Market Updates for March 12, 2021

Section Type

Dairy | Eggs

Large -Higher

Medium -Higher

Small - Higher

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

 

 

Dairy | Butter

Butter-Higher

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. 

Dairy | Cheese

Barrel -Higher

Block -Higher

The CME Block market responded to the governments release of another billion dollars in the USDA Box program.  Speculators feel this will have an effect on the markets for the short term but will not be sustainable for the long term.

 

 

Grocery & Bakery | Vegetable Oils

Vegetable oil prices are continuing to surge higher, and have now increased over 30% since the beginning of the year. The reason being that the ending stocks available this year from last fall's crops have been drawn down significantly to historically low levels.  In the winter the U.S. sold unprecedented volumes of soybeans to China, and now we are seeing the U.S. biodiesel sector come in as they look fill new capacity that is coming online. This is limiting the amount available on the spot markets, driving large basis premiums. Demand rationing is beginning to take place, as a result. The market has been running upward hard without any setbacks for weeks. Technically we are due to see some sort of market correction but there's no telling when that will come. Two potential influencers will be the South American crop coming to market and the release of the U.S. planting intentions -- both to come near the end of the month.

Meat | Pork

Harvest levels are forecast to be lower this week and 3% lower than this time last year. Fewer hogs and labor issues factor in the decrease. At least one packer announced they are producing only 4 days per week due to lack of hogs.  

The pork cutout is 40% higher this year as this time than last year. Butts are higher this week by 7-10 cents and expected to increase by more that $.10 in the next 2 months, spare ribs are steady slightly higher and loin price are bouncing off their lows. 

Belly prices continue to increase, however at a modest pace compared to the past 2 weeks.   

Increased food service demand and confidence is adding to price increases for pork. 

 

 

 

 

 

 

Meat | Beef

Weather-related issues both with producers and consumers have the boxed beef market in an interesting position. Harvest was down 100K last week from the average weekly runs all due to weather-related issues. The excess market-ready cattle will need to be pushed to production over the next few weeks increasing supply during a time when we historically experience reduced demand before the spring grilling season. We have yet to see the market react due to short boxed beef, but it will come soon and probably be a good portion of March as prices are too high for this time of year and increased supply will push prices lower. Middle meats have performed well on retail ads, however, high prices will put pressure on ad placements at retail and foodservice will follow. Look for opportunities on middle meats over the next few weeks. Grinds took a big dive after Super Bowl but are now up again due to short supply caused by last week’s weather events. Expect to see some softness until later into March. End cuts should come off some over the next few weeks and stay lower through most of the spring. Expect lower levels as we move into March. Thin meats and briskets should see good demand and higher prices as we move into March. There are still many large customers shopping brisket packages for the spring business.

Poultry | Chicken

The chicken complex continues to see some challenges as it relates to labor.  Many feel that as the government continue to support workers that have been impacted by Covid that the industry will face a shortage of people willing to work in the industry.  The other challenge that has been talked about is the impact that freight is playing on the cost.  As trucks become tighter the freight rates are being driven up along with the rising cost of fuel.  These are just a couple of industry challenges that are having an impact on the costs that we are currently seeing.  The production numbers have come back down in line with where we were at a year ago versus the spike that was experienced while trying to catch up from the weather related loss of production.  The total production was just over 172 million with around 55% coming in the larger weight ranges.  This has helped us see Breast Meat prices remain relatively stable.  There has been some discussion of more product available at the front of the week, possibly from weekend production catching up on extra birds.  The wing market just can not seem to get caught up and the demand continue to push pricing up to all new record levels.  There are reports of wings now being sold over $3 per pound.  With March Madness getting ready to start and Foodservice opening up it is expected to just put more pressure on a market that is already in short supply.  Tenders have stayed in good balance once again.  The export and retail markets have remained strong for the dark meat and have kept pricing there from decreasing.            

Breast and Tenders:

The Jumbo Breast Meat market remained flat all week and is continuing to trade at $.1.46/lb.  The select  and medium markets have also stayed at $2.23/lb and $1.68/lb for the week along with Line run Breast Tenders $1.83/lb.      

Wings:

Wings continue to climb and and continue to set records and all sizes.  The Jumbo whole wings have increased $.02/lb to $2.62/lb and the medium whole wings also saw a $.02/lb increase to $2.60/lb.  The small wings followed with another $.02/lb increase to their new record high of $2.69/lb.                     

Seafood | Finfish

Cod, Alaskan 1x:

Per Undercurrent News:  The North Pacific Fishery Management Council announced that it had increased the 2021 TAC for Pacific cod in the Gulf of Alaska to 17,321 MT, allowing for a small directed fishery this year.  For the next two years, scientists have also advised acceptable biological catches for Pacific cod in the gulf of 23,627 t and 38,141 t in 2021 and 2022 respectively.  This is worth noting as TAC levels can only be set equal to or below the levels of  ABC's recommended by scientists.  Note the Groundfish Forum this last fall also stated that the global catches would decline by 7.8% to 365,000t led by a decline in US and Canadian landings from 160,0000 to 119,000 t  which based on voume alone have a bigger impact on the fishery.   With that said , to date the cod catches have been limited in Alaska and costs have been rising. Increased COVID cases resulted in plant shut downs for 14 days which also affected the  start of the pollock season then carried over to the cod fishery as well. Mandatory quarantine has really impacted the supply putting pressure on costs  for the 1x frozen market.  Expect prices to be elevated until the fall and new season supply.  * 

Cod, Atlantic 1x:

Russian cod is also bearing the weight of the reduction of cod out of Alaska.  Currently the large 16-32 oz fillets have been short on the market and the next best option will be the 8/16 oz.  Expect costs and supply for larger sizes to be an issue for the next few months   For cod out of Canada the 6 oz option will be short as the season wrapped up early with limited catches of this size.  Costs are stable currently. *

Cod, Atlantic 2x:

Pricing has risen as raw material has become tight, causing production facilities to have to wait which has caused order delays.   This in conjunction with added freight costs has increased costs overall.  To further amplify this problem we have continued to see increased port congestion once orders arrive in the US causing an additional 2-6 week delay on getting product received.   *

Cod, Pacific 2x:

The same issue as  presented for the Atlantic 2x cod has been mirrored in the P cod costs as well.  The lack of raw material out of Alaska  to Asia due to reduced quotas, increase COVID cases , barge fires etc. will continue to impact supply until the B season resumes this summer  That and short supply of raw material in Asia currently for processing, delayed containers and increased cost of freight have driven this item up in cost. For now product is short at elevated costs for both 8/16 and 16/32.  *

Pollock, Atlantic 1x:

Since the onset of the A season for Pollock in January the market has been in flux.  Coming off a deficit of supply in the fall B season many anticipated  the A season to be able to aid in product.  From the onset most processors were forced to shut down due to COVID for 14 days.  Since the length of this season is relatively short the catch has been limited.  Many are scrambling to fill orders as Lent and FS sales have caused an increased demand far and above what was anticipated due to closures.  Until the B season resumes this summer, product will remain very short with  the larger 4/6 oz product being under more duress.    Prices will be elevated.  *

Pollock, Pacific 2x:

We have seen delays on pollock being shipped as raw material on the larges sizes has become tight which has caused pricing to rise by 10%-15% since last year. Raw material will remain short through the summer. * 

Haddock:

Have seen an increase in pricing and delay on orders as large quantities of haddock have been detained in bonded warehouses. Resulting in large scale varieties (8-10, 10-12, 12-16) being short. The next batch of larger raw material is not expected to arrive until after CNY. This has affected many different packers and their ability to ship product. Effective Dec 31st at midnight 10 seafood items including frozen Haddock are set to lose their exemptions to the 25% tariff charge by the USTR. This is a cost that inevitably that will need to be passed onto consumers. Pricing is expected to remain elevated until after Chinese New year pending on what happens with COVID-19 / demand during lent and when more raw material will become readily available for packers to process. 

Domestic Lake Fish:

The fall fishery has wrapped up on Lake Erie and most fishing will not start back up until the spring.  Walleye, yellow perch, and white perch  fishing will begin mid march.  Supply on yellow perch is limited and will continue to be limited especially on the Ohio sizes.  The quota will be announced at the end of March and is predicted to 20% reduction for yellow perch while the Walleye quota is expected to increase.  Smelt will continue to be short and fishing will begin again in April. Fishing for White fish will begin in June however we do not foresee issues on supply getting through to the new season. Blue gill out of China is currently the only option to domestic and Limson has supply on these as well to get our customers through Lent. 

Euro Lake Fish & Zander:

Limson is covered on all sizes at this time but there is less inventory available overseas on the smaller 20-40 zander. We expect prices to level off as we approach the Lenten season.  

Mahi Mahi:

The late 2020 / 2021 fall season of mahi got off to a very slow start.  While most fishing began in October the landings were minimal and what was processed has gone mainly to the fresh market.  Larger fish have been harder to come by and complete orders have been harder to fill as landings out of both Peru and Ecuador have been slow with reduced catches and landings.  Costs are elevated over 2019/20 and expect these levels to increase just to secure supply as the cost for the raw material is already on a rapid rise.  

Frozen Tuna, Swordfish :

Vietnam – We’re fully into the slow season combined with poor weather out of VN.  As a result here is very little raw material, making availability extremely low and prices high. The new season started in January, and still no relief on costs . Also note that Chinese New Year affects Vietnamese output and that will be happening in February.  Indonesia –Prices and availability are steady, so most production is currently coming from Indo. . SWORDFISH Asia – Being a bycatch of Tuna, Sword is the same story as Asian Tuna. Ecuador – Most of the boats retool for the Mahi, so production will be off until around March.

Swai:

Total pangasius exports are expected to be lower than 2019 by around 25%-30% due to COVID-19. Q2 was the hardest hit on global markets due to the nationwide lockdowns. China is the number one importer of Vietnamese swai followed by the US. China is a big drive of where the market levels sit as they accounted for 40-45% of the volume out of Vietnam. China resumed pangasius purchases after re-opening in late April.  Q3.2020, the U.S. and ASEAN showed recovery signs as export values increased by 47% and 19% respectively compared to previous quarter as these countries lifted the nationwide lockdown orders and stocked up for the holidays. Raw Material price has increased by 20-25% since late Q3 due to the surge of global demand while supply shrank slightly due to COVID-19. The price is expected to remain elevated through the end of the year. Raw material is expected to recover and become stable in early 2021.

Tilapia:

Generally prices have remained stable most of the year so far. However raw material pricing/cost was also stable up until about June. Since then pricing has 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 October saw a 25% increase over 2019. This was mainly driven by the retail demand for frozen seafood. Due to the overall demand in retail and slight pick up in food service you will see elevated pricing until demand Stabilizes. Growth is expected to return to pre pandemic levels in 2021.  

Seafood | Shrimp

India, Indonesia, and Vietnam have all struggled with the availability of workers and raw material on different sizes. Earlier this fall we saw some good pricing in the market as people are trying to move off old or excess inventory. Over the last month we have seen the larger impact as there is limited inventory availability which has caused 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. Experts expect to see a drop in overall production output out of India by 30-35% for 2020. The freight market is currently short on the availability of empty containers. Out of India you have suppliers / packers that are all moving product from the west to the east as the East Coast has more availability on containers. This have created logistical issues as certain borders between states are closed within India. If we continue to see container delays you will see production facilities start to short down as they will have no where to go with the product. This will will further impact inventory availability around the world. 

 

 

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. 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. Vietnam has been able to help take the pressure off some but is also starting to see raw material shortages on certain sizes. 

Imported White:

The 8 largest suppliers to the US have had split results in 2020. Ecuador, Indonesia, Argentina, and Vietnam all saw an increase over last year, while India, Thailand, Mexico, and China all saw a decrease compared to 2019. India has seen the largest decline but they still hold the largest market share in the US of about 36%. Currently, 2020 import numbers are about 7.5% ahead of last year which bags the question where is all of the product going. We continue to see the numbers of restaurant closure on the rise across the country. We have also seen other food service outlets reduce their purchases due to the lack of demand / business. While we are aware that retail has stepped up their purchase during the pandemic, it cannot entirely make up for the losses in foodservice. We have continued to see order delays due to raw material availability, worker availability and available containers. This has caused pricing to increase and is estimated to remain high until we head into the spring / summer harvest. On top of these issues we are seeing large delays on getting product received due to port and warehouse congestion. 

Latin White:

Prices have firmed due to limited supply with in the market. 

Domestic White & Brown:

October's landings out of the Gulf were released and were only 7.5 million pounds. These are the lowest for any October since recorded started being kept. The previous low was 10.4 millions pounds in October of 2018. The volume was 47.6% lower than the historical average of 14.3 million pounds. This brought the total for the year to 58 million pounds, which is far less than 2019's total of 69.2 million pounds for the same time period. The biggest impact has been Louisiana which has only landed 17.5 million pounds for the year, which is 632% below the prior 18 year average of 46 million pounds. This has put a lot of pressure on the domestic shrimp causing the pricing to continue to rise. Overall this puts the domestic shrimp at a disadvantage with farm raised imports. 

Domestic PUD:

At the moment peeled production is very light on all sizes, and no inventories seem to exist on 110/130 and smaller. As cold fronts continue to move down from the north the shrimp get smaller, we should see more production of 110/130-150/200 puds from late January into February. 

Domestic Rock & Pink:

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 late January before we see some availability.

Seafood | Lobster

Per Seafood News:  NOAA announced its proposed modifications to the Atlantic Large Whale Take Reduction Plan on December 30.NOAA said it is looking to “further reduce the impacts of entanglement in fishing gear on right whales in U.S. waters.” The modifications are focused on the Northeast Jonah crab and lobster trap/pot fisheries, which are responsible for roughly 93 percent of the buoy lines fished in areas where right whales appear. According to NOAA, the Atlantic Large Whale Take Reduction Team will be asked to recommend risk reduction measures for other Atlantic trap/pot and gillnet fisheries in 2021.

 

 

North Atlantic:

Due to the late start of the season and poor weather, the catch from the Nova Scotia season was limited. Fishing has wrapped up and most processors are limiting production until the spring season in May.  Demand for lobsters has increased with restaurant openings and the market is extremely tight and expected to remain firm until spring.  There is expected to be a limited supply on all sizes of tails and meat going forward, especially the CK Broken and CKL.  

Warm Water:

The market for prime size tails continues to exhibit some strength as of late. Market values at the season open fell to multi-year lows; reaching a point that seems to have created demand in the pandemic environment. Since then, the addition of tropical activity in some producing countries, and residual damage, have yielded a bit firmer market.  As of today Limson has supply on all sizes.   

Seafood | Crab

The Alaska Dept. of Fish and Game announced the 2020/2021 crab quotas .  Mostly the results confirmed industry expectations, although snow crab increases were lower than hoped.For red king crab, the precarious nature of the stock has led to a cut of 1.15 million lbs, which is 30% below the 3.8 million pounds quota set in 2019.The stock has been on a long term decline, and earlier management strategies would have completely closed the fishery.  However, in recent years ADF&G has revised some of the thresholds, so that a weak recruitment leads to lower harvest levels, but not a shut down of the entire fishery.With conservative management, the stock is neither overfished nor subject to overfishing. The allowable biological catch has declined from 6 million lbs in 2019 to 3.54 million lbs in 2020, with the TAC set well below this level at 2.648 million lbs.Russian catches of red king crab are stable, and the loss of 1.15 million pounds in Alaska quota should continue the trend of high king crab demand and pricing.For snow crab, the 2019 Alaska harvest was 34 million lbs., with a biomass projected at 368 million lbs.  Snow crab recruitment is very strong, and the projection biomass for 2020 was to grow to 610.2 million lbs, a 66% increase.However, due to the pandemic no crab trawl surveys were conducted this summer, so the TAC was set based on a continuation of trends identified in 2019. For this reason, ADF&G was more conservative increasing the TAC than the projected biomass might call for, with a 32% increase to 45 million lbs. in 2020.There will also be a small Bairdi or tanner crab fishery this year west of longitude 166 of 2.348 million lbs.  Again, there was no survey, but there has been considerable revisions to the Bairdi crab models in the last few years, and the current ABC matches that of 2017-18, when the fishery was last opened.The snow crab announcement is generally looked upon as an important market indicator for the coming year.This year, snow crab has been one of the top selling seafood products, so much so that unlike many fisheries which have seen lower values in the pandemic due to the cutback in foodservice demand, snow  crab is currently oversold, and back up to record price levels.

Snow Crab:

The snow crab fishery in CFA 23 (Nova Scotia) has been given the green light to open earlier than normal this year.  The official opening is now March 15th.  The Canadian Department of Fisheries and Oceans (DFO) and the other stakeholders are leading an effort to open crab fishing as early as possible this year.  This is based on recommendations from all stakeholders aimed at reducing the risk to northern right whales of possible gear entanglements. Since the Total Allowable Catch (TAC) for 2021 has not been approved yet, an interim TAC has been set at 25% of the 2020 TAC in order to facilitate this early opening. These interim quotas will be distributed in their respective percentage share of the CFA 23 fleet licenses.  When the final 2021 TAC has been approved the remainder of the quotas will be distributed proportionately. Although the boats can fish earlier than usual, we expect initial volumes to be low and delays are likely.  Given the current market shortages, we still see demand outstripping supply until more fishing areas can open and volumes start to increase.  We will continue to keep our customers informed with the most up-to-date information and pricing as it becomes available.*

 

 

King Crab:

As we move into fall we  find some of the most important  king  crab fisheries.  The Russian Far East, Barents Sea, and then the Alaska Red king crab seasons.  Russia will be harvesting over 26,000 M/t and supplying the Asia live market as well as the processed markets in Japan, Asia, and the U.S. With the closure or curtailment of most food service operations and on line ordering, seafood marketers this year have been challenged to find other ways to move the product.  Not many carryout restaurants serve king crab or snow crab so retail is the market of choice. The level of support at retail supermarkets and club stores for king crab and snow crab has been remarkable.  Product flew through the system and we found that 69,268,393 lbs of Canadian snow crab alone was imported during the three month period of May through July!  King crab volumes of course are much lower but also gained significant support from retail. For now costs on all sizes (Reds and Golds) have been firm and are expected to remain so through the holiday season.  Russian King Crab: The market for both red and golden Russian crab remains full steady; supplies are light for a moderate to active demand. Some still higher offers are noted. Inventories remain thin and higher priced replacement product is reported to be putting upward pricing on the market.

Red Swimming Crab:
Blue Swimming Crab:

Seafood | Scallops

Per Undercurrent News:  The average dock price paid at the seafood auction for the first two weeks of February  was 5% higher  than the average paid in January.  Prices began to rise not long after the season opened April 1st of  2020.  As of Feb 11 the fishery had landed 36.9 m of the 46.6 m lbs available.  Next years market might be even tighter as NEFMC voted to in finalize recommendations that would result in a projected 40.0 m lbs of scallops harvested between April 1, 2021 and March 31,2022, a further reduction of 23% from the current season.   

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

Imports of frozen Atlantic fillets increased when compared to the previous month 1.4 percent. In addition, on a YTD basis, imports are 25.3 percent higher. Imports from Chile increased 32.8 percent from the previous month and remains now 20.2 percent higher on a YTD basis. Imports from Norway decreased 38 percent compared to the previous month but continues to see a 20.8 percent increase on a YTD basis. We must mention that we assume this HS code includes frozen portions.

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.   With a mild winter, less harvesting in  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. Prices are supposed to move up a bit based on FishPool, but we are not sure this will be the case as there is a large number of fish still in the water. Sea lice is becoming a bigger issue with warmer water and faster growth, so that could mean more small fish being harvested which again can affect future harvesting this fall.    But the biggest question remains  the exchange rate into the fall as the USD is getting weaker and weaker.  Note per Undercurrent News :  Norwegian salmon spot prices are likely to be volatile from week to week over the next month or so as harvest volumes are expected to rise year over year.  Many expect the harvest profile for 2021 to be similar to 2020 with little growth the first half of the year with more fish during the second half.  However supply growth next year is supposed to be negative for Chile during the second half of the year.  Smolt released for harvest during the latter part of 2021 is down 26% y o y with only two more months left in the release period.    Per Undercurrent News:  Norwegian growth is expected to pick up next year, expecting Norway's Atlantic Salmon production volumes to rise by 4.2% in 2021, exceeding a national production of 1.4 million MT.  As pf late spot prices for Norwegian farmed salmon climbed to their highest levels since the fall in week 52 of 2020 according to the NASDAQ Salmon index.  The index has prices rising by 7.7% week on week in NOK terms.  This is a 9.1% increase over the past four weeks in NOK terms. 

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 had diminished some, the picture is not all gloomy, as the retail sector has been booming and has taken up some of the slack.    Note however even with the issues being reported government officials do not feel that this will affect production in Chile as they have been monitoring this closely at the plant level for some time and this industry is considered to be essential.   Per Undercurrent News:  Chilean salmon production is expected to drop by nearly 10% in 2021, according to the results of the Global Outlook on Aquaculture Leadership survey (GOAL) while other countries beside the traditional giants , look set to play a more prominent roll in the sector's growth in the coming years. The data painted a bleak picture  for Chilean salmon production next year with volumes dropping by 9.4% to close to 650,000 MT in 2021.  This comes after 2020's  6.6% volume growth , contributed to a steep oversupply and resultant price fall.   2020 is actually still a strong year by volume for the Chileans so that leads to a pretty serious price correction for 2021.  Although production growth of 5.7% is then forecast for 2022, this would still mean that the country is not anticipating to return to 2020 production levels until 2023 at the earliest.  The frozen fillet and portion markets out of Chile have been stable this month. Pricing levels for both frozen fillets and portions are very far below the three-year averages. The market undertone is currently steady to full steady with higher offers noted. In the market to this point, many participants reported a greater desire to see the fish sell fresh rather than go into the frozen market, again we will see how this begins to change over the next several weeks.