Market Updates for November 8, 2019
Dairy | Cheese
The CME Block and Barrel markets have seen some un traditional 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.
Block - Up
Barrel - Up
Block - Down
Barrel - Up
Dairy | Eggs
The national flock size is down. This is for the most part due to summer flock rotation. Retail demand has also increased.
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'.
Grocery & Bakery | Wheat
Spring wheat prices are steady/lower 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 3-5%.
Grocery & Bakery | Sugar
Beet processors are mostly off the market on the small percentage of production they haven't forward sold. The beet harvest was only 70% complete in Minnesota/North Dakota last weekend at a time when is usually complete. Processors are concerned that the beets they were planning on running for the uncommitted 10% of their capacity -- the volume they haven't already contracted -- may not get harvested before the ground freezes and/or have lower sucrose content.
Meat | Beef
Beef production has been running a little higher than last year, but the percentage of cattle grading choice is about 2% lower. Choice beef prices are 8% higher than 2018; select beef prices are just a little higher than last year.
Ground beef demand has picked up with prices moving higher. This mini-rally could stall out as consumer interest shifts to Thanksgiving items like turkey.
Choice rib prices within a few percent of all-time highs. The air is getting pretty thin up here. Select ribs are still 30% below choice.
Brisket prices have leveled out but there is a seasonal tendency for them to inch higher as we approach December.
Big forward sales last few month are supporting widespread features of flats and insides; prices are steady/higher.
Strip features are mostly over and prices are starting to slip again.
Choice tenders are at an all-time highs. Selects are at a 28% discount to choice tenders.
This is the time of year when thin meats prices start to trend higher. Most prices are above where they were last year (with the exception of flank steaks, which are a little lower).
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. The most recent export report shows that while exports to China are up, the gains have been offset by reduced sales to Mexico and Japan.
Boneless butt prices have been firming on increased exports to South Korea and other Asian destinations. Bone-in loins are steady so far.
Ham prices took another leg up last week due as exporters jumped back in. China announced that pork imports from Canada will resume which adds even more support to ham prices.
With more hams moving offshore the supply of ham trimmings has been reduced, lifting pork trim prices. The prospect of rising pork sausage costs was not wasted on bacon buyers who are now back in the market. Prices look like they will firm.
Spare and back rib prices are trending higher as buyers come off the sidelines to lock-up relatively cheap prices.
Loin prices continue to struggle with large supplies and cheap prices for competing meats. Japan is a large buyer of boneless loins and the latest data shows their volume is below last year.
Poultry | Chicken
The announcement that the mini-trade deal with China would include resumption of poultry trade (shut down by 2015 avian influenza event in U.S.) breathed optimism back into market conversations. Current conditions remain lackluster, however, and price trends are flat.
Jumbo and medium chicken breast are a more balanced this week with most product trading at steady prices. Tender prices have leveled out at where they were last year.
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.
Frozen leg quarter prices are steady on expectations for more China demand; fresh prices are still discounted. Leg and thigh meat prices are barely steady.
Poultry | Turkey
Retail turkey ads are breaking with initial reports suggesting they are at about the same level as last year. Wholesale whole turkey prices have peaked at the highest level in almost three years.
Seafood | Finfish
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.
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.
2X Frozen Cod remains firm in cost with adequate supply.
2X Frozen Cod remains firm in cost with adequate supply.
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 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 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
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.
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.
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.
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 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.
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.
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.
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.
Prices have firmed due to limited supply.
The current catch is coming up short on the large-size shrimp which is putting a lot of pressure on availability and price.
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.
Inventory and pricing are stable.
Seafood | Lobster
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.
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
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.
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.
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
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.
Ocean Perch raw material was coming up short delaying shipments and firming up costs.