top of mind news
For the week ending April 18th, total chicken slaughter declined 3.4% from the week prior and was 5.6% below a year ago. Still bird weights remain over the year prior, so RTC production was only down 4.4% from year ago levels. Wholesale chicken prices remain mixed amid smaller slaughter, with wings and breast meat finding some strength, but chicken tenders, as well dark meat prices continue to struggle. While the price ranges across the dark meat segment would imply some modest firmness ahead, the chicken tenders’ markets will likely continue to struggle for a least a bit longer. Egg prices continue to fall as interest fades and foodservice supplies are being redirected.
Production cuts continue to plague the beef complex, with last week’s output fading 7% from the week prior and 24.9% from a year ago. So far this week, beef output is running 36.5% below last year. Amid the sharply lower beef output, prices have punched out to new record highs, but expect these sharp increases to begin to fade in the late spring. Beef 50s are now looking to price up to, and potentially over the $3.00 mark, with severely tightened fed cattle slaughter restricting fat trim availabilities. Still, executive orders to reopen plants may bring production back faster than originally expected.
Production continues to fall, with last week’s 428.6-million-pound pork output falling 15% below year ago levels. Amid the tighter production schedules, the USDA pork cutout has been on the rise, but it does appear that sticker shock is causing some demand to wane. Ham prices fell for a single day, and even the retail favorite loin primal showed some lower values on an AM closeout report this week. While upside price potential is still expected for pork in the coming weeks, at least some resistance appears to be forming at these escalating price points.
The Canadian snow crab fishing season is getting off to a late start due to COVID-19. The Newfoundland Snow Crab quota has been set at 29.6 thousand tons, 10% bigger than last year but still historically small. Early Canadian harvests have been limited as processing plants implement employee safety programs with reduced capacity. Food service demand for snow crab remains light which could temper any upside in prices this spring.
The tomato markets are on the rise as recent low prices have caused producers to slow the harvest. The total tomato supply in the U.S. last week, both domestic and imported, was down 24.6% from the same week last year. With the higher prices and relatively good weather, the tomato harvests are anticipated to escalate in the coming weeks which should be accompanied with some price relief. However, as the harvest shifts north seasonally, it usually carries more supply and price volatility. Avocado supplies are improving with U.S. imports last week up notably versus the previous week.
THE KITCHEN SINK
Spot butter prices are modestly higher as of late but still near levels not seen since 2015. The global butter markets are at a big premium over U.S. prices which is boosting exports. This factor and solid retail demand could support prices in the near term. The cheese markets have stabilized after declining sharply since January in response to COVID-19. Although modest improvements for food service operations are occurring, the cheese markets will likely have a tough time mounting a sustained move higher until demand improves even further. Yet, the downside risk for cheese prices from here may be limited.
The wheat markets have mostly softened during the last week. The U.S. winter wheat crop is progressing with 54% of the crop rated in either good or excellent condition. This compares to 64% a year ago. The spring wheat planting season is underway as well. Questions around world supplies could underpin wheat prices in the near term.
After hitting the lowest level in 25 years in March, nearby natural gas futures have risen 23.3% (from that low). U.S. natural gas stocks are roughly 63% larger than a year ago but, production has slowed. There is key price resistance at $2.000.