Market Updates for May 8, 2020
Dairy | Cheese
Dairy | Eggs
Overall Retail orders have remained strong, although it's worth nothing in some area's orders have dipped below yearly averages. Limit 2 per customer restrictions for the most part have been lifted, but some of the larger chains that still have these in place could be the reason for any slow down. Foodservice and distribution orders are starting to trickel in as some states have lifted restaurant bans. This should be a slow reopening process as how the public will respond is still an unknown.
Large - Flat
Medium - Slightly Higher
Small - Flat
Dairy | Butter
Excess Cream Supply is still driving butter production and keeping it very active, inventories are still building. Prices have found their floor ($1.15) and started climbing higher ($1.20).
Butter - Higher
Dairy | Cheese
Cheese pricing hit their bottom 2 - 3 weeks ago with both block and barrel hitting a resistance point at $1.00 - $1.01 range. Since then prices have risen to the $1.20 - $1.24 range. With so much unknown and increased inventories there is still a lot of uncertainty in the cheese markets.
Block - Higher
Barrel - Higher
Grocery & Bakery | Soybean Oil
There have not been noticeable changes in the soy complex since last week. Processing plants have begun adding hours back to their schedule as demand appears to be increasing with states beginning to reopen. Supply is plentiful but the bottleneck to getting product is production and logistical capacity.
Grocery & Bakery | Flour
Spring wheat plantings are tracking ahead of last year's pace, adding more bearish news to an already looming supply. Corn prices will dictate the direction of wheat and right now corn is trading at extremely low prices. Flour prices will likely remain stagnant for the next 30 days.
Grocery & Bakery | Sugar
Sales for sugar both this year and next have slowed. Uncertainty in demand and elongated supply positions have kept buyers on the sidelines waiting for any changes in the market. Prices haven't changed in several weeks and don't appear to be poised to move near-term.
Meat | Beef
No updates to plant closures in the second half of this week; the last big change earlier this week with Cargill’s Schuyler, NE facility shutting from May 6th-May 18th. We are continuing to see the labor issues at a number of plants, either due to sick workers or employees just not showing up. We are seeing some of the smaller packers that have not been impacted by the virus stepping up and helping to fill gaps. Lots of frozen product is coming to the market now as customers that normally would not consider frozen beef are now accepting the option. Kills for this week are predicted to come in between 425K and 450K head, most likely higher than last week but still significantly lower than a normal week’s production. We are still right around the 60% capacity production rate. As prices continue to climb we are predicting that some hoard buying both at foodservice and retail will slow down and pricing could ease. In the short term expect prices to stay flat to higher on grinds, end cuts, and thin meats.
Meat | Pork
Plants are going back to work, with at least one closure announced. A positive sign is packers are adding to harvests this week. We could see week to week improvement in the harvest levels. With Labor still an issue, converted items will continue to be a challenge, boneless butts, boneless loins and marinated items. Prices are steady to higher.
Poultry | Chicken
The market has continued to climb at a very quick pace in the upward direction and we are not back to the levels we were seeing prior to the virus. It is looking like we are going to continue to see the costs rise as there just is not the supply there to meet the demand. In order to secure product you have to pay a premium to the market in the $.20-.25/lb range on many cuts. Labor continues to be the main issue and we will soon be seeing a reduction in the supply of birds available due to cut backs. As states have started to open back up that has brought an increase in demand on a supply that is already strained.
The Jumbo Breast Meat market is now at $1.43 and the select market is back up to $2.30. We are seeing increase of $.05 - .10 per day and it looks as if that is going to continue. If you are able to find frozen inventory that is also selling at a premium. Line run Breast Tenders have taken on strength and they are now trading at $1.00/lb. and expected to continue to climb.
The wing market has also tightened up and all sizes of wings are continue to climb. We are not back to the pre virus levels, but we should be there shortly. As the shortages of fresh products continue, the availability of frozen is becoming scarce and processors are selling at a premium. As we see Foodservice demand return this is only expected to continue to climb at a very fast pace.
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 Ground fish Forum in October 2019. For Pacific cod the forum forecast has the total supply at 365,000 t in 2020 down from 387,000t. Note the Gulf of Alaska is completely closed in Federal waters for this season but the Bering Sea and the Aleutian Islands are still active fisheries . Overall this has driven a decline in Canadian and US landings from 185,000t to 158,000t as well.
The 1x frozen Atl. cod loins from Canada are now available with plenty of supply. Costs remain elevated over last year but are still a good value compared to other Countries of Origin for both quality and cost . In June ICES (Exploration of the Sea) advised the cod quota in the Barents 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. In general the total supply of A cod is forecast to rise slightly from 1.131 m tons in 2019 to 1.132 m t . For Now Limson has supply of Russian fillets.
Pricing will remain firm into the summer until we are able to see the impact of COVID-19 . Inventory levels remain healthy.
Pricing will remain firm into the summer until we are able to see the impact of COVID-19 . Inventory levels remain healthy.
The overall Pollock supply for 2020 is expected to remain relatively stable . The forecast at the ground fish forum for the US supply of Alaskan pollock for 2020 is 1.528 million metric tons, down from 1.552 m t in 2019. Note fillet prices for larger sizes are expected to increase as supply on these sizes is more limited. Per the Seafood Source publication... The largest fishery by volume in the U.S., the Alaska pollock fishery, is also facing its own set of disruptions, though it has fared better than some as the industry’s "A" season managed to avoid overwhelming disruptions. They have been able to harvest their catch and prices have held up well.
All of the Lenten needs have been secured and will remain strong through the holiday into early Summer. Pricing is expected to be steady through Summer. Wild Pollock will increase in demand as a high-protein variant. The anticipated increase in demand has many suppliers looking to become vertically integrated to reduce costs, and gain more control over the supply chain.
The tariff for haddock was rescinded in Dec as petitioned by several members of the National Fisheries Institute. In the fall there was a lack of product being imported in case the tariff was to be increased resulting in a shortage now on raw material in Asia, as we progress through Spring . As a result there is a severe lack of supply for processing once production resumes in China. The lack of inventory is expected at least through April / May until raw material can be exported to China , processed and returned to the states, but the bigger issue now if the severe lack of demand. For haddock out of Norway and Russia the TAC ( Total Allowable Catch) for 2020 is up 25% from 2019.
As the opening of the walleye season resumed May 1st this fishery is still uncertain as to how to begin. Currently the processors have placed restrictions on the quota for the boats as they cannot afford to freeze fish in hope there is demand, and this is a risk they are unwilling to take. For now all that is being processed is fresh and this is done minimally based on demand as the plants are currently operating at 25% due to the restrictions of the virus. At this rate, even though there was a 20 % increase in the overall quota for the season there is doubt that will be caught by the fall. The perch season begins on the 15th of May and as last year the processors are selling perch if you take walleye as well. With an estimated 18% reduction in perch quota we expect the perch prices to start out high. The issue is, do you assume high cost perch to cover you for the season and take the risk of this market collapsing if there is no demand? In addition the fishery was unable to fish the spring season prior to spawning and that will also cause an added 25% loss of of this fishery as well.
The European supply on zander ,pike perch and euro perch has been more than adequate to date with no interruptions in supply . Limson is covered on all sizes at this time. Costs are expected to remain stable for now as demand has been non existent for Food Service sales. For late summer, fall orders we do expect a softening on cost purely due to the current exchange. Note this is a lower cost option to the domestic product and eats comparatively.
Mahi Mahi has been secured from the 2019 fall season and Limson has supply on all sizes. Costs remain stable for limited demand in Food Service. The S American season does not resume until October and to date are unsure of any supply out of Asia due to the virus, as typically their season resumes in the spring and is weather dependant. Note we have 4,6 and 8 oz portions that are vacuum packed and can be a great option for retail applications if sold as eaches. We also have 1-4 oz pieces that are currently sold as a cheap option for taco, applications and such.
Vietnam - The Country is locked down because of COVID-19, and may open later in May. Currently some raw material is available, but prices are down because demand has plummeted.Indonesia - The Country is locked down tighter than even Vietnam because of COVID-19. Ramadan is April – May 23. Normally Indonesia only closes for 15 days, but with prices so low and employees so skittish to go back to work, it looks like they’ll be closed all of Ramadan.SWORDFISH Sword is a bycatch of Tuna in Asia, so reflects the same story as Tuna. For now Limson has plenty of supply available in individually vacuum packed portions. This is a great optioon for retial movement where they can be sold as eaches.
By the end of 2018, inventory levels were high and costs were as well with the impending USDA catfish program. This change was handled well by the USDA overall and the big producers in Asia were deemed equivalent with few setbacks and no stoppages of supply. As a result the market went into a tail spin with excess inventory and falling prices. For the bulk of 2019 costs were soft as many are still working to clear up older inventory. There will need to be a price correction soon as the farmers also need mins. to operate and at current market levels that is an issue. For the US, demand has fallen off but has picked up significantly from Vietnam into China. Note; The US is expected to see 40% less imports of swai YOY.
Tilapia, once a big mover for the foodservice sector has seen diminished sales over the last year where imports have decreased. This commodity was included in the tariff war but many think Tilapia in general has gotten some bad press over the last few years based on the public perception. Some experts at the Global Seafood Conference cite a potential turnaround not only how the fish is perceived but due to the recent signing of "Phase One" of the treaty to resolve the trade war, we may see demand for tilapia turnaround. As such, global production of tilapia is estimated to increase from 6.5 million MT in 2019 to 6.8 million MT this year. The increase in supply should continue to keep prices flat and put this item back on the menu of many foodservice establishments.
Seafood | Shrimp
Pond stocking in India / Indonesia has happen but at a reduction (40-50%) due to the COVID-19 pandemic. Farmers are harvesting early and not seeding again until they see what happens on the world market with demand. In the short term you may see some good pricing in the market as people are trying to move off old or excess inventory. This may have a larger impact come late summer into fall if farmers do not seed as this will limit the inventory availability which would cause increased pricing.
The seafood industry reports stable pricing on Tigers, however demand has been moving over to White shrimp. Spring harvest for Tigers out of Indonesia is seeing good supply on larger shrimp (will soften pricing) while the smaller sizes are tighter causing firm pricing and delaying shipments.
We are coming coming up to the main harvesting season (April-July) out of India and Indonesia. Inventory levels overall remain strong while pricing has firmed some as the Winter harvest did not produce to expectations. The COVID-19 pandemic has also haltered many shipments out of India and Indonesia as the demand around the world has come to a halt for food service distribution. Per Undercurrent News; In India, for example, the income of small farmers will decline and companies lending to this sector will also be hit, with the price drop already causing a decrease in seed dropping between 30-50% in the Asian country. Many shrimp farmers are likely to withhold from restocking during the current pandemic, Undercurrent learned meaning there is likely to be a sharp drop in price during the current crisis, followed by a steep rise as supply dries up later in the year -- assuming the market returns to normal.
Prices have firmed due to limited supply.
The spring season starts mid April to early May but may be delayed due to the COVID-19 impact. Boats are being delayed as overall demand is down and cold storage is filling up. You may see some good deals on pricing prior to the market opening up as people will be looking to move inventory out of cold storage.
Smaller PUDs are tight in the market and driving up prices until we see what the new season (Starting Mid April to Early May) will bring
Rock shrimp production in both the US and Mexico was a bust this past year. Virtually no inventory and very high prices. Domestic rock season starts again July/Aug.
Seafood | Lobster
The lobster market has been heavily impacted by COVID-19. Most items (tails and meat) are heavy in Food Service so demand has dropped off significantly. As a result prices have been reduced as of late but with minimal demand it has had zero affect. To date the season has been delayed but is expected to resume later this spring. The bigger issue might be the labor available to start production in the plants. For now we are in a wait and see pattern for this market.
The WW tail market as for the N Atl market has decreased in demand for the Food Service sector. To date we have supply as the new season will not resume until June, with first arrivals expected in July...if the Caribbean countries can resume production as well by that time frame. Costs have softened at this time with plenty of supply
Seafood | Crab
In Canada, the country's Department of Fisheries and Oceans (DFO) has released its new total allowable catch limits for the snow crab fishing areas off the coast of the Newfoundland and Labrador province, granting an overall 10% increase to 29,551t in 2020, compared to the 26,894t permitted in 2019. However, due to coronavirus-related concerns, the new start date for that season is now May 11. Note the provincial government has backed the processors proposed min price of $2.90 CAD. This can be renegotiated however two weeks after the season resumes to a higher level proposed by the fishermen. Zone 12 in the Gulf, which is also the largest fishery in this region was pushed back until April 24. In addition, the quota for this area has been decreased from last year's TAC (Total Allowable Catch) of 32,480 tons to 27,203.7 tons or about 16%. As pointed out recently, further delays in this area may put the entire harvest at risk if the migrating North Atlantic right whale starts to appear. Unfortunately this did happen this week. Fisheries and Oceans Canada (DFO)– The Gulf and Quebec Regions are providing notice of grid closures due to the confirmed presence of North Atlantic Right Whales (NARW) Upcoming closures in the Gulf of St Lawrence effective May 8th, 2020 at 5:00pm (ADT) Full grids GU42, GU43, GU44, GV42, GV43, GV44, GW42, GW43, GW44 DFO is providing a 96 hour delay for these grid closures due to the weather forecast. All gear affected by this notice must be removed from the closed area before the time of closure. As first offers out of the gulf were just trickling in over the last 2 weeks , prices had continued to decline and were expected to continue even further once Newfoundland resumed. With the most recent announcement they have taken a quick uptick and depending on the whale migration, could increase more. However it has also been noted that the current areas effected are not that big of zones for fishing but this will need to be a wait and see scenario. Regardless, initial costs for the 2020 season are at a significant reduction compared to 2019 on all sizes. Offers to date have been reduced but the volume was not there yet to sell programs as the gulf only resumed harvest two weeks ago. As a good portion of crab is typically sold to FS many processors are scared to hold inventory as the expectation for FS to recover and restaurants to open (at limited capacity) is a guess at this time. That and the closure of buffets and casino business has caused a sever lack of demand. IF the right whale issue does not balloon and is short lived not affecting other regions, there is still hope that with the onset of the Newfi season there could be some further reduction of cost...This is a huge IF as if this issue does get worse there could be a shut down of most of the gulf fishery. Conversely on the other end...with the delayed start of the seasons there is a potential of soft shell issues to appear by late July and than cause the fishery to wrap up early as well. In summary, no one can fully predict the outcome if this season at this time, we can only speculate and make decisions based on current needs of the customers.
Currently the seafood sector reports that king crab is selling well in retail with very minimal sales in Food Service as expected. Right now the market is stable and larger size king crab remains somewhat limited and tight. Costs have leveled off on current inventory. Some processors indicate costs will firm by the summer.
Seafood | Scallops
Scallop costs have up ticked some for April as inventory has tightened prior to the new season arrivals. Costs typically increase month over month until the season resumes come spring. However , due to COVID 19 and the fact that the Food Service sector has been greatly challenged many expect there could be a significant downturn as the boats get fully underway. The quota has changed drastically with reduction of closed areas and the reduction of NEast closed area fishing as well. In general: 17-20% reduction in total catch = forecast is about 10 million # less than 2019. Nantucket “deep” south = forecast is 6.2 million lbs which is currently shucking meat counts of 40/50s and smaller – so this may see a full effort from the boats depending on price or many may decide not to fish due to the increased work, days at sea as this takes a lot more effort for 1lb of scallops, puts added pressure on the guys on the boats, and takes double the time. Boats will fish but its another 6 million lbs that WILL NOT BE 10/20s and bigger reducing total availability of these larger sizes. Less trips, less money for 40/50s , more southern/mid-Atlantic scallops ( that have reduced quality in summer, and possible parasites in south areas) will potentially see many boats spread their fishing out and lower the landings in summer that can drive the auction lower. In general movement has been minimal
With China getting back up and running we are now seeing production plants are running at around 60%. The problem that China is now facing is the lack of Demand due to the COVID-19 impact around the world. We were able to pull our orders ahead for Lent which provided a healthy inventory to get us into the Spring / Early Summer. Pricing could soften as we see the markets begin to open and new product arrives in the market.
Seafood | Salmon
A Mild winter in Norway has given good growth and should provide steady volume throughout the year with estimated peak harvesting volume in Sep/Oct/Nov. The volume to Asia has been increasing again after slow growth during Covid-19, and although the volume to Europe is still behind it is expected to increase as restrictions decrease (restaurants have started opening). The volume to US is still behind, but this is largely because there is limited air cargo space for fresh Head-On-Gutted. Estimate increase in cargo capacity in 2H. The Price to farmers has been very stable at around NOK 50/Kg (or slightly below) for the 3-6 Kg sizes, and the larger sizes have actually been cheaper (unusual, as they are preferred by fresh customers in Asia). Prices are well below last years prices at the same time. With increased volume in late summer/early fall we should see further downward pressure on prices to farmer, but the big question will be exchange rate. The USD is currently strong against the NOK, but it is very likely we will see the NOK strengthening against USD when challenges with Covid-19 ease come fall. So although lower raw material cost is expected in the fall, this can be somewhat offset by a stronger NOK, but it will all depend on how much change we see from exchange rate. So prices in 2020 will be at a lower cost then 2019 and there are clearly good buying opportunities, but the forecast for 2021 does predict increased prices from 2020 levels as demand will again match or out-pace supply. Another question here in the US is also what will happen with other protein supply (meat/poultry) as we are seeing shortages already with demand far outstripping supply. How long will this last? Will customer be looking for other sources of protein (seafood) as a result of this? What will this do to demand on seafood? Only time will tell. As a finaml note for Norwegian salmon all portions 4,6 and 8 and E trim fillets are vacuum packed and can be sold as eaches for retail customers.
Travel restrictions imposed by the Chilean government have impeded the country's capacity to export salmon to the United States for fresh. Internally Chile also announced the ban of transport trucks for farmed salmon on the Island of Chiloe as there was concern over the spread of the virus via truckers. But even as supply tightens, a massive drop in foodservice demand as the COVID-19 pandemic widens, has prompted mass closings of bars and restaurants and caused US salmon prices to fall, not rise. While US foodservice demand for salmon has dropped, the picture is not all gloomy, as the retail sector has been booming and has taken up some of the slack.