top of mind news

Weekly chicken slaughter for the week ending March 20th was below initial estimates, down 3% from a year ago. Bird weights have declined, nearing year ago levels but remain record heavy for this time of year causing broiler production the past four reported weeks to be up 2.6% (y/y). Still, larger chicken output has not been able to break down prices, leaving wings at record high levels while the breast and tender markets are well inflated also for the early spring. Dark meat continues to clear well so anticipate next week’s export report to likely confirm active dark meat shipments occurring in February. Price support for the chicken markets is likely to persist at least in the near-term.

Beef

Last week’s cattle harvest rebounded sharply (w/w), but, at 646k head, was 5.7% smaller than last year’s COVID slaughter surge. The USDA boxed beef cutouts continued higher, with Choice up more than $0.07 week-to-week, as the middle meats continued to lead those increases. Also aiding the upside were the beef 50s which jumped towards the upper $0.50’s area and further increases are expected into the summer months. Imported lean beef trim prices rose, as well, and reports are surfacing that demand is starting to pick up amid tighter inventories. Shipping issues remain but are non-Suez Canal related.

Pork

Last week’s hog slaughter held in the 2.5 million head area, but pork production was down 7.2% from the prior year. Significant strength remains for the USDA pork cutout, with bellies and spareribs driving most of last week’s primal increases. The 42% pork trim prices skyrocketed, averaging $1.137 through last week. Other hotdog and sausage ingredients, mechanically separated chicken and turkey have both seen similar jumps in price and it appears the rush to reopen theme parks and ball parks may keep upside pressure on the many trimming markets.

THE SEA

Seafood

The shrimp markets are mostly tracking close to year ago levels. However, this could change in the coming months due to the low prices during the spring of 2020. U.S. shrimp imports have remained consistently strong. During January, the U.S. imported 7.1% more shrimp than the previous year. Solid trade is expected to persist, but the downside price risk in the shrimp markets is likely only nominal.

THE GARDEN

Produce

The tomato markets generally are trending at attractive levels for buyers. The harvest in Florida has improved considerably with the warmer weather but shipments are still tracking at or below year ago levels. Solid supplies from Mexico have helped to make up any difference. History suggests that lower tomato prices could be forthcoming in the coming weeks. However, given the existing attractive pricing, any further downside potential is expected to be limited. The chief lettuce harvest is beginning to shift northward in California.

THE KITCHEN SINK

Dairy

Last week spot butter prices were the highest since June. Domestic butter stocks on February 28th were up 16.8% (y/y) but were the smallest for the month since 2011. CME cheese block and barrel prices finished lower. U.S. cheese inventories in February were up 5.4% (y/y) and were the second largest for the month in three years. The seasonal trend for cheese and butter prices is lower during April. But the butter markets may continue their counter seasonal strength in the near term as prices are still the lowest for this time of year since 2015. Cheese block prices generally establish their yearly low in April.

Grains

The wheat, soybean meal and distiller grain markets have seen some weakness during the last week. However, the spot corn and soybean oil markets have continued to firm. Speaks to the tight supply situations for both. However, the futures markets are signaling that a top in both of these important markets should occur this spring.

Oil

Nearby natural gas futures last week finished higher (w/w) and were up 61.4% (y/y). For the week ending March 19th, U.S. natural gas stocks were down 13.1% (y/y). Natura gas prices usually remain steady to firm during the spring.