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The Idaho potato markets remain firm which is not atypical for this time of the year. Idaho potato supplies have seasonally tightened and will continue to do so into the new harvest towards the end of the summer. History suggests that higher Idaho potato prices could be forthcoming. The 70-count Idaho potato price during June has been higher than May in four of the last five years by an average of 10.9%. Lettuce prices have remained soft during the last week due to building supplies. The downside price risk in iceberg lettuce prices from here is likely nominal.
The weather for the 2018-19 domestic corn crop has been nearly ideal since planting. The USDA this week released their first domestic crop ratings for corn, and they were historically very good. If this trend continues, it could lead to a seasonal top in the corn market sometime in the next few months.
U.S. butter supplies have been historically large despite strong export demand. As of April 30th, U.S. butter holdings were 5.2% more than the prior year and the second largest for the date since 1993. The year-to date build is the second biggest since 2006. However, international butter prices continue to firm which should underpin the domestic markets in the near term. The April 30th cheese inventory was 3.3% bigger than last year and the second largest for any month on record. But like butter, firming global cheese prices could temper the near-term downside in the domestic markets.
Beef output last week fell 2.1% but was 4.9% bigger than the same week last year. Recent cattle on feed data suggests that solid year-over-year gains in beef production should occur this summer. Yet, fewer cattle placements into feedlots the past two months may equal a cattle-supply gap occurring this fall. Per the USDA, the May 1st U.S. cattle on feed inventory was 5.1% larger than the prior year, but cattle placements into feedlots during April were down 8.3%. Still, the average cattle placement weight was up 3.1% versus 2017. Typically, beef prices seasonally peak soon. Since 2013, the average move for the choice 0x1 strip market from early June through July was down 30.8%.
Pork production last week was down 2.1% but was 6.5% larger than a year ago. Pork output this summer is expected to be 4.8% stronger than last year. This should temper the pending seasonal price gains for pork. But, retailers are planning to feature pork, including bacon, in the coming weeks due in part to higher beef prices. This may be supportive of the pork belly markets. Since 2013, the average move for the de-rind 9-13 pork belly market in the next seven weeks was up 23.3%.
Chicken output for the week ending May 24th rose 2.3% and was 1.7% better than a year ago. The six-week total of chicken production stands at 1.1% above 2017. Summer chicken output is anticipated to be 1.9% more than last year per the USDA. Alternative protein sources are keeping the chicken markets at bay. The ARA Boneless Skinless Chicken Breast Index last week was at its second-lowest level for this time of year since at least 2000. Chicken tenders were the lowest since 2011. But, expect building feature activity soon which could boost prices. The May 1st table egg laying flock was 2.4% larger than last year but egg output performance remains a challenge. Egg prices are likely to be above prior year levels through the fall.
The Newfoundland snow crab fishing season is progressing. As of May 28th, just over half of the 2018 quota had been landed. However, the Newfoundland snow crab quota this year is down 17% from last year and the smallest in recent history. The Gulf of St. Lawrence quota is down 44%. This should mitigate the downside in snow crab leg prices this summer.
WTI crude oil futures corrected lower over the last week, falling 8.1%. Record high U.S. crude oil production, along with OPEC announcing they will soon increase their oil output influenced prices downward. Still, $65 per barrel is key support.