MARKET TRENDS

Transcription

1 FARMER S REPORT MARKET TRENDS This notice is subject to change. Information printed is based on last received market data. Subject to change without notification US Foods, Inc All rights reserved.

2 BEEF Cash cattle traded up between $2-3 last week, selling mainly between $ / cwt. This week, feeders are asking for even money from last week, but buyers have been bidding in the $117/118 range thus far, as the cash market is showing a weaker undertone. Last week s harvest came in at 649K head, with the packers back to normal production levels, as they are working now to fill retail holiday needs. 558K head were of the steer/heifer variety, up from the previous week s 419K head. GRINDS 81/19 FINE GRIND: Ground beef continued to come off moderately last week, and is expected to continue this way until later in the month. ROUNDS PEELED KNUCKLES: Knuckles declined just slightly last week. We still believe that we will see an unstable market during December. INSIDE ROUNDS: Choice insides reported moderate decreases, while Select reported down modestly. The market continues to be unstable, and is expected to ease lower through early December. BOTTOM ROUND FLATS: Bottom Round Flats reported moderate decreases across all grades. The market continues to be unstable, and is expected to ease lower through mid-december as well. EYES OF ROUND: All grades reported moderate declines, with demand slipping. The market remains vulnerable to possible declines into mid-december. LOINS STRIPS: Choice striploins continue to fall, with lackluster demand, as packers are focused on producing Tenders to cover the holiday needs, while the Select grade was up just slightly. Striploins will remain unstable, as the packers focus will be on tenderloins and ribs the next couple of weeks. TOP BUTTS: Choice top sirloins reported another modest decrease from the previous week, while Select was almost flat. More downward trends could be on the horizon, as the chain cutters could be close to completing their business for the year. TENDERLOINS: Choice tenderloins traded steady last week, while the Select grade saw a modest decline. All grades are just about done, and they hold a lot of downside risk in the next few weeks. RIBS RIBEYES: The rib market, for the most part, is coming off and is poised to continue this trend in the coming weeks. By the end of next week, the packers should be done shipping to the retail sector and could struggle, managing their inventory levels unless they pull back on the kill. CHUCKS CHUCK ROLLS: Choice chuck rolls reported modest declines accross all grades. Demand for chuck rolls is considerably lower across all sales categories, with pricing following suit. We expect them to drift lower until mid-december, before seasonal increases. TERES MAJORS: Choice teres majors came in at steady money last week, while the Select grade took a moderate decline. These could continue to see softening through January. As with the chucks, the market is expected to weaken and ease lower into mid-december. BRISKETS: The Choice grade of briskets came in flat last week, while the Select grade saw a modest decline. We do expect more demand across all grades as forward sales begin to ship in front of St. Patrick s Day to the processors. We could see steady to modestly increased prices through December and into January. THIN MEATS BALL TIPS: Choice ball tips reported down moderately, while Select saw decreased value as well, but not to the extent of the Choice grade. As we go into December, we will see an unstable market, with bias to lower costs. FLAP MEAT: Choice flap meat fell modestly last week, while the Select grade took a modest increase. FLANK: Choice flanks reported a slight decline again last week, while Select reported a slight increase. They are vulnerable to a setback into late December, before seasonal winter gains begin. SKIRT STEAK: Outside skirt reported slightly lower from the previous week, with average demand. The market will remain unstable, with highs and lows into the winter months. 2

3 PORK The estimated USDA slaughter level for last week was 2.53 MM hogs, roughly on par with last year at this time, and higher than last week, now that production is back in full swing post-thanksgiving. Packers are still holding back on their production numbers to limit exposure to increased hog costs, causing the current hog crop to age and put on weight, with average hog weights up 5 lbs on average over last year. This time of year is when the packers typically maximize production capacities, so the holdout is considered a counter-seasonal move. The USDA just released pork export numbers for the month of October. As many had suggested, October was a huge month for pork exports, up 5% over last year. Exports continue to be a driving factor in wholesale pork pricing. LOINS Pricing on the loin complex remained mixed last week, with the bone-in loins trading slightly lower and the boneless loins making their seasonal move higher. Both loins are at what many would consider their lowest pricing point of the year, due to seasonally weak demand as the November-December timeframe tends to prioritize other cuts and proteins for the holidays. Current pricing is considered to be a great value on the loin complex, so demand is forecasted to kick in rapidly, especially at the retail level, which should begin driving prices higher. TENDERS Tenderloin prices remained unchanged last week as they hovered very near to their annual lows. As tenderloin prices flirt with seasonally low pricing, it s only a matter of time before the retail channel steps in and begins to promote tenderloins, especially for New Year s and Valentine s Day ads. BUTTS Pork butt prices eased slightly last week due to increasing supply, as some packers came out of the Thanksgiving holiday with a surplus of pork butts. That, combined with weaker demand across almost every market channel, is causing a temporary dip in pork butt prices. At this point, however, price is unsettled because butt prices are still 15% higher than last year, and another wave of export demand is scheduled to kick in, so pricing could head in either direction. RIBS Pricing on the rib complex moved higher last week, with both backribs and spareribs moving slightly higher. Packers continue to actively allocate a high percentage of their fresh rib production to freezer programs for Backrib prices are expected to continue teetering within a couples of pennies range for the next 3-4 weeks before making their seasonal move higher. Sparerib prices remain counter-seasonally high as the market continues to push hard for St. Louis ribs, so sparerib prices are a bit more unsettled than backribs at the moment. BELLIES/BACON Belly prices continue to push counter-seasonally higher as fearful buyers stock their freezers with bellies to avoid the volatility that became the headline in the bacon world last year. With belly prices currently 40% higher than this time last year, some market analysts are calling for a price correction lower, due to the proactive demand in October and November. However, early December is also when belly prices begin to see a more seasonal push higher, so it remains quite possible that belly prices could stay elevated and continue to push higher at a more gradual rate. HAMS Ham prices experienced a brief stint of decline two weeks ago, as ham buyers paused to assess post-thanksgiving inventories. As it would turn out, hams must have sold well during Thanksgiving, as last-minute demand for the remaining holidays is starting to kick in and rebound ham prices higher. The holiday season will continue to drive ham prices gradually higher for the next two weeks, until hams can no longer be produced in a timely manner. Afterwards, expect ham prices to fall considerably until Easter ham discussions come into consideration. TRIMMINGS Prices on pork trimmings traded marginally higher last week. Retail ads for breakfast sausage continue to support trimming prices, especially over the holidays. As well, processors continue to buy product for the freezers as they focus on out-front needs. As mentioned above, heavier hogs are coming to market, which is generating additional trimmings and should pressure prices slightly lower. PICNICS Picnics prices have been trading generally flat for the past 3 weeks in a row, due to steady demand. Smoked picnics are sometimes preferred over hams over the holidays on a regional basis, so prices may see a brief increase over the next few weeks. In addition, bone-in picnic demand should stay relatively supported during the winter months, as retailers feature them for roast season. 3

4 TURKEY BONELESS, SKINLESS TURKEY BREASTS The turkey breast market was flat this week. We should expect this market to trend upward to flat for the near term. WHOLE FROZEN TURKEYS Whole turkeys were down this week, and should remain flat to slightly down for the near term. CHICKEN BROILER-TYPE EGGS SET IN THE UNITED STATES UP 4% Hatcheries in the United States weekly program set 229 million eggs in incubators during the week ending December 2, 2017, up 4% from this time a year ago. Hatcheries in the 19-State weekly program set 220 million eggs in incubators during the week ending December 2, 2017, up less than 4% from a year earlier. Average hatchability for chicks hatched during the week in the United States was 82%. Average hatchability is calculated by dividing chicks hatched during the week by eggs set three weeks earlier. BROILER-TYPE CHICKS PLACED IN THE UNITED STATES UP LESS THAN 1% Broiler growers in the United States weekly program placed 178 million chicks for meat production during the week ending December 2, 2017, up less than 1% from this time a year ago. Broiler growers in the 19-State weekly program placed 170 million chicks for meat production during the week ending December 2, 2017, up less than 1% from the year earlier. Cumulative placements from the weeks ending January 7, 2017, through December 2, 2017, for the United States were 8.65 billion. Cumulative placements were up 2% from the same period a year earlier. BONELESS, SKINLESS BREASTS & CHICKEN TENDERLOINS TThe jumbo and medium breast markets, and sized fresh and frozen markets were all flat this week. The tenderloin market was slightly up this week, as producers are replenishing their frozen retail inventories. We expect this market to trend upward to flat in the near term. WINGS The small and medium wing markets were flat this week, and receiving various degrees of interest. Expect these markets to trend flat to down in the near term. The jumbo wing market was slightly down this week, as oversupply continues to be an issue. BONELESS, SKINLESS THIGHS The market was flat this week, as both domestic and export demand has slowed. We expect this market to trend down to flat in the near term. WHOLE CHICKEN & CUT-UP PARTS Small bird demand is still very strong, and supply continues to be tight. This trend will continue for the near term, and possibly the remainder of

5 COMMODITY OIL SOY, CANOLA & PALM OIL The soybean complex closed mixed last week, with soybeans and soybean meal again posting gains, while the soybean oil market and its share of product value lost ground. China was back in buying U.S. soybeans this week, helping to support that market, while the oil/meal spreads continued to liquidate despite heavy soybean meal stocks in the West. Poor forward replacement cash margins and heavy meal supplies have some Western plants starting to slow down their crush rates. In South America, Brazilian soybean planting is approximately 88% complete now, but Argentina continues to lag it is only about 48% complete due to the continued dry weather conditions in some areas there. The weather concerns in Argentina may eventually be trumped by what could be another very large Brazilian soybean crop, however, as early growing conditions there remain nearly ideal. SOY: The EPA confirmed that the 2018 and 2019 RFS mandates would be left unchanged, and as this had been widely anticipated by the trade, prices sold off hard promptly after the announcement, as it was not considered fresh bullish news. CANOLA Statistics Canada released their final 2017 crop production estimates on December 6th. The average estimate for canola production is million metric tons, compared to 18.2 million MMT in August. PALM OIL Palm oil prices fell to a four-month low early this week, reacting to a stronger local currency in Malaysia (the ringgit), and the residual negative tone set by the steep increase in Indian import taxes on edible oils announced last week. US EXPORTS Total soybean oil commitments are currently running 53% below last year s levels. SEASONALS Current weather conditions for South America remain mostly favorable at this stage of the soybean season, except for Argentine regions, which are still showing signs of drought. There is a strong seasonal tendency for soybean oil prices to rally from November through March. DAIRY BUTTER Cream for butter production is generally available. Demand is steady and manufacturers have been consistent in meeting that demand. Pricing should remain relatively flat over the next 30 days, as the holiday demand period is ending. CHEESE There is steady to good cheese production across all regions, due to readily available milk. Cheese inventories are balanced to heavy. This has put some pressure on cheese prices. SHELL EGGS Retail demand has varied across all regions. The foodservice market is steady to good, as the holiday season is boosting foot traffic at restaurants and chains. Overall the egg market is steady. MILK & CREAM Milk output is steady to lower across most of the country. Cream supplies are steady in the Midwest, while they vary from tight to plentiful in the West, depending on location. For December, FMO markets were all down except for Class I skim. California markets experienced decreases in all markets. Overall pricing should be flat to down across product lines. 5

6 SEAFOOD SHRIMP, DOMESTIC (WHITES AND BROWNS.): The domestic shell-on Brown season is coming to an end. Inventory is getting tight, and we are seeing price increases across this category. The fall domestic White season is now underway. We are waiting for some cooler weather to force the shrimp from the shallow waters to deeper waters. The fishing fleet is still out, but lack of inventory is causing a rise in prices. DOMESTIC PUDS: Inventory positions are now reported tighter than initially thought from last week. Prices are rising, and they will continue to do so. SHRIMP, IMPORTED (BLACK TIGER AND WHITES.): Production on tigers continues to be very low. Farmed Asian White shrimp are showing some signs of weakening, but the feeling here is that inventory levels in the US are causing vendors to lower prices. Overseas pricing has not gone lower. Latin American Whites remain steady. (MEXICAN BROWNS AND WHITES.): The new-season production is underway. Prices inched up with recent bad weather. We are a little more than halfway through the harvest. While the catch is better than last year, we are hoping for a strong finish. CATFISH DOMESTIC: Production of farmed domestic catfish has started to pick up, and we are starting to see more inventory and some weakening in prices. This trend should last until the end of the year. IMPORTED: We are seeing stable pricing on imported catfish. New-season fish are starting to hit the US. The long-term outlook is still uncertain. SALMON ATLANTIC FARMED SALMON: The market is steady week-over-week, with good inventory. The holiday season could put pressure on inventory and cause pricing to get stronger. MAHI MAHI Fishing has begun in Peru. Ecuador is really off to a great start. Most of the fish at this time are smaller fish and not large enough yet to cut into frozen portions. Outlook is good, with the expectation of a better season than in 2016 and We will have a better idea once large offshore boats start to report their catch and land fish. SCALLOPS SEA: Pricing is firming on domestic product. Days fishing at sea per government regulations will be the next issue in regard to rising prices. We are seeing fresh product fluctuate with the catch. BAY: Pricing has turned upward on low production and tight inventory. This could last well into the fall. TILAPIA Inventory in the US seems to be good, with pricing starting to stabilize. We should see some consistency through Q1 of PANGASIUS Pricing overseas continues to move up, and we are starting to see higher prices in the US now. The new USDA guidelines are adding to overseas cost. Inventory overseas is now starting to tighten up, as China has become a bigger buyer. Out of stocks will be the norm, depending on item and vendor. 7-9-oz fillets will be the biggest challenge. WHITEFISH COMPLEX COD: The market for Atlantic and Pacific cod continues to see stronger pricing. It is expected that cod pricing will increase throughout Q4. We also anticipate there will be shortages on Pacific cod, due to poor fishing and quota cuts. POLLOCK: The fishery for Pacific pollock has produced only smaller fish, just 2-4 oz. fillets. This could cause an inventory issue for frozen loins if they don t start catching larger fish. Larger fillets of 4-6 and 6-8 oz. are very tight. HADDOCK: Pricing on skin-on fillets and skinless loins is starting to see increases. Even with the increases, we are seeing haddock as a great value. As cod goes, so will the haddock market. Things definitely look like they will heat up in the coming weeks. FLOUNDER: Product from China will remain tight, as the catch has been very slow. The Argentine season will be getting into full swing in the next few months. Argentine product is tight at this time, but improving. TUNA, YELLOWFIN (FROZEN STEAKS & LOINS.): Tuna is fairly stable in pricing and inventories are good. SWORDFISH The catch in Central and South America has been slow, with mostly smaller fish being caught. We could see higher pricing as this fish hits the market. 6-oz. portions are in good supply. Ask your sales rep about this size fish, as the yield is better than industry standard. KING CRAB (RED & GOLDEN.): Test pots on red king crab have been very low. The biomass is not at a level where we will see a large amount of product. We feel the quota will be low this year and create higher pricing. We are seeing an increase on 16/20 Russian product now as well. CRABMEAT (BLUE & RED, PASTEURIZED.): Blue swimming crab pricing is taking further declines for next week. We do expect to see further declines as we go forward. Red swimming crab pricing is stable for the next week. Mexico blue crab season is in full production with stable pricing. Inventory positions are very good at this time. SNOW CRAB ALASKAN: The quota for 2017/2018 was announced recently, and we will see about a 3-million-pound reduction in this year s quota. We are not near a time to start quoting price yet. CANADIAN: Fishing is now over in Canada. There seems to be good inventory on 5-8s and 8-up clusters. Larger 10-ups and 12-ups are very tight. We are hearing that many of the Gulf State casinos are only serving all-you-can-eat snow crab on weekends, and some are charging a premium. This could put additional crab in the market, but right now it is a wait-and-see game. LOBSTER TAILS NORTH AMERICAN LOBSTER: The Maine season has wrapped up. Tails are in very bad shape. The category as a whole was very short, and with not much being produced, they will be an issue from now until May/June of We do expect to see pricing surge and inventory firm as we go forward. LOBSTER TAILS WARM WATER: Supply on warm water tails is in a good place; however, pricing is heating up as the shortages in the cold water market continue to put pressure on larger-sized warm water tails. LOBSTER MEAT: The Maine season has wrapped up. As inventory depletes, we will see prices rise accordingly. 6

7 PRODUCE The brussels sprout market has finally come down, as supplies have improved. The green bean market is down again this week out of all growing regions, as demand has tailed off after the holiday. Production has ramped up and suppliers are improving. The tomato gap has officially hit, pushing most of the product to Mexico while the Florida farms wait on harvest. Mexico has come out dictating the prices, which caused overall prices to skyrocket. This mainly impacts Rounds and Romas. Along with tomatoes, Mexico has decided to shut down multiple avocado fields in hopes of getting more money for product. In the last two weeks, 4 to 6 fields have shut down which control over 60% of the harvest. Avocado farmers are extending the time of the fruit on the tree to get larger sizes. KEY Anticipating an up market Anticipating a steady market Anticipating a down market VEGETABLES POTATOES Russet: The market on russets is steady to up this week, depending on the sub variety. Norkotahs out of Idaho are steady, while Burbanks out of Idaho are up. Idaho demand is slightly down right now, which is common for the two weeks after Thanksgiving. Demand is expected to pick back up next week. Good quality is being reported. Reds: The red potato market is steady this week out of all growing regions. Good supply and quality is being reported. Yellows: The markets out of both Florida and California are steady. Quality is good, with moderate supply and demand. CABBAGE Round Green: The cabbage market is mixed this week, with moderate supply and demand. Cabbage is flat out of all growing areas--western/central New York, San Antonio/Winter Garden in Texas, California and South Georgia. LEAF LETTUCE Green Leaf: The green leaf market is down this week, with good supply. Quality has been very good. Romaine: The romaine market is down this week, with good supply and fairly light demand. ICEBERG LETTUCE The iceberg lettuce market is up this week, with good supply and above average demand. Supplies are expected to remain steady. GARLIC Chinese peeled garlic pricing is moving down, as more supply has made it into the market. Demand is steady, and supplies are good, with no quality issues to report out of California or China. ONIONS The jumbo yellow onion market is steady this week out of the Washington/Oregon and Idaho growing regions. Good quality is being reported. CHILE PEPPERS The chile pepper market is steady this week. Supplies continue to be on the lighter side for jalapeños and poblanos. Quality is being reported as good. CILANTRO The cilantro market is slightly up this week out of all growing regions including Imperial, Coachella, Arizona and Mexico. Supplies are steady with good demand and quality. CUCUMBERS Cucumbers continue to drop in price. Both Mexico and the East Coast continue to push out good volume, which is increasing overall supply. Overall quality is good. SQUASH Yellow Squash: Squash is mixed this week for pricing. The West remains flat, as supply is meeting demand. However, the East Coast is seeing a slight increase in price as supplies tighten. The reason supplies have tightened up was a frost that hit some of the East Coast farms. Quality is still a concern, with heavy scarring being reported across the country. Zucchini: Zucchinis are flat for the week. All growing regions are pumping out good volume, keeping the price low. Quality is still a concern, with heavy scarring being seen across the country. GREEN BEANS The green bean market is down this week out of all growing regions, including machine-picked product out of Florida, imported haricot verts and hand-picked green beans out of Mexico. Production has ramped up and supplies are greatly improving. Nogales is crossing product. EGGPLANT Eggplant supply remains light, causing the price to be flat. Coachella supply remains light, while Mexico is ramping up more. Volume is expected to increase over the next couple of weeks. Quality remains fair. BELL PEPPERS Green: Green bell peppers are mixed this week. Green bells out of Florida are seeing a price decrease for the week, as supplies improve. The West product coming from Mexico is slightly up this week, as Mexico transitions to new fields. Quality remains fair to good on green bells. Red: Red bell peppers are mixed this week also. Product out of Mexico is slightly up while they transition to new fields. California is down, as they work through the remainder of their crop. The remaining California crop could have some quality issues. Overall the main concern for red bell peppers is undersized product. 7

8 PRODUCE TOMATOES Rounds: Round tomatoes have jumped this week. The gap on tomatoes has officially hit, allowing Mexico to dictate pricing across the board. All sizes and all grades have increased in size. Florida is roughly two weeks away from harvesting, so as supplies tighten even more, price increases are likely. Quality remains a concern, more so now, as product is all coming from one region. The gap is due to the damage from Hurricane Irma, which pushed harvests back a couple of weeks. Cherry: Cherry tomatoes are slightly down this week. Supplies remain tight as demand from grape tomatoes is affecting the cherry market. Supply relief is expected in about two weeks as Florida gets ramped up. The delay in supply relief is due to Hurricane Irma damaging the fields in South Florida. Quality remains very good. Grape: Grape tomatoes continue to drop. Overall supply has slightly improved, but only due to the lack of demand. The pricing gap between cherries and grapes is closing fast, so demand will start to sway back to normal soon. Palmetto and Ruskin farms are expected to start harvests. Quality remains good, even through supply struggles. Romas: Romas are up this week, as supplies tighten. Just like rounds, roma supply will be scarce out of Florida for the next couple of weeks. This puts all the pressure on Mexico for supply as they are setting their prices. This gap will be roughly two weeks long, and once Florida ramps up, supply relief should follow. Quality will be a concern, as most of the product is coming from one growing region. The gap, again, is due to the damage from Hurricane Irma, which pushed harvests back a couple of weeks. CARROTS The carrot market is mixed this week. Product out of California is steady, while product out of Mexico is up. New crop has started out of California, so there are better supplies, especially on jumbo and rainbow. Good quality is being reported. CELERY The celery market is down this week, with light supplies and moderate demand. Quality is good. GREEN ONIONS The green onion market is mixed this week. Domestic product out of South Carolina is steady, while Mexican product is down. Supplies are good, with increased volumes coming from Mexico. CAULIFLOWER The cauliflower market is up. Supplies out of California continue to wind down. Supplies out of Arizona are ramping up. ASPARAGUS The market on imported product out of Peru is down this week, with lighter demand due to post-holiday. Quality and supply are being reported as good. BROCCOLI The broccoli market is down. Supply and demand are good. TROPICAL PINEAPPLES Yet again, there are no changes from last week. Pineapple supplies will remain good through the end of the year. Fruit continues to trend large. Volumes on 5/6 cts. are high, while there are lesser volumes available on 7/8 cts. Overall quality in the marketplace is good through the end of the year. BANANAS Total supplies on conventional bananas are expected to decline for the last two weeks of the year, and then will continue to be light through mid-january. This is typically the time of the year where temperatures start dropping in the tropics, and this change in temperatures delays the physiological processes in the plant. We will expect similiar conditions for organics and plantains. AVOCADOS The avocado market skyrocketed this week, as supplies tighten. Mexico has decided to shut down fields for supply to tighten. Since most of the crop comes from Mexico, they can now dictate the price to customers. Also, the farmers are trying to push fruit to a larger size, so the fruit will sit on the tree longer. This price gauge can be expected throughout the holidays going into the New Year. Even though supplies have tightened, quality remains good and product will start trending to larger sizes. MELONS CANTALOUPE The cantaloupe market is flat this week, with light to moderate supply and moderate demand. Quality is good, and supplies are expected to remain steady. HONEYDEW The honeydew market is mixed by size. 5s are flat, with light supplies, and 6s are up. Import season has started, and supplies are expected to increase. 8

9 PRODUCE BERRIES RASPBERRIES The raspberry market is looking good in size and firmness. STRAWBERRIES The strawberry market is down this week. Supplies remain light, and demand is light to moderate. Current fires in the California regions may affect supplies there due to poor air quality and the inability to get workers into the fields. GRAPES The grape market is steady this week out of California. There are good supplies and great quality with moderate demand. BLUEBERRIES Overall, quality is looking great. Blueberry production is currently stemming from both Mexican and Chilean regions with vessels arriving this week. BLACKBERRIES The blackberry market is looking good in size and firmness. CITRUS LEMONS Lemons are up this week. Lemon demand remains very strong right now. Small lemons are the tightest, due to the sizing coming from the fields. There are still currently three fields harvesting; Desert, Central Valley and Coastal. Supply relief is expected once D-1 and D-2 fruit becomes available in late January or early February. There are still some quality issues being spotted in the field. ORANGES Oranges are starting to see a shift to a larger-sized fruit. As the shift occurs, smaller-sized oranges will increase in price. Choice oranges remain less than 15% of the current harvest. Cara Caras and Blood Oranges will start harvesting in the next week or two. Quality remains fair to good. LIMES Limes are up for the week. Supplies remain light, due to Europe still buying up a ton of crop. If Europe pulls heavy, prices will remain steady to up. Quality looks to be fair to good on most product. HANGING FRUIT APPLES & PEARS Apples: The apple market has stabilized, as the harvest is complete. Pricing is expected to stay constant through the New Year. New varieties are available. Demand is moderate. Pears: The pear market is stable and should remain stable throughout the New Year. California and imported bartlett, red bosc, butter pears and Korean Asian pears are available. 9