Market Updates for July 17, 2020

Section Type

Dairy | Eggs

Large - Lower

Medium - Lower

Small - Flat

Retail demand mixed. Supplies of extra large and large well balanced and held confidently. Market steady to full steady.

 

 

Dairy | Butter

Cream inventories are continuing to tighten as ice cream production starts to compete for raw material and hits it's production stride. Retail sales show signs of decline, but overall are still healthy. With restaurants reopening food service distributors are still coming back to the buying table, but orders are still below expectations. 

 

Butter: Lower

 

Dairy | Cheese

Barrel - Higher

Block - Higher

Cheese stocks have tightened significantly, especially for fresh made products. Combination of retail orders, food service buyers, & the new government purchases that have been secured by companies. As all this demand is increasing milk demand is falling, both for seasonal and imposed restrictions reasons. The big question isn't if the cheese market will settle just when. 

Grocery & Bakery | Oil

Increased demand from China and declining soy oil stocks are helping push the market higher. Soy oil prices are up about 17% from the lows we saw in the late spring. Given food service demand has been a fraction of the norm, it tells us that processors were successful in shifting their oil production to biodiesel processors. Longer term, the biodiesel processors are only going to purchase their needs up to the mandated amount for the government subsidy, so a return to normal demands from the food service side will be critical or we could see this market run out of gas as we get closer to the fall harvest. Another developing story is the sudden tight supplies on canola oil. A plant explosion at Viterra's Quebec facility (the largest in Eastern Canada) has left many U.S. packers running short for at least a few weeks. There has also been a demand shift to canola given the recent spikes in corn and peanut oil prices. Viterra is supposed to get back to running this week, so assuming that happens we should see supplies recover within three weeks, albeit, still at tighter than normal levels.

Grocery & Bakery | Flour

Wheat futures dipped to a twelve-month low, following a collapse in corn futures that declined to below $3.20/bushel. Since the drop, prices have bounced back mildly. Crop condition ratings have been good and planned production come harvest time is expected to continue the trend of having ample supply. If good weather persists then protein premiums should likely deteriorate as we get closer to the harvest. Most buyers are hand-to-mouth, anticipating further price relief come September.

Grocery & Bakery | Sugar

New crop pricing continues to soften after Mexican imports into the US were raised by 140,000 tons, coming from a larger crop than originally expected. An 85,000 ton increase in domestic production also added pressure. Beet sugar production is still unknown, with expectations for a stronger crop than last year but below the five year norm.

Meat | Pork

Market conditions are providing steady to lower prices for most cuts, expectations are for prices to decline slightly after the holidays. Ribs are steady to higher heading into the holiday with potential relief after the holidays. Freezer reports indicate the inventory of back ribs is lower that expected for this time of the year. Every thing leads to plenty of pork at decent prices. 

Overall production is higher than this time last year. 

Meat | Beef

Production at packer level continues to be consistently above last year during the same period by 1-2% each week. Cattle supply continues to be abundant. However, fourth quarter could see some back to normal levels as cattle placed on feed has be low over the last few months and harvest has been high each week. Fill rate continues to improve each week with a few cuts still slacking mainly due to inconsistent demands over the last month. Both food service and retail demand has been better than expected so expect further downside to the cutout to be minimal. Ribeyes and strips are working to find their bottom along with tenderloins. Sirloins found a bottom and are now running flat to slightly higher. Chucks and end cuts are flat, expect to see these bounce around in the current range. Grinds are flat to slightly higher and would expect to see more movement over the coming weeks.

 

Meat | Pork

Harvest levels remain strong, 7% higher than last year. The seasonal trend for pork in mid to late July is for prices to soften as demand declines. Spare ribs have declined by $.10/lb, butts and loins are steady. Belly prices are up slightly. Trim prices are higher as processors are working to fill the demand for hot dogs, sausage and brats. Items requiring further processing and labor are being shorted as the labor situation has not approved as planned. 

Meat | Beef

Harvest continues to be strong as the supply of cattle is still weighing heavy on packers. The main goal is to keep plants running full speed as packers continue to make record margins are every pound they sell. Fill rate from suppliers continues to improve; grinds could become an issue if we see demand pick up from the retail sector. Price points on grinds along with many other cuts are becoming attractive for retail to setup features. More news of possible shutdowns is starting to become a reality. We could experience another volatile market over the coming months if COVID spread continues. Currently, we are seeing strong demand for ground beef as many restaurants have narrowed menus towards burgers and sandwiches. Expect to see flat to slightly higher pricing on grinds over the next few weeks. Middle meats continue to struggle and have taken another small step down this week. We should see middle meats flatten out and get some attention soon. End cuts and briskets are mainly flat and should continue to stay flat.

Poultry | Chicken

We are now seeing additional production come to the market with the number of birds being processed increasing back to pre covid levels.  The primary increase has been in the medium and jumbo bird weight ranges. The additional supply of jumbo breast meat has taken the jumbo breast meat market down.  We can expect to see additional downward pressure on the jumbo breast next week.  The increased production has also put additional jumbo wings and tenders on the market, but we still seeing those increase at a little slower rate.  Even with the extra supply the wing and tender markets are expected to remain strong.  We continue to hear of labor challenges with some plants as many employees remain fearful of returning to work or continue to have the government support.  The labor challenges have really varied with the different processors, but most remain with challenges. The demand for products continues to remain a challenge from week to week as the return to pre covid demands just does not seem to be there.  The retail side of things remains strong as many are just continue to avoid the Foodservice restaurants that are open with limited capacity.  Exports have been slow and there has not been much happening to see a change there.  

 

Breast and Tenders:

The Jumbo Breast Meat market continued to come off last week and has come down to $1.05 with plenty of product available and hearing of trades well below this market level.  The select and medium markets have remained relatively flat.  The select market is currently at $2.41 and medium market is trading at $1.63/lb.  Line run Breast Tenders have seen an increase and are currently at $1.42/lb. 

Wings:

The market for wings has continued to stay very tight and does not seem to be changing with the additional supply.  Jumbo whole wings have taken a slight increase and are now at  $1.64/lb and medium have climbed to $1.94/lb while the small wings continue to climb and are at another all time high of $2.19/lb.  Even though we are expecting to see some additional production the expectation for wings is to remain in tight supply especially on the smaller wings as the increase in production has been on the medium and jumbo birds.   

Seafood | Finfish

Cod, Alaskan 1x:

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.    Currently Limson has plenty of supply in the 8/16 oz size. 

Cod, Atlantic 1x:

For Russian and Norwegian Cod Per Undercurrent News:  The International Council for exploration of the Sea (ICES)  has recommended that the cod catches in the Berents Seas are set at 885,600 MT in 2021.  ICES advised the cod quota in the Beren's Sea for 2021 be set at a level 28% higher than the level that was advised last June for 2020 of 689, 672, MT .  The 1x frozen Atl. cod loins from Canada are now being offered from the new 2020 season.  Costs have been confirmed to be close to the same as last season.  Canadian Cod is harvested in three general areas in northeast Canada that impact our supply.   2J 3KL (Northeast Coast).2020 total removals were recently announced at 12,350mt - same level as in 2019.  However only 10,000mt was caught  in 2019 which effectively means the fishermen have access to an additional 2,350mt in 2020.   3Ps (Southcoast). 2020 TAC was cut 55% from 2019.  Limson's processor left 1,350mt of Canadian* fish in the water last year so the effective cut is more like 30% for Canada.* the cod quota in this area is shared between Canada (84.4%) and France (15.6%).  4RS 3Pn (West Coast) 2020 TAC is 1,000mt - same level as 2019.  

 

Cod, Atlantic 2x:

Pricing has started to rise as orders for the holidays are being placed which is causing packers to negotiating for raw material. Inventory levels remain healthy. 

Cod, Pacific 2x:

Pricing has started to rise as orders for the holidays are being placed which is causing packers to negotiating for raw material. Inventory levels remain healthy. 

Pollock, Atlantic 1x:

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 are more limited.  As the B season resumed at the end of June,  first reports are that the fish are smaller only producing 2-4  oz sized fillets. The hope is as they grow out at best to the  900 gram size, this  will increase the availability of the 4/6 oz fillets.  For now Limson has product and does not expect any interruption in supply.  

Pollock, Pacific 2x:

Inventory will remain strong through the Summer and into the fall. Will see pricing soften through the summer months until packers overseas begin to receive holiday / lent orders. 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.

Haddock:

Per Undercurrent News:  For haddock ICES is advising the TAC be lifted 8% for 2021 to 232,537 MT relative to the advise of 215,000 MT for 2020.  Norway and Russia followed Ices advise for it's 2020 quota setting it at 215,000MT. 

Plants overseas are currently looking to negotiate on prices as they look to get product moving.

 

 

Domestic Lake Fish:

As we progress through the summer season the landings of perch have been minimal at best.  Originally there was concern that this market could crash with no demand but to date the fishing is so poor on this species they cannot catch enough to make a difference.   Costs remain elevated and taking walleye with perch purchases is still an issue when they are available for sale.      For now walleye is plentiful and costs are softening especially on  the larger sizes.     The availability of smelt is limited due to an overall shortage of the product.  The season for smelt  was supposed to have been underway but to date the fish are so small they cannot be eviserated for sales,  nor is the volume significant enough to supply current demand.    We are hoping to be able to obtain more product if possible but at the moment the outlook on supply is bleak    Prime fishing was missed for white perch due to the virus causing there to be a shortage of the product.  White perch is not expected to be available until late summer when fishing picks back up.  New season whitefish is expected to be available shortly but costs have not been confirmed.  

Euro Lake Fish & Zander:

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 adequate for reduced Food Service sales.  For late summer, fall orders we did expect a softening on cost purely due to the current exchange but that was short lived as of late with the dollar adjusting recently and increasing cost of goods.    Note this is a lower cost option to the domestic  product  and eats comparatively.  President Trump has also announced added tariffs out of the EU on certain key items. Euro Lakefish has not been added to the list at this time and is currently exempt

Mahi Mahi:

Mahi Mahi has been secured from the 2019 fall season and Limson has supply on all sizes to get us until the next season resumes out of S America.  .   Costs remain stable for limited demand in Food Service.   To date there has been minimal supply out of Asia due to the virus.   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.  

Frozen Tuna, Swordfish :

As of late costs have remained stable with a slight uptick on demand.  Limson has plenty of supply on all sizes and offerings from steaks to saku to swordfish all in IVP packaging for retail sales as well.  Vietnam – 50/60% of the fleet has gone out to sea but the rest are staying in port because prices are low compared to last season.  If the  fishermen continue to stay in port  and there is a slow start to the season , the raw material could get short as we move into February.   Indonesia - The main tuna season is currently underway for this region.  However, since Food Service is not purchasing any Saku from the loins, all are currently being sold as steaks limiting any anticipated price drops.   SWORDFISH  Asia - Sword is a bycatch of Tuna. Since few boats are going out for Tuna, raw material for Sword is very tight so prices remain the same.  Ecuador - COVID-19 is an issue here so catches are limited.  

 

 

Swai:

In Vietnam the government has eased social distancing in most cities. The suppliers teams are back to work full time with minimal restrictions. Small businesses have reopened and have continued to move in the right direction. Raw material (RM) pricing is believed to be at the bottom as farmers have been losing money with current pricing. Some reduced farming quantity or switch to farm a different species, which will lead to RM shortage later this year.  On top of that, farmers were reluctant to start new crops due to high level of uncertainty in global demand since the beginning of the pandemic. Therefore, shortage will most likely occur in Q3 and Q4 this year and might even last until next year if farmers' mentality does not change.  Right now, farmers refuse to drop RM pricing further as they are waiting for China's recovery from COVID-19. In fact, demand from China showed minor sign of recovery this month. We forecast its demand will be back to its normal level by late summer. Once it happens, RM price most likely will face upward pressure.

Tilapia:

Generally prices have remained stable most of the year so far. However raw material pricing/cost was also stable up until about May. Now for the past few month you have seen an increased competition for raw material. The reasons for this are due to high demand for many months at retail. Where they prefer 2-5 oz or 3-5 oz traditionally over the larger sizes. Larger sizes tending to be preferred by restaurants. Focus by some customers and plants on producing 4 oz and below due to the tariff exclusion.This means that plants are having to pay an ever-increasing premium to secure enough raw material from the farms to meet orders. Farmers do not make much profit on smaller sizes. So they prefer to wait until the fish grow bigger before harvest. Now packers and customers need the farmers to harvest sooner to get more smaller sizes. Farmers must be incentivized to do that. Packers are competing for the farm supply. At the same time that would of course mean there’s less available of the larger sizes if farmers are having to harvest sooner. Overall import volume reports from January through June saw a 25% increase over 2019 with February being high, March very low and then April, May & June back up. This was mainly driven by the retail demand for frozen seafood. Food service demand is starting to slowly pick up, though how fast has varied by region of the country, where in the re-opening phases. Due to the overall demand in retail and pick up in food service you will see prices start to rise until demand Stabilizes.

Seafood | Shrimp

Per Undercurrent News: After months of anticipation that the coronavirus pandemic would cause US shrimp imports to take a fall, it happen in May per the National Oceanic and Atmospheric Administration. The US imported 37,961 metric tons of shrimp which was 29% less than April 2020 and 28% less than May of 2019. In fact, the volume was so low that it set a seven-year record low. India for years has been the top importer to the US with typically about 40% of the total import but only sent 8,560t which is a 58% drop in volume vs May of 2019. Experts expect to see a drop in overall production output out of India by 30% for 2020.

India and Indonesia have both struggled with the availability of workers and raw material along with getting Brood Stock as international flights are very limited right now. 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 will have a larger impact come late summer into fall as this will limit the inventory availability which would cause increased pricing. Current shortages in the market are easy peel, cooked shrimp and smaller sizes on raw PD and PD tail-on as we have seen an uptick in retail and delayed shipments from overseas. 

 

Imported Black Tiger:

Production out of Indonesia has been slow and steady without any shut downs. The packers are backed up with excessive orders(for over 6 months in most cases) and most buyers have experienced extensive shipment delays causing current shrimp shortages in the US. Raw material prices there are escalating even at much higher pace than in India and packers are taking major losses as order dates are back from January and February 2020. Packers are also handicapped and are not in position to take any new orders until they put some dent in their existing order book. Indonesia will continue to struggle through late 2020 when their season starts in Dec. However, they are expected to continue shipping at a steady pace.

Imported White:

We will see a rising market through summer and into fall as shortages continue to develop with the uptick in demand for both retail and food service. Normal harvesting has been disrupted as farmers panic harvested in March and April. Many farmers have reseeded but at 40-50% due to limited raw material. The next harvest is expected in September with a limited crop availability. Presently there is raw material available, but the cost is escalating as packers are bidding each other out in a race to fill their existing orders as their margin are shrinking.

Latin White:

Prices have firmed due to limited supply, 

Domestic White & Brown:

The spring season started mid April to early May but was 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. Retail continues to spike on 16/20 and 21/25 which has driven up pricing on those sizes across the market. Louisiana inshore is still closed to protect juvenile white shrimp.  The May/June production of small peeled was the lowest it has been in over 30 years, primarily due to lack of shrimping effort.  The next opportunity for small peeled will be this fall with whites. Texas waters open to shrimping mid July. The big boats that have been working off-shore La and AL have begun to come in with a mix of large white headless, brown headless, and large head-on for peeling (that would yield 31/35-61/70 peeled). Boat prices have steadily risen over the last  several weeks on all raw material  due to current inventory shortages, and demand from retail and the gradual opening of foodservice exceeding current supply and production.  This is expected to last into August.

Domestic PUD:

Smaller PUDs are now very tight in the market and driving up prices until the current season brings in new landings. We have seen a delay on production as only 25-30% of boats have gone out in recent weeks. We should see more availability come August as the fishing in Texas waters open up for shrimping mid July. This will put increased pressure on the East Coast to get more boats in the water.

Domestic Rock & Pink:

Domestic rock production typically starts on the Atlantic coast  of Florida toward the end of July.  At the moment there is no concentrated effort on rock, only small incidental catches of a few rock shrimp along with brown shrimp.   It takes a long time right now to accumulate enough rock raw material to process.Targeted Domestic rock production typically runs from Late July through December.  Mexican rock production in the southern gulf starts later in the year (typically November)  and runs through the following spring. At the moment there is really no existing inventory of shell on or P&D rock.  It will be August before we see some availability.

Seafood | Lobster

North Atlantic:

The lobster market has been heavily impacted by COVID-19.  Most items  (tails and meat) in the past were heavy in Food Service so demand has dropped off significantly in this sector.  As a result prices have been reduced  over the last few weeks but with minimal demand it has had limited affect. The spring lobster fishery has now come to a close out of Canada. It also has been reported that landings have dropped off recently.   The fisherman were also noted to limit the catch being brought to the wharf due to the lower production capacity in the plants this year due to Covid-19 restrictions.  With very active demand from retail since the start of the season, prices have started to strengthen just recently as we now enter the Maine season    There has been some increase in soft shell lobsters but the bigf "if" at the moment is where pricing will land as they ramp up harvest for end of July and August.  All that is being produced currently is being sold, as retail has been far and above FS sales this year.  

Warm Water:

The WW tail market as for the N Atl market has decreased in demand for the Food Service sector.  To date we have supply on all sizes as the new season arrivals are due later this summer,  but the price offering has not been settled upon.  Reports indicate the plants are social distancing to maintain production and that Brazil and Belize are not having any issues getting product processed.  This year they seem to mirroring the N Atl Market to capture their share of the market based on cost.  However... there has been increased demand in the retail sector that has driven movement.  As travel, cruises etc have been limited and the big parks remain closed or limited , many have chosen to use their disposable income on what in other years has been pricy product.  Enhanced unemployment ,  PPP dollars etc has made this market extremely active and is making up for losses in Food Service sales.  

Seafood | Crab

Snow Crab:

The snow crab fishery season has drawn to a close out of the Gulf  leaving at best 10 % of the quota in the water, with prices still increasing almost daily.  We have seen record prices across the board and the end is nowhere in sight as the availability of crab will begin to decline.  What has made this season more difficult to comprehend is the majority of end-users - foodservice - have for the most part been a non-factor when it comes to purchases and with re-openings just beginning, it will take some time for them to get their bearings.  This has left the retail sector as the bulwark when it comes to selling crab, not only equal to what they have done in the past but to compensate for foodservice as well.    Suppliers are having difficulty maintaining any sort of inventory with product flying out the doors as soon as it arrives.  Pricing does not appear to be a deterrent as costs have risen sharply    As for Newfoundland/Labrador, it is expected that the entire quota for this fishery as well as Nova Scotia will be harvested.  The only problem with this fishery is not the catch but the processing end due to COVID-19 which is creating the supply issue from Canada to Boston.       

King Crab:

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 starting to tighten some on the  larger size king crab as these sizes are  limited as of late and increasing in cost.  Some processors  indicate costs will be firmer still  through  the summer.  

Red Swimming Crab:
Blue Swimming Crab:

Seafood | Scallops

Due to  COVID 19 and the fact that the Food Service sector has been greatly challenged many expect  there could be a significant downturn on cost  as the boats got fully underway but as of late this train of thought is uncertain for the dry products  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.  Quality scallops from northern mid, open areas and the Northeast limited fishing areas have been in high demand and have higher boat price average than the southern areas due to quality and size mix. All larger scallops are short and will stay firm for year and more than likely thru 2021 due to fishing area rotation and stock size.  Retail / Club – demand is up 30-40% which is putting pressure on buyers to take positions now as there will not be enough to fill demand later in the  year and prices will more than likely firm specifically on the 20-30 ct size. Quota is cut 20% on paper but, fishing is spreading out, small 20-30=40/50s will also be another 15-20% of catch further reducing the prime demand sizes

Chinese Flounder and Ocean Perch:

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

Norwegian Salmon:

The Norwegian Salmon industry has been operating during the pandemic, and although volume is down the pricing affected the large fish (6+ Kg) the most as this was for Asian markets. . The food service industry has been heavily impacted as we know, but retail business picked up a lot of this volume and as such kept harvesting and production moving. We are not sure  how all the producers will be handling the summer, but plan on them  shutting down plants for maintenance and limit harvesting as usual during vacation (July-August) period.  With a mild winter, less harvesting this later winter and early spring we would think that we will see more volume pushed towards late summer and/or fall which normally will lead to pressure on prices, and more than the usual fall pressure. The big farmers might try to pace the volume as they usually do not want to release everything in a short timespan as that will lead to total market crash. But the biggest question is exchange rate, and we think we will see a strengthening of the NOK versus the USD. The Norwegian Bank has been buying up the NOK and larger investment companies have noticed as well and think  the NOK is undervalued. For now costs remain stable with adequate supply   

Chilean Salmon:

As supply has become more available  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.