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For the week ending August 10th, weekly young chicken harvests were flat with the week prior but up 2.5% from the year prior. Bird weights rebounded sharply and are now well above a year ago, boosting ready-to-cook production. The running six-week total of chicken production is near 5% over a year ago. Breast and tender prices continue to ease, while the wing and dark meat markets are holding mostly firm. Seasonally, the chicken wing markets are past their summer low and should begin to climb higher into October as the football season and the World Series bring additional consumption demand. But, much additional upside from already inflated prices looks limited.
Despite the loss of one of the largest beef packing plants recently, last week’s slaughter came in 9k head over the week prior but was 8k head under last year. The loss of beef output, coupled with panic buying, pushed Choice beef prices more than $0.14 higher than the prior week. The largest gains were noted with middle meats and grinds. Beef 50s pushed over the $1.00 mark earlier this week, but that strength is expected to be short-lived. Anticipate beef prices to recede as needs for Labor Day are finalized throughout this week. However, production schedules are still likely to be challenged until at least the early part of Q4.
Last week pork output jumped sharply, up 5.6% from the prior week, but was only 1.9% over last year. Production schedules are expected to continue to expand for the balance of this year, and prices should retreat in response. Ham and belly prices have been rising this summer and driving the USDA pork cutout higher, but the ham markets have likely established a peak and are expected to fall heading into late-August. A similar fate is projected for pork bellies as well. Again, expect lower pork prices to materialize as production expands going forward.
The shrimp markets continue to trade at historically engaging levels although some are averaging above the same price last year. U.S. shrimp imports have been solid. During June, the world exported 6.7% more shrimp to the U.S. than in 2018. With the U.S. dollar nearing historic highs against some other important countries’ currencies that trade seafood, strong U.S. imports should persist which should temper any price increases.
The avocado markets have been steady to firm during the last week with prices averaging well above a year ago. Avocado supplies from California are starting to seasonally decline, but imports from Mexico are picking up. Expectations are that the avocado supply as a whole could tighten some in the coming weeks which could underpin the markets. The tomato markets have been firm as of late as well. Concerns remain around tomato supplies in the U.S. as the imports from Mexico are expected to carry a bigger share of the total supply this fall.
THE KITCHEN SINK
Cheese block prices are the highest since November 2016. Price support is occurring from lackluster milk output. The USDA reported that in July, milk production was flat from last year, and the milk cow herd was the smallest since March 2015. Yet, U.S. cheese exports have slowed which should help the cheese markets to seasonally peak soon. The spot butter market has fallen 5.1% from the July high ($2.435) which may prove to be the seasonal top. Domestic butter prices are well above the global markets which is limiting exports. Lower butter prices are likely in the coming months.
The U.S. wheat harvests are progressing with the winter crop nearly complete but just 16% of the spring crop reached. High protein wheat supplies should remain historically ample, but lower wheat protein supplies, although still adequate, should tighten some. The downside risk in wheat prices is likely limited in the near term.
Diesel fuel (ultra-low) futures were up modestly from a week ago. The EIA’s most recent national average retail diesel fuel price was $2.994, which was 6.6% less expensive than a year ago. But history suggests higher diesel fuel prices this fall.