Alerts & What’s Trending
- Quinoa Whiskey? Modified Crop List Spurs Distilleries To Try Alternative Grains
- Hotels entice guests with fresh winter menus, activities
- Why ‘ghost’ restaurants are changing the delivery game
- More time, more money, more insight: How supply chain apps can ease inventory headaches
The tomato markets remain elevated due in part to adverse weather in both Florida and Mexico slowing production. Weekly tomato shipments from Mexico were especially lacking earlier this month. The weather in Florida is forecasted to be erratic during the next few weeks which could cause subpar tomato supplies to continue. That said, history suggests that the greater price risk in the tomato markets from here is to the downside. Idaho potato prices continue to firm. Additional price increases are anticipated throughout the spring.
Rumors continue to circulate that Russia could limit their wheat exports in the coming months. Russia has become the world’s largest exporter in recent years, and stocks there have fallen to decade plus lows. If Russia does in fact temper their wheat exports, it could be supportive of U.S. wheat prices.
The cheese markets struggled over the last week. Cheese barrel prices hit the lowest level since 2009. U.S. cheese stocks are historically high, but export demand is likely to pick up due in part to more expensive global cheese markets. The downside price risk from here for cheese is likely nominal. The butter markets have been choppy. Butter production was strong throughout 2018 but class IV milk futures are over class III milk futures, which encourages more (milk) cream to go to butter output. Spot butter prices are likely to trend lower and may approach $2.100 per pound this winter.
Last week, beef production held near the week prior, but was up 2% year-over-year. Lighter than expected carcass weights continue to keep a lid on beef output gains, as winter weather hampers feedlot performance. Amid the muddy feed-yard conditions, packer margins have tightened but, the Choice boxed beef cutout is still sitting more than 3% above last year. Supporting the cutouts were last week’s negotiated sales, the largest since 2015, but forward sales have waned, and February is looking light. The beef markets typically soften into late January, with a seasonal move for the Choice cutout typically being a 4% decline.
Last week, pork production eased nearly 2% from the prior week but was up a whopping 7.3% year-over-year. These large year-over-year output gains are expected to be the new norm moving forward, expanding even further as another processing plant comes online in Q2. The USDA pork cutout continues to struggle amid the larger production schedules. Even the wholesale pork belly markets are declining sharply this week. China appears poised to begin taking U.S. pork, but the countries still lack a settled official trade deal.
For the week ending January 12th, chicken slaughter was up 19.5% week-to-week, but lighter bird weights ebbed production modestly (yoy). The six-week change in output was a sharp 2.2% decline, the second largest drop since July 2012 (the first of which being three weeks ago). An additional plant is scheduled to come online later this year. This should increase available broiler meat to an already well supplied wholesale market. Wings prices last week were the highest since last February, but the cheapest for that week since 2014. Breast meat prices, although moving up lately, are still low for this time of year. Yet, look for seasonal chicken price rises in the early spring.
The Alaskan Bering Sea snow crab fishing season is starting to escalate. As of January 22nd, 9% of the quota had been landed. This year’s quota is 50% larger than last year’s multi-decade low, but it is not expected to be large enough to bring significant relief to the tight world snow crab supply situation. Still, modest snow crab price declines may occur.
Nearby WTI crude oil futures moved modestly lower over the last week but are still up 15.6% this year. In reaction to record U.S. crude oil production, OPEC has tightened their output even further than cuts announced in December. There is key price resistance for WTI crude oil futures at $54.90/brl.