Market Updates for January 10, 2020
Grocery & Bakery | Wheat
Spring wheat (pizza flour) prices seem to be leveling out temporarily at prices 5-10% below last year. Smaller North American supplies have pushed pasta flour prices 15-20% above last year.
Grocery & Bakery | Soybean Oil
A tighter world supply-demand situation has emerged pushing soybean oil prices 10-15% in the last month.
Grocery & Bakery | Sugar
Beet and cane sugar prices remain firm as processors have little uncommitted sugar to offer. It is expected that imports from Mexico will nearly double to fill the U.S. supply shortfall. This will change shipping patterns with cheaper prices actually more likely in the south and eastern coastal areas versus the interior of the U.S.
Meat | Beef
Milder winter weather has helped feedlot performance allowing steer and heifer weights to move above where they were in 2018 and early 2019. Grading has also improved pushing choice beef output about 1% above last year. This explains why choice beef prices are now 2% lower than year-prior levels.
Ground beef prices dropped counter-seasonally prior to Christmas as heavier cattle weights add to beef trimming supplies. Imported beef was also cheaper after China finished buying for their New Year. Prices have since recovered and are very much in line with previous years.
Rib prices are still soft as spot availability continues to be larger than it was at this time last year.
Forward sales of briskets are made at declining prices suggesting packers see the current downtrend continuing.
High prices last fall discouraged forward booking of round cuts. Reduced retail featuring has increased supply with prices drifting lower.
Strip prices made their seasonal lows in December; prices are gradually working higher.
Tender prices adjusted back to year prior levels after holiday buying finished up. We expect to see some strength develop as we get closer to Valentines Day.
Beef slaughter declines seasonally as we get into winter, tightening supplies of thin meats. Prices usually trend higher as a result.
Meat | Pork
Pork output ran 5-7% higher in December but are expected to moderate in coming weeks. Pork prices are mostly on the defensive except when exports lend a helping hand.
Butt prices remain above year-ago levels due to consistent export pulls.
Ham prices have come down from their pre-holiday peaks but remain at the high end of historical ranges for this time of year. Excellent demand from Mexico continues to be a supporting factor.
Belly prices are stuck at 5-year lows as buying fails to keep up with record output. Aggressive buying last fall pushed frozen belly inventories to 5-year highs. Now prices have to go lower to incentivize more booking for retail features.
Spare and back rib prices are in the middle of historical ranges; big supply is balanced with good seasonal demand.
Loin prices are similar to historical averages. Stronger export demand is helping a little.
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.
Poultry | Chicken
New capacity has added 5-6% more chicken output, but almost all of it is large birds destined for deboning. Smaller-sized whole bird prices are mostly steady.
With production of jumbo breast meat at record levels, prices have dropped back to record lows for the month of January. Processors will have to make their money on value-added chicken breast or dark meat in 2020, because the outlook for commodity jumbo breast meat looks bleak.
Wing prices are increasing going into peak demand around the Super Bowl. So far prices are tracking pretty close to last year.
Frozen leg quarter prices and thigh meat prices are steady. We will have to wait until after Phase I of the China-U.S. trade accord is signed to see what happens next.
Poultry | Turkey
Whole turkey prices came down a little after the holidays, but are now mostly steady at the upper end of historical price ranges for this time of year.
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.
Block - Up
Barrel - Down
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.
Small- 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'.