Market Updates for November 22, 2019

Section Type

Dairy | Cheese

The CME Block and Barrel markets have seen some untraditional moves in recent weeks.  Speculators feel this is not due specifically to a demand element or supply element but a combination of both.  Current run-up we have seen is a combination of holiday buying and no extra product available to be taken to the market that fits the specific spec, but there is plenty of cheese to fill orders.  Traders feel there is a light at the end of the tunnel, but the length of the tunnel is still being defined.

Last week:

Block - Down

Barrel - Down

This Week:

Block - Down

Barrel - Down

 

Dairy | Eggs

 The national flock size is down. This is for the most part due to summer flock rotation. Retail demand has also increased.

Last week:

Large -Up

Medium -No change

Small- Up

This Week:

Large -Up

Medium -No Change

Small -No Change

Dairy | Butter

Butter production continues to be active and inventories continue to grow; expectations are for butter pricing to stay relatively stagnant on the spot market over the next few weeks prior to the butter inventory is reset with current levels and previous inventory is ‘wiped out'. 

Last week:

Butter -Up

This Week:

Butter -Down

Grocery & Bakery | Wheat

Spring wheat prices are even with 2018 on plentiful supplies of milling quality wheat; durum prices are 15% above 2018 due to a smaller crop in both the U.S. and Canada.

Grocery & Bakery | Soybean Oil

A smaller 2019 soybean supply has boosted the soybean oil price trading range by about 4-5%.

Grocery & Bakery | Sugar

Mud and then early frost left as much as 10% of all U.S. sugar beets unharvested in Minnesota and North Dakota. These beets are a complete loss and will be left in the ground to rot. The USDA has already announced plans to boost import quotas from Mexico who, fortunately, have enough output to cover the shortfall. U.S. beet processors are not quoting new business; affected processors are declaring Force Majeure on 18% of booked volume, notifying their customers that they will not honor that portion of the contract. Cane processors have jumped prices to 44 cents versus 37-38 cents in September. Stay tuned...

Meat | Beef

Overall beef production has been running even with last year, but the percentage of cattle grading choice is about 2% lower. While prices for holiday favorites like ribs and tenderloins have seen the biggest boost; overall wholesale choice beef prices are up 12% versus 2018. Slower demand around the Thanksgiving holiday may pause this choice beef price rally. Retail beef margins have been crunched which could limit December feature activity.

Ground Beef:

Ground beef formulation costs are up as imported beef prices skyrocket 55% above last year; China has replaced the U.S. as the number one market for New Zealand's beef and Australia is trending the same way. Domestic trim prices have risen as imported supplies get tight forcing ground beef prices higher.

Ribs:

Choice rib prices may be topping out around 8% higher than last year -- pretty consistent with the supply reduction from lower choice grading. Select ribeyes are still 10% below last years peaks.

Briskets:

Brisket prices are inching higher as we approach December.

Rounds:

Higher trim prices have set a floor under round and chuck prices; we are establishing a new trade level as imported beef dries up.

Strips:

Strip prices are bumping along near typical seasonal lows.

Tenders:

Choice tenders are at an all-time highs. Selects are at a 39% discount to choice tenders.

Thin Meats:

This is the time of year when thin meats prices start to trend higher. Most prices are above where they were last year.

Meat | Pork

Pork production is record large and exports have not grown fast enough, so far, to keep pace. This has kept a lid on prices. With Canada/China trade resuming and China opening the doors to U.S. chicken, a Chinese pork export bonanza is looking less likely.

Butts:

Boneless butt prices have been firming on increased exports to South Korea and other Asian destinations. Bone-in loin prices are also a little higher.

Hams:

A big spike in ham exports left domestic buyers chasing a limited supply pushing prices to nearly double 2018 levels. Now that the window to process hams for Thanksgiving is past, prices should ease.

Bacon/Bellies:

Bacon prices snapped back in the last two weeks and are now reaching levels that are giving buyers pause; prices could top out soon.

Ribs:

With Canada now exporting pork to China again, a source of cheap ribs has dried up. Prices continue to edge higher as packers send most output to freezers to fulfill existing contracts.

Loins:

Loin prices are a little softer but they holding well above last year. Prices could erode further, however, due to competition from record-low retail chicken breast prices.

Poultry | Chicken

The announcement that China will resume chicken imports (shut down by 2015 avian influenza event in U.S.) has prompted many processors to expand boxing/freezing chicken versus selling at current depressed prices. This speculative demand has firmed markets, but probably isn't enough to trigger a sustained rally until we actually see significant Chinese buying.

Breast and Tenders:

Chicken processors have concluded that, since breast meat is cheaper than thigh meat, Chinese buyers will come after it. Although some may question astuteness of this assumption, more processors are willing to send breast meat to the freezer betting on future business with China.  Jumbo and medium chicken breast being shown at a slight premium which a few buyers are paying. Tender prices have leveled out at where they were last year.

Wings:

Prices for all three sizes of wings have leveled out at prices at least 6% above 2018 levels. Processors seem to be getting enough business to keep supplies moving.

Dark Meat:

Leg quarter prices are slightly on expectations for more China demand; leg and thigh meat prices are steady. 

Poultry | Turkey

Retail turkey ads more widespread than they were last year. Wholesale whole turkey and bone-in breast prices have peaked at the highest level in almost three years.

Seafood | Finfish

Cod, Alaskan 1x:

The supply of the big stocks of wild whitefish are set to remain stable for 2020, lifting by less than 1% according to the forecast from the Groundfish Forum.  For Pacific cod the forum forecast has the total supply at 365,000 t in 2020 down from 387,000t.  This has driven a decline in Canadian and US landings from 185,000t to 158,000t.  For now costs are stable with good supply for the 2020 Lenten season. 

Cod, Atlantic 1x:

The 1x frozen Atl. cod loins from Canada are now available with plenty of supply.  We recommend that you start  to plan accordingly for Lent .  Costs remain elevated over last year but are still a good value compared to other Countries of Origin for both quality and cost.  In general the total supply of A cod is forecast to rise slightly form 1.131 m tons in 2019 to 1.132 m t .  In June  ICES (Exploration of the Sea) advised the cod quota in the Berents Sea for 2020 to be set at a level 2% higher than it's advised level for 2019 of 674,678 t.  At 689,672 t, in 2020 advise comes in at 5% lower than the total allowable catch for 2019 set by the Norwegians and Russians of 725,000 t.  

Cod, Atlantic 2x:

2X Frozen Cod remains firm in cost with adequate supply.  

Cod, Pacific 2x:

2X Frozen Cod remains firm in cost with adequate supply.  

Pollock, Atlantic 1x:

New B season Pollock is now in our inventory .  Note Lenten needs have already been secured for 2020.  Supply has been tight overall .   The forecast at the forum for the US supply of Alaskan pollock for 2020 is 1.528 million metric tons, down from 1.552 m t in 2019.  Undercurrent News recently reported the science on pollock points to possible cuts in the next couple of years. 

Pollock, Pacific 2x:

Pollock raw material is short, prices will increase as we head into year end and beginning of 2020. Will also see tariffs increase in 2020.

Haddock:

Haddock costs  are firm on product out of Russia, Iceland and Canada.  Note the fishing quota is also down by 25% compared to last year at 15,000 MT  for 2019 out of Canada. Currently fishing is good in CAN so they do expect to catch the qouta.  Overall supply has been adequate but at firm costs for all COO's 

 

Domestic Lake Fish:

Yellow Lake perch on all sizes is under pressure at this time with limited to no supply. Most sizes are hand to mouth  and will be allocated out based on inventory. The fall fishery is just getting underway and some reports indicate fisherman will fish for more perch if they are present before converting the nets for walleye or with hold offerings so they can divy up the catch. There is still a large amount of the quota left on perch , but the bigger issue is if they exist to be caught.   This problem is expected to persist through the winter as well, with the potential for another quota cut come spring 2020.   Walleye has experienced  softer costs with the increase in quota for the majority of the summer.  Supply is plentiful at this time on the prime sizes while the 2/4 and 14 ups (outliers) have been harder to come buy with firming costs.  The fall fishery should bring all walleye back in stock.  To date the Whitefish season has not materialized as expected.  High winds and poor weather overall have hampered fishermen's efforts and supply has suddenly come up short for the fall fishery.  As the Native American fishing season wraps up this week for certain regions we are hopeful to gain added supply.  For now costs are stable but expect them to firm.   Smelt for both battered and dressed has  tightened on supply as costs firm.  This resource in general is under stress and some are not sure if this will be a viable offering in the future.   Limson has now run out of the dressed option and only has supply of the battered.  With increased pressure on this item we will be unsure if the inventory will make it to next summer.  Please plan accordingly as we try and explore other species and or COO's for possible supply .   The Canadian blue gill continues to be a struggle as catches and supply have come up short.  What is being offered is minimal but firm on cost .  The next best option is the same species but produced out of China.    Supply is available but another increase will follow as all imports now out of China are impacted by the tariff unless this changes in November when Trump meets again with the Chinese Govt.                    

 

 

Euro Lake Fish & Zander:

Zander and pike perch are a better valued option compared to the domestic walleye at this time.  Costs on this species have been stable with adequate supply.  Euro perch however is starting to feel the pressure from the lack of domestic yellow lake perch.  Supply is short and costs on the 20-40 and the 40-60 g euro perch have firmed up recently and are expected to remain at this level through the fall at least until fishing resumes and supply becomes more readily available.  At this time this resource has not been impacted by  the new Trump  tariffs assessed on the EU.    

Mahi Mahi:

The Mahi Mahi season out of S America has resumed but first reports indicate that Peru is off to slow start and what has come out of the water thus far is of the smaller 4 oz size.  First offers  appear to mimic last years costs to date.  As more product becomes available and Ecuador has production we expect to  have a better idea of where the pricing levels will be defined for the new season. For now we have supply at a steady cost.  

Frozen Tuna, Swordfish :

AHI TUNA:Vietnam - Peak season in Vietnam ended in August. Demand is stable for this time of year and prices are stable as well. No changes expected through Vietnam’s secondary season which starts in December. The market seems to be heavy on Saku inventory, presenting opportunities for Saku programs. Indonesia – Indo season has ended as well. Indo does have a small secondary season in October/November which could help the market. SWORD - The Swordfish season in Ecuador is ended in August. Prices are stable due to weak demand for Swordfish both in the U.S. and Europe. In Asia, Swordfish is generally a by-catch of Tuna. So there is limited availability from both Vietnam and Indonesia.

Swai:

Swai prices peaked in November of last year, but have since dropped quite dramatically by about 40 percent, resulting in losses for farmers and producers. There is ample product available in the market today as many importers are trying to push product before year end. Prices will begin to firm after the new year. 

 

Tilapia:

Farmgate prices for Chinese tilapia have been relatively steady so far this year. Supply will remain adequate for the remainder of the year. 

Seafood | Shrimp

Pond stocking in India / Indonesia during the main farming season of May–Aug has been much lower this year, suggesting a continuation of supply shortage for the rest of the year. Heavy rainfall in July affected aquaculture belts. Indian industry sources indicate a 30–40 percent production drop in 2019 compared with 2018.

Imported Black Tiger:

The seafood industry reports seeing pressure on inventory and higher pricing on black tigers. Large-sizes 26-30 count and larger are under a lot of pressure due to seasonal demand and lower raw material availability.

Imported White:

During the season’s first harvest in April–June, vannamei production declined considerably in Asia as low price persisted in the international market. Farmers have reduced pond density, delayed seeding and even delayed harvests. This cause a lot of pressure due to seasonal demand and lower raw material availability on larger size shrimp. 

Latin White:

Prices have firmed due to limited supply. 

Domestic White & Brown:

The current catch is coming up short on the large-size shrimp which is putting a lot of pressure on availability and price. 

Domestic PUD:

Smaller PUDs are becoming tight and driving up prices, as they have been pushed into the Gulf of Mexico with the influx of water coming out of the Mississippi River. 

Domestic Rock & Pink:

Inventory and pricing are stable. 

Seafood | Lobster

North Atlantic:

To date poor weather and a late  summer with cooler temperatures have resulted in very poor landings out of Maine and this issue persists where tails are reported to be down as much as 20-30%.    Costs have firmed up overall and are expected to go higher to at least the end of the year if not beyond.  There is hope that there might be some relief when Nova Scotia comes on board at the end of November but that remains to be seen.    Meat is also very short at this time with limited offerings overall for CK, CK broken, CKL and leg body meat .  Since the bulk of meat products are produced in the spring Canadian season, inventory might be tight for the balance of the year and maybe through the winter unless there is some added production this fall / winter.   Costs have firmed and are expected to remain elevated .   Lobster meat is sitting at 52-week highs, recently crossing 2017 levels, and only sitting below prices during the record-high 2016.

 

Warm Water:

The WW tail market continues to be firm.  Costs have been increasing since the hurricane in the Bahamas.  With elevated costs on N Atlantic's the WW tails although high on cost,  are still a better value in comparison.  We expect to be able to meet all of the WW tails needs from other countries but the unknown is at what price level this might be.   

 

 

 

 

Seafood | Crab

Snow Crab:

The market out of Canada for snow crab has been firm since the end of August on all sizes. For most of the season, larger snow crab, in particular, was seeing thinning supplies, but market participants report that all sizes are moving quickly and supplies are growing tighter. New season crab out of Canada will not be around until the end of April, beginning of May 2020. Alaska just announced a 24 percent quota increase for snow crab. However, product will not reach the lower 48 until sometime into the new year where the 5/8 size is expected to be the prominent  offering.  5-8s also  are at a 52-week high on cost out of both Newfoundland and the Gulf and 10-up crab is at an all-time high. Imports of Russian snow crab through August are down 7.6 percent; thus adding to a lack of available snow crab in the current U.S. market. For now supply is short overall and costs are firming.

 

 

 

 

King Crab:

Both Russian red and golden king crab is seeing upward pricing pressure on all sizes, in particular on reds on the larger count sizes. This pricing pressure is coming about even with imports out of Russia, specifically on red and blue king crab, which are higher year-to-date (YTD). Red king crab out of Russia is up 13.5 percent through August and Blue king crab (which is typically sold in the U.S. as a red king crab equivalent) is up 144.6 percent out of Russia. Imports of golden king crab out of Russia are actually down 12.5 percent. However, Alaska’s Western Aleutian Islands Golden king crab fishery has a quota of almost 2.6 million pounds, with roughly 1.6 million pounds harvested so far, the need and demand for king crab in the U.S. had some assistance.In general costs are firm and supply has been guarded.

 

 

 

 

 

 

 

Red Swimming Crab:

A new 10% tariff on all seafood items should go into effect in August.  The market is still uncertain however, between high market prices, and limited supply, cost might go up.  This coupled with the void in the market on red swimming crab only strengthens this possibility.  We are still expected to start receiving shipments on red crab in October.  The main crab harvest is October – December. 

Blue Swimming Crab:

Prices are still high with great inventory.  There has been a slight decrease in pricing from Indonesia while Philippines and India move up to be more in line with Indo.  For the next 60-90 days prices will stay level to a possible dip however, Q4 is expected to pick back up.  With the red swimming still high with limited supply, this too drives the price up.  Overall prices will come down a bit.

Seafood | Scallops

Scallop costs have started to uptick some as we are entering the fall fishery.   To date approx 70 % of the quota has been caught but varies by area, and typically costs start to rise through the winter months as fishing can be impacted by weather etc.  To date there is no expectation of shortages going into the fall and winter.  Preliminary review of the 2020/2021 scallop biomass shows good juvenile population with total quota amounts expected to be similar to this years expected 60m pound range.

 

Chinese Flounder and Ocean Perch:

Ocean Perch raw material was coming up short delaying shipments and firming up costs.