Market Updates for April 19, 2019
Dairy | Cheese
The CME Block and Barrel pricing has found a range where speculators feel will continue in the short term. With the spring flush approaching the highs will be minimized, but second half of the year strength is still being projected.
Block - Up
Barrel - Up
Block - Up
Barrel - Down
Dairy | Eggs
Retail demand disappointing. Supplies readily available. Market soft.
Large - Down
Medium - Down
Small - Down
Large - Down
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'.
Butter - Up
Grocery & Bakery | Wheat
Wheat prices are low as we enter the 2019 growing season. The winter wheat crop is in great shape in Kansas and the southern plains, but soft winter wheat (crackers, cake, pastries) in the Midwest is reported to be in the worst shape in decades. Spring wheat (pizza, pasta) planting are likely to be delayed a little, but it is too early to be very worried.
Grocery & Bakery | Soybean Oil
The USDA lowered crude soybean oil price projections by 1 cent/lb. to $0.28-$0.30; prices are trading in the middle of that new range.
Grocery & Bakery | Sugar
Refined sugar.prices are steady.
Meat | Beef
Beef production has been almost unchanged from 2018 so far this year, but beef prices are up 10% from where they were last year. Exports have actually been down so strong domestic demand and improved packer pricing strategies are the likely explanation.
Ground beef prices are up at retail and food service but demand remains good.
Forward prices are below current spot levels, but not by a lot. Prices should begin adjusting lower.
Prices are a little higher as we approach grilling season.
There is still some discounting, but spot and forward pricing are equal indicating expectations of a sideways market trend.
Strip loin prices have shot above where they were in previous Aprils. It would not be a surprise to see prices pause before heading higher.
We are entering the time period when large bookings for Mother's Day get made. Prices usually bottom in this timeframe.
Ball-tip and flank meat prices are mostly steady as we approach grilling season. Outside skirts have become one of the highest priced beef cuts.
Meat | Pork
Hog futures continue to be volatile as new information surfaces on pork exports to China. First we learned that China's February pork imports from all nations were up 75% as they scramble to replace production lost to the African Swine Flu epidemic.Then two large purchases from the U.S. were reported (totaling 1% of U.S. annual production). The futures market is clearly expecting more sales which, if they materialize, could significantly shrink domestic pork availability. Since the beginning of March cash pork prices are up over 30%!
Butt prices have climbed above where they normally trade this time of year; hog futures suggest more upside.
Prices are adjusting lower after the processing window for Easter hams closes. Like butts, hog futures suggest spring/summer prices could be much higher.
Belly prices are adjusting higher as demand continues strong.
Rib prices are rocketing higher as we start grilling season.
Bone-in and boneless loin prices snapped back to levels typical for this time of year. Prices should trend even higher as grilling season kicks in.
Poultry | Chicken
Whole and cut-up chicken demand is feeling the effects of Lent; prices are flat.
Medium and jumbo breast meat are more available; prices are still steady. Tenders prices are dull.
Wing demand has been OK as further processors rebuild inventories. Prices are mostly steady.
Leg and thigh meat are balanced; prices are steady.
Poultry | Turkey
Retailers remain focused on building inventories; prices for both whole turkeys and bone-in breasts are edging higher.
Seafood | Finfish
Alaskan cod had a firm undertone for most of Lent and costs remain at this level. Currently there is plenty of supply
The 1x frozen Atl. cod loins have come up short for the season out of Canada. Adverse weather and reduced quota have resulted in limited catches for the fishermen at the end of the season. Canada does not resume until June. 1x frozen Iceland product of the same weight variance and spec will be a good option on supply moving forward.
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.
The overall Pollock quota has remained fairly stable. Reduction in quota out of the Gulf of Alaska has been offset by increases out of the Eastern Bering Sea for the most part. The smaller 2/4 have been easier to come by where the 4/6 in shatters or IQF remains shorter until the B season this summer. Costs have firmed
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.
Supply of Yellow Lake Perch, Walleye, Whitefish and Smelt has been plentiful through Lent. At the end of March the Lake Erie Committee (LEC), set a total allowable catch (TAC) for 2019 of 8.552 million pounds of yellow perch and 8.531 million walleye. Yellow perch are allocated in pounds and walleye are allocated by number of fish. This TAC represents a decrease for yellow perch from 10.498 million pounds of fish over last year, (about a 20% decrease overall) and an increase in walleye from 7.109 million fish (about a 20 % increase overall). As a result perch prices have risen quickly and product has been short especially on the smaller Mi sizes. Note the new season formally resumes in May but expect perch on all sizes to be short for the balance of the year . Walleye has started to see softening on costs with the increase in quota. When the season resumes in May we expect some continued reductions, for now walleye is available on all sizes. Whitefish currently has ample supply with the new season resuming in June. Smelt for both battered and dressed has started to tighten slightly on supply so expect costs to firm as well. The Canadian blue gill continues to be a struggle as catches and supply have come up short. What is being offered will need to remain on allocation. 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 10 % tariff.
Supply is ample and costs softened over time but are leveling off as we go into the summer months.
Mahi Mahi costs for this season softened closer to 2013 and 2014 levels earlier in the year but as we moved through Lent and as the S American season has wrapped up costs started to firm The season for Peru will not reopen until October. The next avaibale resource is Taiwan and that season should resume shortly. Currently supply is adequate for a strong demand.
INDONESIA – There are only a few regions in Indonesia landing raw material and those are minimal. With the lack of raw material, prices are firm and high from this region. Their season will start in late March/early April. Prices may find relief at that time, depending on the strength of those landings. Thailand – Landings are very minimal. . For Swordfisn, in Ecuador – all the boats have been fishing for Mahi, so there has been virtually no production. They will retool for Sword in March/April. Pricing will be reviewed at that time. In Asia (Vietnam & Indonesia) – European demand continues to be much higher than usual, putting pressure on supply and pricing. Landings are tied directly to Tuna, so the notes above also apply to Sword.Thailand – Only processing frozen on-board product at this time. As a general rule, all of it is untreated. Landings are low. Prices are high and creeping up. Overall Limson has supply on all sizes with stable costs at this time
Raw material source is currently more than packer’s demand to the farmers.China is slowly buying as they still have inventory from purchases placed prior to Chinese New Year. The U.S buyers remain quiet as there is ignificant inventories being held in U.S. freezers at much higher costs than current replacement prices. Production should increase in May and June so chances are prices could soften further but we will have to see if China and the EU steps in and becomes more active.
The tariff war has increased costs of product by 10% . The potential for another 15% increase has now been delayed until the beginning of March by the Trump administration.
Seafood | Shrimp
Indonesian Black Tiger raw material is stable with low quantity. Farmers raised the prices on the larger sizes as main landings are 16/20 thru 26/30. India’s prices are cheaper but the Indo packers will not lower price to compete with India. Current U.S inventories are more than adequate for dull demand.
INDIA WHITE SHRIMP Raw material arrivals continue to be slow with firm pricing at least for now until farmers start the new harvest of 2019. Packers have tried to lower the raw material prices to the farmers with no success. Main request for pricing overseas from USA buyer is medium to larger sizes of PTO and EZP which is most likely earmarked for the retail sector. There were no large volume deals made during SENA 2019 as most buyers wait on the sidelines for next harvest. The current market is stable with discounts noted on smaller peeled shrimp. Demand has been steady for 21/25 Headless, shell on Asian Vanamei whites and 16/20 thru 26/30 EZP shrimp. INDONESIA WHITE SHRIMP Raw material is stable with major landing sizes in 31/40 ct. More quantity of bigger sizes become available each week on 26/30 and up.Price of raw material has remained stable as packers are waiting for the next crop in May which will shift down to 41/50-51/60 sizes. U.S. inquiries are slow as many importers have good stock available and only buy on a need be basis. There have been some requests on the larger sizes (13/15-26/30) but packers main focus is on smaller sizes as they have heavy stock with May harvest around the corner. Indonesia packers are more aggressive than India on certain items and accept counters where the gap between offer and acceptance is not too far apart.
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
Landings were initially reported to be down 30-40% in early December out of Nova Scotia. It was assumed a 2 million lb + shortfall of meat, as well as 4 million lb + shortfall of tails . Most sizes from the processors are on allocations with limited to no inventory on sizes larger than 5-6oz. Some indications were that landings improved, but the damage had been done when the shore price reached extreme highs before the holidays and many processors closed for the winter. Spring season starts in early May, but initially a lot of this goes to live or whole lobster production in order to avoid a bottle neck from tail and meat production. Realistically look at improved availability in early June. For now prices are high with limited to no supply on 6/7 oz tails. Meat bottomed out this winter but costs have rebounded and started to firm again as supply on both tails and meat is scarce at this time
Supply has been short on warm water tails after a late start to the season last summer. Poor catches, increased demand out of Asia and retailers taking a stronger position on the market have resulted in a firm undertone. This trend continued through the holidays and is expected to remain firm until new season supplies start to arrive in July. The WW tails in the 6 and 8 oz sizes might be a viable option to the lack of larger N Atl tails but costs are a trade off as both species report a firm market and overall lack of supply.
Seafood | Crab
The global shortage of snow crab continued through the fall. What did come out of Alaska was mostly of the 5/8 oz size and the bulk was presold or of very limited supply. First indications out of Canada are that the volume will remain stable and at best 1-2 % above last season. Qouta cuts out of Newfoundland are being offset by increases in other regions. They expect predominatly the 5/8 oz size with limited offers in the 8 up and 10 up sizes . The market is volatile as the season started this month with USA buyers waiting to see what pricing is going to look like. The “Ice Pack” on the fishing grounds is quickly going away and delayed openings in all fishing zones is not expected. Northern Gulf’s (Zone 17, 16) quota is ↓15% with Zone 17 opened on March 27th, and Zone 16 opened on April 9th. Nova Scotia’s quota is ↑7% and opened April 1st. Southern Gulf’s (Zone 12) quota is ↑~35% (Awaiting final quota) and opening mid/end of April. Newfoundland’s quota is ↓7% (not as much of a reduction as some thought) and opened the week of April 8th. Only Newfoundland/Labrador and Nova Scotia will be MSC certified this season. Please note that it is anticipated that the Japanese will buy less Canadian Snow Crab this year due to increased purchases out of Alaska and therefore more product could be available to the USA. For now it is more of a wait and see approach to see where the market and supply will land. In general 5/8 is the better value to the firm prices and limited offerings on the the 8 and 10 ups where many processors are limiting the offers on the larger crab to move the 5/8.
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. Th. We do not expect any relief on supply for months, possibly even through summer 2019 as the 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. Note however due to the lack of overall supply for reds the costs of golds are starting to increase as well.
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 is softening on most sizes as the season resumed in April . A water level of new season costs has yet to be determined. As the catches continue we expect more availability of supply of all sizes.
10% tariff duty has been applied. The possible added 15% has now been pushed back to the beginning of March when the Trump administration will decide on a final ruling.