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The tomato markets have firmed during the last week. Hurricane Florence brought heavy precipitation to the mid-Atlantic states which will be a notable source for east coast tomatoes in the near term. At the same time, imports from Mexico have softened. These factors may continue to support the tomato markets during the next several weeks. The Idaho potato markets continue to seasonally decline as the harvest builds. History suggests that additional potato price decreases can be anticipated into next month. Various other produce markets experienced volatility over the past week which isn’t unusual during early fall.
The chief harvest season is progressing. As of September 23rd, 16% of the corn harvest and 14% of the soybean harvest were in the bin. This, and the ample carryover supply from the previous crops, could keep a lid on the feed markets in the near term. 2019-20 domestic winter wheat planting is 28% complete.
Farmers continue to expand milk output. During August, U.S. milk production was 1.4% bigger than last year due to a 1.4% gain in milk per cow yields and a slightly smaller herd. Dairy farmers added a net 5k to the heard during the month, marking the biggest gain since January. Milk prices are high enough which should encourage modest milk output gains in the coming months. This, and deflated nonfat dry milk prices, should temper the upside risk in the cheese markets. World butter prices are on the decline which should mitigate export demand and limit domestic butter prices.
Beef output last week rose 1.1% from the prior week and was 2.4% larger than last year. The September 1st cattle on feed inventory was 5.9% bigger than 2017. Further, cattle placements into feedlots during August were up 7.4% from the prior year but at an average weight of 1.3% lighter. This data supports expectations for solid year-over-year beef production gains this fall. August 31st boneless beef stocks were up 5% from a year ago and the biggest for the month in at least 18 years. This could temper seasonal price gains for ground beef which usually occurs soon. Since 2013, the average move for the 81/19 ground beef market from early- October through early-November was up 7.2%.
Pork production last week gained 1.3% from the prior week but was 7.5% smaller than a year ago. The unimpressive pork output was due mainly to slowed operations from Hurricane Florence. Hog supplies have been surprisingly tight and have supported the pork markets. China’s African swine fever cases have grown but the overall spread potential of the virus is still in question. August 31st pork stocks were up 1% with 2017, with belly (82%), ribs (5%) and trim (21%) holdings all larger. The pork markets usually peak in early to mid-October.
For the week ending September 15th, chicken output declined 2.3% from the prior week, and was 2.2% less than the same week in 2017. Yet, the six-week total of chicken production was 2.9% better than a year ago. Inexpensive feed costs should boost chicken production this fall. The USDA is calling Q4 output to be up 2.2% year-over-year which should limit any surprise price gains for chicken. Wing prices are seasonally rising in response to strong demand from football watchers. Still, the chicken wing markets are the cheapest for this time of year since 2011. Chicken wing prices usually increase over the next two weeks. Wholesale chicken breast prices are at multi-year lows for September which may temper seasonal declines this fall.
Despite the elevated value of the U.S. dollar against major seafood trade currencies, U.S. shrimp imports have been lethargic. During July, the U.S. imported 8.2% less shrimp than the prior year. Still, shrimp prices continue to track below 2017 levels. If sluggish shrimp imports persevere next year, the shrimp markets are likely to climb above 2018 levels.
The crude oil and petroleum markets are either at or near three-year plus highs. OPEC’s failure to boost crude oil production despite higher prices is supporting prices. Still, the crude oil and petroleum markets usually decline during the fall.