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The tomato markets have eased despite domestic supplies being historically limited. Total U.S. tomato shipments and imports last week were 19% less than the same week last year. The weather has improved for the Florida growing areas which should boost supplies in the coming weeks. History suggests, however, that tomato prices could firm during March. Typically, the large mature green tomato market averages near 13% above February during March. History says that the risk in the avocado markets from here is to the upside.
China has stepped up purchases of U.S. soybeans during the last week as a sign of good faith with the Trump Administration. However, U.S. soybean exports as a whole continue to struggle. Ample U.S. soybean supplies are projected to persist for the next several months which should keep a lid on prices.
The spot butter market held steady since last week. In November, domestic butter production was down 2.7% year-over-year. But butter output has risen with more available milk (cream) supplies due to costlier Class IV milk prices than Class III milk. The quarterly pivot model hints that spot butter prices could fade to $2.150 this month. The cheese markets were modestly higher since last week. International cheese prices continue to rise and are higher than their U.S. counterparts. This is encouraging U.S. exports and suggests that the downside risk for the cheese markets is nominal.
Hampered by severe winter weather, beef production last week fell nearly 3% from the prior week (and y-o-y). The Choice cutout remains supported, bolstered, not only by weather, but strong exports as well. Last week’s export sales were the best since August and should continue to temper available U.S. beef supplies. But the cutout is slated to seasonally decline this month; a notoriously slow month for beef movement. Domestic 90’s (prices) are rising, narrowing the year-over-year spread, but beef 50’s remain depressed. Choice middle meat prices remain high, but this could be a headwind for the typical spring increases.
Pork production fell sharply last week, down 4.6% week-to-week and was 2.2% less than the prior year. The winter weather may have staved off further USDA pork cutout price declines in the short term, but further downward pressure is expected moving forward. Ham prices continue to languish at multi-year lows, but with Easter a mere two months away, prices remain favorable for late holiday negotiations. Pork belly prices have come off rather abruptly, but are expected to find modest support as buyers look for value heading into the spring.
For the week ending January 26th, weekly average chicken production fell 4.8% week-to-week, but the six-week average of output moved into positive territory (y-oy-) for the first time since October. The average live bird weights are falling seasonally and are already near 2% below a year ago, a trend extending from December onward as small-bird production has been growing. Producer margins are on the mend, with the feed-cost ratio improving to its best level in 15 months, due mainly to rising wholesale chicken prices. Wing prices have likely seasonally peaked, but some support can occur for March Madness. Chicken breast and tender prices can still appreciate.
World snow crab supplies remain limited supporting the snow crab leg markets. The Alaskan Bering Sea snow crab fishing season is escalating with 33% of the quota landed. The Canadian snow crab quotas will be set this spring, but expectations are that the Newfoundland total could be historically small. Elevated snow crab prices may persist into the summer.
RBOB gasoline futures rose over the last week but are still well below year ago levels. The EIA’s national average retail gasoline price was $2.341 per gallon, the third lowest for any week since December 2016. The healthy U.S. economy suggests that the downside risk for gasoline prices from here is small.