starting to see substitution demand from cod users.
Raw material prices firming due to the cheapest ground fish compared to Pacific and Atlantic cod. Continued substitutions from cod consumers driving up demand and cost. Available raw material is in short supply.
The Lake Erie commercial fishery is well underway and costs have softened as supply is readily available. Expect prices to level out over the next few weeks as the lake shore business ramps up for the summer.
Supply is good and costs have been stable with only minor adjustments to market . This is a more cost effective substitute for the higher priced domestic lake fish items where applicable.
The S American Mahi Mahi season began last fall and costs have softened compared to the same time last year. Prices have adjusted downward and are expected to stabilize for most of the summer grilling season where current supply is plentiful. Typically the spring season brings added containers from Taiwan, but reports now indicate that they are having a poor start with reduced catches yielding less overall supply available to enter the market.
Frozen tuna harvests out of Vietnam are considered stable for this year with supply listed as normal. Product out of Indonesia has been slow to materialize and therefore has put added pressure on the product out of Vietnam. The Thailand season has ended. Expect prices to continue to be stable for the summer grilling season with only a uptick expected on the smaller 4 oz size of tuna. Supply is currently tighty. Swordfish has also started to firm on the 6 and 8 oz portions, supply has been tight .
Cost fingerlings increased after Chinese New Year instead when market expected a drop. US trade commission assesses preliminary higher duty rates in Swai. Prices firm with short supply until end of 2018/early 2019.
Low production during this time of the year. Prices recently firmed.
Seafood | Shrimp
Black Tiger shrimp prices are stable and supply is improving on smaller sizes. There are shortages of large sizes due to limited production (2-4 through 13-15).
White shrimp prices are at a great value due to their recent declines as we head into summer. Demand has been good and replacement offers overseas are being limited.
Latin White shrimp are mostly stable in pricing however buying interest has been high on shrimp smaller than 41/50 HLSO which could lead to markets firming.
Domestic Brown shrimp continue to move upward due to limited availability and good demand. There is a lack of inventory to carry from last season to next, which puts pressure on prices to move up in an attempt to stretch inventory. Boats are currently working White shrimp and have had most landings in smaller sizes for peeling. Larger White headless relief is in sight once landings increase.
Domestic PUD shrimp prices have weakened to match new season production. Landings are good on mostly small sizes (90 count/lb and smaller). We will see landings of larger shrimp as the season progresses and shrimp grow.
Rock & Pink shrimp are both in good supply. Pink shrimp, in particular, have had very good catch rates in the late winter months.
Seafood | Lobster
The season for N Atl. Lobsters formally began May 1st out of Canada. Initially the expectation was for costs to soften as supply became more readily available but the harvest to date has yielded the predominately smaller sizes of 3/4 and 4/5 with limited offerings of the 5/6 tails and larger. This in addition to less than favorable weather and the recent announcement of 10 fishing zones being closed to preserve the right whale, has now put pressure on supply as the Canadian fishing season wraps up on June 30. As a result of the closures impacting fishermen for both crab and lobster, the Canadian Dept of Fisheries has offered lobstermen in New Brunswick and Quebec a fall fishing season to make up for the right whale closures. For now costs are firming with adequate supply
Costs have adjusted slightly as the new season out of Brazil resumes this month. First indications are that costs will be firm. Due to the N Atl high prices this season , many switched to the lower cost WW tails. As a result they are keeping costs elevated to capture their market share. If this can sustain itself long term, will remain to be seen.
Seafood | Crab
The global shortage of snow crab will continue in 2018 for the Canadian season. Prices have been rising weekly but as of this week have started to see some leveling off. Costs are still very firm and it does not look like there will be any relief in sight at least for the larger 8 up and 10 up sizes. It is hard to predict this year if there will be any settling down or concessions on cost. Some feel there could be a correction on the smaller 5/8 but that is uncertain as well.
Smaller king crab sizes remain very tight, especially on 14/17 ct, 16/20 ct and 20/+ ct. These three sizes have seen the biggest issue with availability and as a result costs are firming. They are still fishing for Russian crab but most is moving to the Asian market. We do not expect any relief on supply or cost at least for the next 5-7 weeks.
Seafood | Scallops
The scallop season has begun one month later in April for the 2018 season and boats have made a mad dash to get started. With the announcement of newly opened restricted areas and an overall increase in quota, costs are continuing to adjust lower. Supply is currently adequate on all sizes.