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.