Market Updates for August 26, 2021
Grocery & Bakery | Frying Oil
News of the EPA sending a recommendation to the White House reduce to the mandate for biofuels, was quickly followed up with a report that the EPA was actually considering changing gears and suggest increasing the mandate. This has obviously created a lot of uncertainty and the market has reacted accordingly, trading sharply lower then sharply higher, for a net-neutral shift. Looking at the operations side of things now, the industry is facing several labor challenges. First, plants are struggling to get enough workers to come in and run things efficiently. Second, the country has a severe driver shortage (note: almost all veg oil is still delivered by trucks!) Looking forward, the macro picture really hasn't changed much. The biggest factor will be demand for renewable diesel. As that demand increases, so will the price of veg oil.
Meat | Pork
This week's harvest is forecast to be slightly higher that last week at 2.45 million head.
Bone in butt prices are higher this week are slightly higher and possibly the value pork cut. Boneless pork butt prices are increasing as labor constraints are limiting product availability. Boneless loin prices declined this as buying for the holiday tails off.
Spare ribs are higher this week, with St Louis prices steady to higher as buying for Labor Day continues. Back ribs prices are stable to higher. Low inventory in cold storage is also holding prices up as we head into the holiday.
Belly prices are slightly lower this week, prices continue lower as demand declines with travel season coming to an end.
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 experience some changes with the breast meat markets going up a little and the wing markets seeing some small decreases. The demand for breast meat seems to be driven by Foodservice demand continuing to strengthen. There is also demand on the market by schools opening and more involved in actually going to school versus the virtual learning. You have also experienced demand from entertainment venues able to be open. The sandwich promotions are not going on, but many of the fast food restaurants continue to show these items on their menus as they are still doing well. The production levels have remained fairly flat as expected. Last week there were 167.5 million head processed compared to 168.1 million the week before. As we see the placements remaining consistent it is not expected to see much of an increase in supply. We are still running at over 50% of the birds come in the heavier weight ranges which does keep the total supply in pounds up. The Jumbo wing market has continued to hold at a record high, but the medium and small wings have come off just a little bit. There have been some offerings out there on the small wings, so I would not be surprised to see these continue to come off slowly. With the limited supply I would not expect to see any dramatic declines. The tenders continue to strengthen and are setting new record level highs. The demand for tenders is just taking the costs up very gradually.
The Jumbo Breast Meat market picked up some additional strength and broke back through the $2 mark and is trading at $2.08/lb. The medium and select markets have also found some strength as chicken remains a good value compared to other proteins. The medium is now at $2.16/lb and the select has found its way up to $2.88/lb. Line run Breast Tenders new record high is $2.95/lb and the select tenders broke the $3 mark to $3.03/lb.
The wing markets have experienced the softening on the medium and select, but have held flat on Jumbo wings. Jumbo wings remained at the record high of $3.22/lb. The medium whole wings slide down to $2.79/lb and small wings have come off to $2.92/lb. There are offers out there on the small wings, so that is starting to show some promise that we are getting the demand in line with the limited supply.