Monthly Archives: May 2018

May 17, 2018

Alerts & What’s Trending

Produce

The tomato markets remain relatively depressed due mostly to ample supplies from Florida.  The low prices are starting to curb imports from Mexico, however.  Total tomato shipments last week fell 4.9% from the prior week and were 15% less than the same week last year.  Higher tomato prices could be forthcoming.  The five-year average trend in the large mature green tomato market during the next two weeks is an increase of 10%.  Lettuce supplies are starting to improve with domestic iceberg shipments up nearly 3% last week.

 

Grains

American farmers have stepped up their planting pace with the improved weather this month.  As of May 14th, corn and soybean planting was close to average levels.  Spring wheat planting remains behind but should be sufficient.  This could keep a lid on the grain markets in the near term.

 

Dairy

The cheese markets have mostly moved sideways recently.  U.S. cheese continues to be competitively priced, fueling exports which is underpinning the markets.  As milk output seasonally declines in the coming months, it could support cheese prices as well.  The butter market remains firm due mostly to strong export interest.  History suggests that fairly inflated butter prices could persist into the summer.  But, history also says that the greater long-term risk for butter is to the downside.  World nonfat dry milk supplies are ample which should temper any additional price gains.

 

Beef

The cheese markets have mostly moved sideways recently.  U.S. cheese continues to be competitively priced, fueling exports which is underpinning the markets.  As milk output seasonally declines in the coming months, it could support cheese prices as well.  The butter market remains firm due mostly to strong export interest.  History suggests that fairly inflated butter prices could persist into the summer.  But, history also says that the greater long-term risk for butter is to the downside.  World nonfat dry milk supplies are ample which should temper any additional price gains.

 

Pork

Pork production last week fell .7% but was 3.7% better than last year.  Solid year-over-year pork output growth is forecasted in the coming months.  The USDA is calling pork production during the summer to be 4.8% more than 2017.  April retail pork prices were down .7% from last year and the second lowest for the month in five years.  Retail bacon prices were down 6.1% from last year and the lowest since February 2017.  Though pork belly stocks are larger than a year ago, big retail bacon feature activity should support prices this summer.

 

Poultry

Chicken output for the week ending May 5th, declined .2% from the prior week but was 1.6% better than the same week last year.  The six-week running total of chicken production is .8% better than 2017.  The USDA is forecasting chicken output this summer to be 1.9% better than a year ago.  The wing markets are pricing at levels not seen since August 2014 due to uninspiring demand and better inventories.  March 31st chicken wing holdings were 5.3% more than the previous year.  And, it was the first time in 13 months that stocks grew from the previous year.  Yet, history suggests that the downside risk for wings during this time of year is small.  Since 2013, the average move for the ARA Chicken Wing Index over the next six weeks was up 3.7%.

 

 

 

Seafood

Solid salmon imports continue to weigh on the salmon markets.  During March, the U.S. imported 16.5% more salmon than the previous year.  Salmon imports from Canada, however, remained subpar down 4.8% from 2017 at an average price 4.2% more expensive.  Canadian salmon may continue to carry a premium to other markets during the next several months.

 

Oil

The crude oil markets have firmed over the last week with nearby WTI crude oil futures reaching the highest level since November 2014.  Geopolitical tensions are rising in the Middle East. Still, the downside risk from here should be respected.

 

May 3, 2018

Alerts & What’s Trending

Produce

The Asparagus market has finished the transition from Mexico to Peru, but supplies out of Peru are limited, and Quality is poor due to spreading and dehydration. Quality issues are expected to last for the next 2-3 weeks. Out of Salinas, Romaine and Romaine Heart are seeing good supplies with good quality. Supplies are beginning to tighten on the Iceberg and is seeing signs of a gapping due to the cooler weather. Green and Red Leaf, and Butter Lettuce supplies are lower than usual due to quality issues. Elsewhere, the Roma and Round Tomato Markets continue to experience good supplies and quality out of Florida and Mexico; Grape Tomato pricing has increased due to overall quality issues but is expected to decline after the Mother’s Day holiday. The Yellow and Zucchini Squash Markets out of both the East and West are seeing very low volumes, and pricing has increased due to colder weather. Supplies are expected to pick up and two weeks and pricing should begin to decline as volumes ramp up. The Blueberry Market continues to slightly decrease with improved supplies out of Florida, Georgia, and California, and Strawberries are in peak supply in California, now through the end summer and overall quality is good.

Grains

The spring wheat planting season remains behind with just 10% in the ground as of April 29th. This compares to the five-year average for the date of 36%. Planting is anticipated to pick up substantially in the coming weeks, but some acreage could be switched to soybeans. Wheat prices are overdue for a short-term correction lower.  International sugar prices have found some modest support as of late. Higher crude oil prices are driving better sugar demand for ethanol in Brazil. This may underpin the sugar markets at least in the near term. But, ample world supplies should eventually temper that upside potential for sugar.

Dairy

The butter market remains firm due in a large part to solid export demand. March 31st butter stocks were slightly larger than the previous year and the biggest for the date since 1993. Further, European milk output should seasonally expand which may also temper export demand for U.S. butter. These factors suggest that the upside in the butter markets may only be modest from here. March 31st cheese stocks were 5.2% greater than the previous year and a record for the date. However, the cheese inventory build from January through March was the second smallest since 2012.

Beef

Beef output last week fell .5% but was .8% larger than the same week last year. Year-to-date cattle slaughter was 2.1% better than 2017. Beef production in the coming months is forecasted to be much stronger than a year ago. Beef prices have begun to seasonally rise as retailers aggressively feature beef, especially grinds. Total wholesale beef sales over the last four weeks were 10.1% more than last year. However, boneless beef stocks on March 31st were .9% larger than 2017, the best build for the month in five years. This factor along with strong beef output and heavier cattle weights may temper the upcoming seasonally rally for the ground beef markets in the coming weeks.

Pork

Pork production last week decreased 3% but was 3.7% bigger than the same week a year ago. Hog slaughter was the lowest in three weeks. Notable year-over-year pork output gains are anticipated to persist in the coming months. March 31st pork stocks were 12% more than 2017 with belly (188%), picnic (29%), ham (7%), loin (9%), and trim (41%) holdings all above the prior year. This factor and big pork output gains makes the various pork markets susceptible to only a modest upward seasonal move into the summer, despite solid exports.

Poultry

Chicken output for the week ending April 21st fell .2% from the prior week and was 2.9% more than the same week last year. The six-week total of chicken production was up 1% from 2017. Chicken producer spot margins last week were the worst for the week in four years due in part to rising corn and soybean meal prices. If this trend persists, it could slow expected year-over-year output gains later this year. March 31st chicken stocks were 14% larger than 2017 with breast (5.4%), leg quarter (23.3%), thigh (11.9%) and wing (5.3%) holdings all above the prior year. It was the first time in 13-months that wings had a year-over-year increase. Since 2013, the average move for the ARA chicken breast index during the next three weeks was up 7.5%.

Seafood

The snow crab leg markets remain historically inflated. World supplies are limited due to the smaller Canadian and Alaskan harvests and not expected to greatly improve in 2018. This year’s Newfoundland (17%) and Gulf of St. Lawrence (44%) snow crab quotas are both substantially below 2017 and multi-year lows. This should underpin snow crab prices.

 Oil

After setting an 11-month high in January, the natural gas market is currently pricing 24% below (that high) despite U.S. natural gas stocks being 29.1% below the five-year average for this time of year. Natural gas prices usually rise during May.