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The lettuce markets remain inflated. Wet, cold weather during February caused maturation to slow and has exacerbated the existing supply gap. Domestic iceberg lettuce shipments last week fell 14% from the prior week and were 16% less than the same week last year. Warmer weather has occurred in the major growing areas during the last week, but cooler temperatures are forecasted. Lettuce prices could remain volatile in the near term. The avocado markets are relatively deflated but the risk in these markets remains to the upside.
Expectations are that some sort of agricultural deal between China and the U.S. will be signed by the end of the month. This could lower the Chinese tariffs on U.S. soybeans, but this may not push prices notably higher due in part to decade plus high stocks.
The cheese markets have remained relatively steady over the last week but are up roughly 10% this year. According to the USDA, U.S cheese output during December was 1.2% smaller than the prior year but was up 1% from November. Typically, cheese prices can become choppy during March. The butter market has become volatile in recent days but is higher than a week ago. Domestic butter output in December was .1% less than 2017 but was 17% better than the prior month. Since 2014, the average move for spot butter prices from late-March through mid-June was up 15.9%.
Last week, beef production rebounded, up 3.5% week-to-week, but lighter carcasses and 1.3% fewer cattle harvested caused production to be 2.2% below a year ago. The semi-annual cattle report revealed a slightly larger beef cow herd, but cautious attitudes toward a continuation of herd expansion exists. Still a larger calf crop coupled with increasing inventories of feeder calves outside of feedyards continues to suggest growing beef production well into 2020. The cutouts remain firm, but year-over-year gains have slowed, and expectations are for modest weakness for beef prices before the usual spring demand season.
Amid languishing pork prices, pork production last week was tempered, down 1.6% from the prior week, but still came in 1.4% over last year. After dipping into the low $.900 price area, pork bellies have been trending choppy to higher and are expected to find further support after a significant export sale was registered in late-February. The USDA pork cutout is likely nearing its seasonal low which would be more in-line with the typical seasonal bottom before rallying higher. Last year the USDA pork cutout rise occurred later than usual.
For the week ending February 23rd, chicken production was down 1% week-to-week and 1.3% smaller than last year. Despite the declines, the six-week output average remains up modestly (yoy). Chicken wing prices have started to decline due in part to fading interest following aggressive retail deli bone-in wing features occurring in February. Rising production schedules are expected to adequately supply the market into the summer, but chicken prices are not expected to revisit lows noted in 2018. Breast meat price increases have failed to materialize, but risk still remains to the upside heading into early Q2, especially with the tender/breast price spread being relatively wide.
The Alaskan Bering Sea snow crab fishing season is nearing its final stages. As of March 5th, 80% of the quota had been landed. The 2018-19 Alaskan Bering Sea snow crab quota is 50% larger than the prior year’s historically small number. Yet expectations are for a small 2019 Newfoundland quota which may temper any downside in snow crab prices.
The EIA’s most recent national average retail gasoline price was $2.502/gal., the highest in twelve weeks but 6.6% less expensive than a year ago. Domestic gasoline inventories for the week ending February 22nd were 1.2% more than last year. Gasoline prices usually begin to trend seasonal higher in May.