Market Updates for August 13, 2021
Dairy | Eggs
Small - No change
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.
Dairy | Cheese
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 | Frying Oil
Futures markets have been choppy driven by weather, demand for renewable diesel production and a Brazilian drought. But despite the volatility soybean oil prices are only slightly below where they peaked during the mid-summer. It is typical to see some pricing relief near the U.S. harvest. Farmers need to create space for the new crop and will provide old crop availability at a discount to entice movement. Coming off historically high pricing that peaked mid-summer, the real question is 'how low can the market move from here'? There are two forces which pulled the markets higher in 2021; record exports to China and new, large demand from a growing renewable diesel industry in the U.S. Neither of these two demand avenues look poised to back off in 2022. China will continue to buy agricultural goods to meet the requirements of the new trade agreement with the U.S. and more renewable diesel plants are scheduled to come online next year. This will, undoubtedly, create a higher floor for soybean oil. The food industry will have to continue paying up to compete with the export and automobile industries.
Grocery & Bakery | Flour
Northern spring wheat is turning in a terrible crop rating, with only 10% of it rated good-excellent, compared to 73% in 2020. With most the damage already done, high protein flour prices are expected to remain strong into 2022. Lower protein flour seems to be in much better shape, offering an opportunity for end-users to trade down where able at a considerable discount.
Grocery & Bakery | Sugar
Larger than expected production from India is helping offset the lower output from Brazil, tempering the recent rise in world sugar prices. Global supplies are smaller and should keep a firmer undertone to the market in the near-term. Domestic supplies are still tight in the spot market. The next round of fresh news will come in the fall when beet sugar harvest begins. Expect flat pricing until then, with occasional cost variances in freight.
Meat | Pork
This week's harvest is forecast to be 2.33 million head, comparable to last week. Kills have averaged 9% fewer hogs that 2020 as hogs where pushed to the market with Covid uncertainties a loss mitigation strategy used by growers. Factors such as respiratory disease, high feed costs and breeding decisions have held the harvest at these levels. 9% seems like a large reduction, however 2020 harvest levels where inflated due to Covid uncertainty.
Bone in butt and boneless butt prices are lower this week , prices will increase from here into Labor Day as demand for the holiday increases. Boneless loin prices are higher this week and will continue to increase into the holiday.
Spare ribs are higher this week, with St Louis prices steady to higher as buying for Labor Day get underway. Back ribs prices are stable to higher.
Belly prices are slightly higher this week, price could level off in the next 1-2 weeks as record prices will likely slow down demand. Shortages are possible due to labor issues and increased demand.
Meat | Beef
Harvest numbers are slightly higher than previous year's numbers as smaller cattle have dropped the production pounders per head slightly. Choice grading is starting to slip and currently running a bit below previous years’ percentage. Prime has continued to drop percentage-wise making it even more difficult to come by. Expect to see the choice/select spread to increase as we move closer to September. Logistical issues with both container ships and port warehouses have slowed the processing of imports and exports. Late August and into September should show good numbers of exports as ports and warehouses work on catching up on the backlog of orders.
The choice cutout has started to move higher, up $0.50 bouncing off the dip we had in mid-July. Demand is picking up again as prices became more realistic. Most middle meat items have started to trend higher as retail took interest and took positions in late July. Ribeyes are higher, expect to see these prices for the next few weeks with retailers booking for deep chill programs to support the holidays. Striploin and short loins have captured some retail attention and should keep support under these cuts through most of September. Briskets have been booked up by retail on forward bookings to help cover Labor Day ads with a cheap BBQ beef option, prices have shot back up. End cuts are steady to higher, holding well above historical prices for this time of year. Thin meats and labor-intensive items are steady to slightly higher across the category as labor is an issue across all beef packers and specialty cutters. Grinds have started moving already, retail has already stepped in on ground beef packages for the upcoming holiday.
Poultry | Chicken
The markets have remained relatively stable with a slight uptick on Jumbo breast meat. The medium and select breast meat markets have all remained flat for a couple of weeks now. The production levels have come off a little over the last couple weeks and there were 165 million head processed which is down about 5 million head from two weeks ago and the same as last week. The placements are remaining at a pretty consistent level, but I have heard that we may see around a 2% increase as we enter into the 4th quarter of the year. We are stay with over 50% of the birds come in the heavier weight ranges, so the total supply of meat in pounds produced is up some. The wing market has also remained flat for the Jumbo, medium and small wings for the last two weeks. I am hearing some availability of small whole fresh wings, but any IQF or frozen product is difficult to find. If you do find it the overage is pretty significant. The tenders continue to find strength and have continue to set new record level highs. The demand for tenders is expected to remain strong even at the record high prices.
The Jumbo Breast Meat market picked up some additional strength and is now trading at $1.89/lb. This seemed kind of surprising that we saw this go up as there was talk and offers in back of the market. The medium and select markets have had another week of no changes and are at $2.08/lb on the medium and $2.84/lb on the select. Line run Breast Tenders continue to set new record highs of $2.89/lb for line run tenders and $2.97/lb for select tenders.
The wing markets on all sizes once again remained unchanged for the week. Jumbo wings remained at the record high of $3.22/lb. The medium whole wings held at $2.84/lb and small wings also held to end the week at $2.94/lb. There was some availability of small wings late in the week, but not any discounting at this time.