top of mind news
Chicken production for the week ending December 14 moderated from the week prior but was 6.7% larger than year ago. Bird weights continue to hold near record levels and are adding pounds to production, leaving RTC supplies relatively available. Breast meat prices took a pause into the holiday week, and upside is expected to moderate with choppy trade likely from early 2020 into the late winter. The seasonal trend for wing prices in late December is usually higher. But strong output expansion is anticipated to temper price increases heading into the Super Bowl. The leg quarter markets could remain firm into January if exports remain strong.
Following the reopening of the downed Tyson beef plant, cattle harvests jumped to 682k head earlier this month, the largest weekly throughput for Q4 since 2002, and last week’s harvest remained active at 668K. Seasonally, cutouts are declining, with losses being led by the Choice middle meats and grinds. Following the expensive holiday shopping season, ground beef prices tend to find support as a lower cost beef feature item, but given persistently elevated prices since the late summer, lackluster interest is being noted. Still, ground beef prices should find support later this month into mid-January.
Last week’s hog slaughter came in at an estimated 2.81 million, a new all-time slaughter record, but active schedules are still anticipated into the first half of 2020. Pork belly prices continue to languish near the $1.00 mark, but price risk remains to the upside both seasonally, as well as on escalating export expectations. Pork 72s have started to decline and are back near 2018 levels. The upside risk for many pork markets is notable for 2020 as China is expected to increase import volumes from the U.S. Buyers should act when value presents itself.
The shrimp markets are mostly tracking above 2018’s depressed levels but remain historically engaging. U.S. shrimp imports during October were just .7% better than the previous year. A large part of those imports originated in India which carried 43% of the trade. U.S. shrimp imports from India during the month were up 15% from prior year. Solid shrimp imports are anticipated to continue which could temper any price upside.
Inflated Idaho potato prices are persisting due to adverse early fall weather negatively impacting the late harvest and storage supplies. As much as 30% of the crop could have been impacted. According to the USDA, December 1st potato stocks were down just 4.3% from the prior year. Still, they did match the smallest stock level for the date since 2011 and the quality of those stocks may be suspect. The USDA is expected to update their 2019 fall potato crop harvest estimate on January 10th with an historically small number expected.
THE KITCHEN SINK
After hitting the lowest level since November 2016 earlier this month, spot butter prices are finding support. The cheese markets have fallen sharply recently, especially cheese barrels. Per the USDA, November milk production was up .5% year-over-year. The milk cow herd was .3% smaller than a year ago, but the USDA did adjust its October herd number up by 3k head. November’s milk-per-cow yield was .8% better than a year ago, which is disappointing compared to the October milk-per-cow yield up 1.7% (yoy). History says to expect only modest price declines from here for both cheese and butter.
The wheat markets have been erratic during the last few weeks as the trade adjusts to various supply concerns. Major wheat exporter, Argentina, recently boosted export tariffs on their wheat which could impact supplies during the next several months. The wheat markets may remain underpinned in the near term.
Natural gas prices have risen slightly but remain engaging. For the week ending December 13th, total U.S. natural gas stocks were 22.1% larger than a year ago. Moderate weather forecasts could keep a lid on prices as the year ends.