Market Updates for December 21, 2018
Dairy | Cheese
The CME Market has seen some barriers as it pushes higher lately. Speculators feel the markets are still bearish and were seeing the cull numbers on dairy cows increase. Supply is heavier then the demand can take and there is ample milk supply. In the short term speculators feel there is not a strong upside to the market.
Block - Down
Barrel - Down
Block - Up
Barrel - Up
Dairy | Eggs
Retail demand fairly good to very good. Supplies otherwise are more available. Market mixed.
Large - Up
Medium - No Change
Small - No Change
Large - Up
Medium - Down
Small - No Change
Dairy | Butter
Butter production is active throughout the country to meet the immediate needs as well as build for Spring Holiday demands. Inventory reports that are due out on Friday should be the indication of a bull or bear market for the first quarter of 2019. Futures are at or just below spot pricing in the short term, but futures for the back half of 2019 are elevated.
Butter - Down
Butter - Down
Grocery & Bakery | Wheat
Prices have leveled out for now as a lack of "news" leaves prices flat at relatively cheap levels.
Grocery & Bakery | Soybean Oil
Soybean oil prices are at the low end of the USDA's $0.28-$0.32/lb range. There is plenty of vegetable oil available worldwide.
Grocery & Bakery | Sugar
Now that most processors have forward sold a significant part of their output, they have tightened up the lower end of their offers. Cane remains at a 2-3% premium to beet sugar.
Meat | Beef
Packers are buying fewer cattle for the two holiday-shortened weeks ahead. Cattle prices are mostly steady. Beef production will drop around 20% during the holiday period.
Holiday shortened production schedules will tighten supplies of ground beef. Prices should continue to firm.
Ribeye prices have topped out and are trading lower now that holiday pulls are over. Packers are forward selling at a 10% discount to current prices.
Forward prices are even with spot prices showing that packers believe prices will trend sideways.
Round prices are increasing as retailers load up for January features.
Strip prices are increasing as we approach holiday production slowdowns.
Tender prices have peaked with just a few more days of fill-in buying before prices adjust lower. Forward sales have been made at 10% discounts.
Prices for most thin meats are rising as production shrinks late this month.
Meat | Pork
Last week and this week will likely be the largest pork production levels we will see in the next few months. As output trends lower into next summer pork prices should begin to get a little traction.
Butt prices are low enough to move extra production into freezer programs or exports,
The brief rally enjoyed by ham prices has ended and prices are headed lower.
Belly prices are lower as holiday shopping and retail features wind down.
Rib prices are below where they were last year. Demand for freezer programs is good.
Loin prices bounced off of 5-year low as buyers stepped in to take advantage of fire sale cost levels. Prices could continue higher as the holidays temporarily shrink supply.
Poultry | Chicken
Buyers are scrambling to cover their needs during the upcoming abbreviated plant schedules. Cut-up and whole chickens are rather snug with prices trending higher
Most breast meat items are trending higher; medium sizes are in the best position. Food service demand for tenders used in boneless wings is good and prices are headed higher.
Small wing prices are higher as demand outstrips supply. Medium and jumbo wings are in good balance at steady prices.
Export demand for leg quarters is strong creating a good option to deboning. Leg meat prices are trending higher; thigh meat is steady.
Poultry | Turkey
Whole turkey sales have shifted to 2019 delivery at mostly steady prices. Bone in breast prices are steady.
Seafood | Finfish
Supply remains tight and costs are firm as we head into the end of the year. The Alaskan cod quota has been reduced by 18,000 tons and with reductions in quota on other white fish species as well the end result will be increased costs on cod overall.
The 1x frozen Atl. cod loins are firm and could increase further. Current adverse weather and reduced quota have limited the availability of product. The smaller 4 oz size has been the most effected as the current harvest has yielded larger fish and loins. Expect this trend to continue at least through Lent.
2019 Total Allowable Catch is announced at 6.5% lower than 2018. Prices will remain firm.
Due to lower catch announced from Atlantic cod. Pacific cod raw material price remains high.
Costs on 1x fz Pollock are currently stable with adequate supply as we prep for Lent.
Firming of pricing as expectation of drop in pollock biomass. Starting to see substitution demand from cod and haddock users.
15% decrease of Total Allowable Catch announced for haddock. Price is still cheaper than cod. Expectation of cod substitution to continue.
To date there is 2.4 Million pounds of walleye quota left in Lake Erie and the expectation is that all will be caught before the fall fishery wraps up. For perch the estimate is 1.4 million pounds still in the lake and it is doubtful all will be caught. As a result many expect the perch quota to be reduced overall come Spring 2019. Costs will firm slightly as we approach the end of the season and supply will be adequate into May. For whitefish the fall season has closed and the catch has yielded larger fish for the bulk of the inventory, hence larger fillets. Expect costs to firm slightly and level off for the winter until fishing resumes in June of next year.
Supply is good and costs have been stable. We expect this to maintain itself into the Spring and through Lent. This is a more cost effective substitute for the higher priced domestic lake fish items where applicable.
Mahi Mahi costs have continued to soften as the season has resumed out of Peru. Reports indicate there is left over product from the 2018 season both domestically and over seas. To date the harvest has yielded predominately small fish (65-70 % in this size) of the 4 oz portion size. Currently supply is adequate on all sizes.
As we move into the end of the year there is minimal harvest of tuna out of most regions. In January Viet Nam catches typically improve and fish becomes more readily available for spring arrivals. For now costs are stable and supply is adequate for a relatively active demand. Costs have firmed on Swordfish from Indonesia, with high demand from the European market and stricter regulations overseas. Demand remains strong from both retail and food service customers
Reports of more consistent swai supply from producing countries.
Tariff war will increase cost by 10% and potentially an additional 15% January 1, 2019.
Seafood | Shrimp
Black Tiger shrimp prices are stable and supply is good on small and middle sizes. There are shortages of large sizes due to limited production (2-4 through 13-15) and heavy demand.
White shrimp supply is somewhat sporadic with shipments being late due to heavy demand overseas. Market values are good and offer great opportunities to menu shrimp this summer. Expect supply to be better as we roll into the late summer months as production catches up.
Latin White shrimp are firm with replacement prices firming. Supply is good for the time being.
Domestic Brown shrimp are steady in price as we roll into the new season for Texas. Larger sizes of white and brown headless shrimp should begin to land over the next few months.
Domestic PUD production has slowed on smaller shrimp. While boats begin to target larger whites and browns where available, we should see better production in larger and middle size peeled shrimp.
Rock & Pink shrimp are both in good supply.
Seafood | Lobster
Lobster tail costs have firmed as the landings from Maine were not stellar this season and demand has been strong. Expect this trend to continue. The fall Nova Scotia season is on the cusp of beginning but there is no way to determine catches at this time as it can be weather dependent. Note this fishery typically yields larger lobster and tails, with minimal catches of the smaller 3/4 and 4/5 oz sizes. Meat has been softening over time and has started to level off. Supply is currently adequate on all sizes of tails and offerings of meat.
Supply has been short on warm water tails with inventory just starting to ramp up slightly after a late start to the season. Poor catches, increased demand out of Asia and retailers taking a stronger position on the market have resulted in a firm undertone. This trend continues as we start to enter the holiday season.
Seafood | Crab
The global shortage of snow crab will continue through the fall. Alaska did announce their recent findings on their biomass survey of the Bering sea and the results are favorable for more quota for this region come this winter. The survey showed a 60 percent boost in market sized males and nearly the same for females. However ..many are predicting a large reduction in the snow crab quota out of Newfoundland come spring. This will out weigh any increase out of Alaska and in the end snow crab is still expected to be short. To date prices have leveled off on Canadian crab on the larger 8 and 10 up products with limited offerings. However the 5/8 size has continued to soften slightly as processors and brokers look at moving off the balance of their inventory.
This market has remained unchanged in regard to supply All king crab sizes remain tight, especially on 14/17 ct, 16/20 ct and 20/+ ct. These three sizes have seen the biggest issue with availability and as a result costs are firming. They are still fishing for Russian crab but this will wrap up soon as most is moving through the Asian market causing some delays on containers. We do not expect any relief on supply for months, possibly even through summer 2019 as the recent announcement out of Alaska was not positive. For red king crab at the eastern portion of the Bering Sea more commonly called Bristol Bay, numbers of mature males dropped more than 40 percent from last year and mature females were down 54 percent. Buyers need to consider gold king crab as a viable option for the 2019 season.
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.
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
The scallop market as of late has taken some significant increases. Strong demand has impacted cost and these are expected to remain elevated at least until after the first of the year especially on the larger sizes (U-10, U-12 and 10-20 ct sizes). With 75 % of the quota caught they are hoping the weather will cooperate and the balance will be landed. For now expect firming prices and adequate supply.
10% tariff duty has been applied. An additional 15% may be applied January 1, 2019.