Market Updates for July 24, 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 - Lower

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 | Soybean Oil

Palm oil markets have been firm due to excessive rains and labor shortages. Continued support in palm markets (the world's most widely used cooking oil) will lend to a bullish narrative for soy oil. China is backfilling their canola supplies after a long political battle with Canada has run their supplies tighter. Canola oil basis has in turned become firmer given the higher crush margins with the additional demand. This helps offset some of the pressure we've seen with higher seed costs. Longer term, there is a scenario where vegetable markets continue to climb higher to levels not seen since late-2017 (approximately 15% higher than today's values) but with so many economic variables at risk with the impacts only budget buyers appear to be taking extended positions at this time. 

Meat | Pork

Harvest levels are forecast to be 8% higher this week than the same time last week, labor continues to be a challenge for some plants. These plants are producing less further processed items than they did prior to Covid. There is evidence that market ready hogs are moving through the plants and the speculation that there are excess market ready hogs due to the Covid slow down are inaccurate. Plants paid higher prices for hogs this week signaling market ready hogs are not readily available. This week, packers indicate that they do not have extra product to sell for weekend shipments, coupled with low prices and a quick increase in boneless loins prices it looks like retailers will feature pork as we move into August. Pork butt prices are down slightly and spare ribs prices fell quickly after the 4th. Hams have garnered export interest and prices are up by approximately 15%.

Meat | Beef

Cattle production continues to be steady to slightly higher compared to year ago levels. Cattle inventories continue to be heavy. Look for tighter supply as we move into fourth quarter. Fill rate continues to get better as packers get back to a somewhat normal routine. Demands are starting to shift from foodservice to retail as some areas of the country are experiencing restaurant restrictions and further shutdowns. If shutdowns continue expect to see further downside to the cutout as we move into August. Middle meats are steady but should see a bit more downside. Retail should be taking advantage of middle meat prices for Labor Day ads. End cuts will be supported by ground beef prices and should not drop further; unless we see grinds fall further. Briskets should see a bit of a lift as retail and foodservice are looking to book packages. Grinds are flat to lower.

 

Poultry | Chicken

We saw a slight reduction in the number of birds being processed last week, but we are much closer to the Pre-covid levels than the numbers that were being processed during the cut backs for Covid.  The primary increase has remained in the medium and jumbo bird weight ranges. The interesting change that was experienced this week is seeing the Jumbo breast market gain some strength while the medium and select breast markets actually came off a little.  In trying to understand this it appears that there are plants that have been experiencing labor challenges again.  These labor challenges lead to less of the birds being able to be deboned.  This also helps explain the drop off that was experienced with the bone in breasts and the levels they are trading at.  They have been able to get the birds processed at the plants, but are not able to get them further processed into boneless offerings.  Wings and tenders have continued to remain in a very good position although the small wings came off a penny for the first time since April.  It is expected that wings and tenders will remain at the levels we have seen recently without any signs of weakness in the near future.    The labor issues that seemed to have quieted down are starting to get brought up again as you hear of the number of cases in the Southeast starting to increase.  If the government support ends as is currently expected there is a chance we could see some of the individuals that have chose to remain safe at home return to the plants.  This is something we will have to keep a watch on.  The Foodservice demand remains unknown with the discussion of states cutting back on the opening of restaurants or reducing the occupancy that is allowed.  The retail side continues to perform well and the demand there holds steady.  Another area that is getting some discussion is exports.  With leg quarters hitting all time lows the export market is starting to look like a home for some dark meat.    

 

Breast and Tenders:

The Jumbo Breast Meat market surprisingly saw some increase this week and increased to $1.09 and talk that we could experience more strength next week.  The trading in back of the market quickly disappeared and is not expected next week.  The select and medium markets for the first time in weeks actually came off some.  The select market is currently at $2.36 which is a $.05/lb drop and medium market is trading at $1.62/lb which is just a $.01/lb drop.  Line run Breast Tenders have seen another week of increase and are currently at $1.46/lb, so up $.04/lb from last week. 

Wings:

The market for wings has continued to stay very tight and looks like they will remain in a solid position.  Jumbo whole wings have taken a $.01/lb increase and are now at  $1.65/lb and medium have climbed $.02/lb to $1.96/lb while the small wings came off $.02/lb for the first time since April and are at $2.17/lb.  The expectation for wings is to remain in tight supply especially on the smaller wings.  The slight decrease this week seems to be more from the unknown Foodservice demand.  

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:

Vietnam feels they have the Corona virus completely under control as they have not have any new infected cases in the past 100 days. Therefore, our pangasius supply chain fortunately is not disrupted throughout this unprecedented period. Since May, global markets showed some recovery signals as countries started to re-open and loosen their social distancing status. Although there is a concern of the 2nd wave of COVID-19 this fall. Raw material remains at the bottom level since February. As farmers reduced farming volume early this year due to the uncertainties caused by COVID-19. Pangasius supply is expected to be short in Q4 this year and once this 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 months 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 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 major 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 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.

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 have opened up for 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 through August.

Domestic PUD:

Smaller PUDs (110-200ct) have becoming unavailable in the market which is driving up prices until the current season brings in new landings. We have seen a delay on production as only 35-40% 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:

China production plants are still running at reduced volume (70%) as there is still a lack of demand around the world because of the Covid-19 impact. Pricing will most likely remain soft into the fall until suppliers have placed orders for the Holidays / Lent. Once this happen we may face an upward pressure on pricing.

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. Note recently there has been some disease issues for three big salmon producers in Norway where to mitigate further losses they have harvested out an abundance of smaller fish. This in conjunction with summer vacations at the plants, less demand overall and the exchange factor, have led to a brief blip on costs at lower levels overseas.  But the biggest question remains  the exchange rate into the fall, and we think we will see a strengthening of the NOK versus the USD but cannot be 100 % certain as a lot  can happen in an election year .  

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.