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For the week ending February 13th, chicken harvests plunged 4.1% below year ago levels, but record heavy bird weights salvaged ready-to-cook production, with the week coming in 1.8% smaller than 2020. Last week’s broiler output estimates were down sharply, with winter weather leaving many plants idle throughout parts of the week. Early slaughter estimates put the week 39.5% below a year ago, but there will likely be some adjustments on the actuals. Wing prices remain sharply inflated, with breast meat prices running at record levels for mid-February. Even the chicken leg quarter market is on the rise, as inflated feed costs continue to strip away producer margins. Plus, the hatchery data has not been indicating that production increases are coming soon.
The winter weather that plagued much of the South throughout last week left production down sharply, with beef production falling 10% below year ago levels. The USDA cutouts were higher to sharply higher amid the lower production, with the middle meats carrying the bulk of the upside. It would not be surprise to see additional beef price firmness this week given the potential for a buying bulge here as retailers that weren’t able to receive shipments (or those that were cleaned out) rush to refill inventories. Beef production is likely to pick up this week which may help to temper some of the likely price increases in the near-term.
While pork production was smaller last week, the decline was more modest than the remainder of the proteins complex, with pork output off 4.9% from year ago levels. Tighter supplies underpinned additional price support throughout last week, with the belly primal picking up the bulk of those increases. While pork bellies averaged nearly $1.580 last week, the weekly high broke $1.600 on Thursday before retreating, but spot sales were 55% smaller than year ago levels. Some make up hog kills may occur this week, but pork supplies will remain tight.
The shrimp markets continue to mostly trend below year ago levels. U.S. shrimp imports have been strong in recent months due in part to some resiliency in domestic demand. During December, U.S. shrimp imports were 7.6% more than the previous year. Foodservice demand for shrimp is anticipated to expand later this year which could be supportive of the various shrimp markets.
The Idaho potato markets are steady to lower due to ample supplies and relatively lackluster demand. As of February 1st, U.S. potato holdings were 2.1% more than the previous year and the third biggest for the date in the last decade. Idaho potato stocks were 2.7% better than 2020 with russet supplies up near 2% as well. Potato stocks should seasonally tighten during the next several months which typically brings support to the markets. However, any pending price gains could be tempered unless demand improves considerably.
THE KITCHEN SINK
CME spot butter prices were up last week (w/w) and the highest since September. Improving food service operations and active exports are aiding butter demand. These factors and perceived value (lowest spot prices since 2009) suggest the lower risk for the butter markets may be nominal. CME spot cheese prices last week finished lower (w/w) and have weakened this winter. Still, current U.S. cheese prices are cheap versus the global markets and is encouraging exports. Last week’s arctic temperatures deep into to the southern plains likely hurt dairy cow milk output which may support the cheese markets soon.
The grain markets have generally found support during the last week. This includes the wheat markets which experienced abnormally cold temperatures in the better part of the high protein winter wheat belt. Damage will take weeks to assess but this could underpin the wheat markets in the near term.
Last week WTI crude oil futures were down modestly (w/w) but still the highest in over a year. Loosening domestic and global lockdowns along with less favorable U.S. government support for crude oil production can still support prices.