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Chicken harvests for the week ending October 26th were up 5.2% from last year, and bird weights remained at record levels, which pushed ready-to-cook (RTC) production 8.4% over last year. The six-week rolling sum of RTC output is now up 6.4% from the year prior, and the wholesale chicken markets are experiencing pressure in response. Wing prices are on the backside of the World Series, and further downside potential is expected moving forward. Chicken breast meat prices, remain depressed as well, but have bounced modestly off an early October low. Yet, seasonally lower breast meat prices are projected early next year before the typical increases that occur into early summer.
Last week’s cattle harvest was larger than expected, up 2.8% week-to-week but was only modestly better than the previous year. Carcass weights appear to have moderated some, with beef production coming in lighter than slaughter estimates would suggest. The USDA boxed beef cutouts are moving upward but should seasonally stall nearing Thanksgiving when buying interest fades. Early year beef promotions are typical for end cuts and ground beef items which usually support those markets towards the end of the year. However, before then, expect the beef trim and grind markets to experience weakness.
While more modest than in previous weeks, last week’s pork production resulted in 564.5 million pounds of pork on the market, down 0.7% from the prior week but was 2.7% more than last year. Hams, ribs, and picnic prices have all taken off, escalating sharply, and are now above year ago levels. The pork belly market has fallen in recent weeks but may have minted a all time low. Anticipate higher pork prices from now into year end, and even into early 2020, as escalating exports are projected to temper domestic pork availabilities going forward.
The shrimp markets mostly continue to track above 2018’s depressed levels. Shrimp imports have been solid tracking above the prior year. And good domestic consumption has helped to lift the markets. But the bigger driver has been a decline in domestic landings. 2019 U.S. Gulf of Mexico shrimp landings are tracking 20% below the previous year. The shrimp markets are likely to remain above year ago levels into the winter.
The Idaho potato markets remain expensive for this time of the year. Cold temperatures caused challenges during the late stages of the potato harvest as well as with storage supplies. Further, estimates suggest that the Idaho potato crop could be historically small. History indicates that the greater risk in the potato markets during the fall is to the downside. But that downside may be limited, and supplies could become especially tight next spring and summer. The avocado markets remain fairly engaging which may continue in the near term.
THE KITCHEN SINK
The cheese markets remain near or above five-year highs. Year-to-date American cheese production (through September) was .7% less than last year and was the first yearly drop for that period in a decade. But better dairy farmer margins are aiding milk output which should influence milk and cheese prices lower soon. Since 2014, the average move for the cheese block market during the next seven weeks was down 15.7%. Spot butter prices are soft, and the quarterly pivot model hints of a test of $2.00/lb. Buyers take note, butter prices haven’t priced below $2.00/lb. for a notable period of time since the fall 2016.
The corn harvest is slowing progressing. As of November 3rd, just 52% of the crop was in the bin. Usually, roughly three quarters of the crop should be harvested by the end of October. Further, the crop ratings are some of the worst for corn for this time of the year on record. Corn prices could remain relatively firm this fall.
Last week retail diesel fuel (ultra-low) prices were 8.3% cheaper than a year ago even though U.S. inventories were the smallest for the date since 2013. This data says that this year’s seasonal (fall) price weakness that occurs may be limited.