Business Insights

April 2019 Market Outlook

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Beef

While retail demand for beef normally stalls during the first two weeks of April, lower-than-expected beef production has led to tight availability for certain primals, keeping prices firm for this time of the year. The negative impact that weather has had on beef production is still in place, however more moderate conditions in certain Plains states is indicating conditions on feedlots may be improving. The USDA’s National Weekly Fed Cattle Comprehensive report released on 4/02 showed dressed cattle weights for prior week were at 843.8 lbs./ head. While this measure is 7 lbs. below last year’s dressed weights for the week, last week’s reading is 5 lbs. higher than the previous week. And, while beef exports have been slower YTD, the prospects of increased demand from China is providing a supportive tone as China has been an aggressive importer of beef from Australia/NZ and Brazil in recent months. Finally, seasonally strong gross margins should incent packers to maintain a strong slaughter pace in the near term.

Ribeyes: Prices have taken on a more neutral tone as buying interest has taken a pause even in the face of what is normally an increase in seasonal demand for Choice product. Short Term: Steady pricing.

Strips: Prices continue firm due to robust retail demand in the face of tight supplies from packers. Short Term: Firm pricing.

Tenderloins: Prices are firming as buying interest for spring demand has been reported to have picked up, providing support for both Choice and Select grade products. Short Term: Firm pricing.

Tri-Tips: Prices have shifted to a more neutral tone this week with prices trading in line with the five-year average for the week. The trade will continue to focus on the potential for increased demand from the QSR segment. Short Term: Steady pricing.

Top Butts: Prices are expected to stay strong over the next few weeks due increased seasonal demand. Also, product availability from packers is reported to be tight by some participants. Short Term: Firm pricing.

Briskets: Prices will retain a neutral tone over the next few weeks as buying interest after the St. Patrick’s day holiday has moderated. The trade will be focused on the success of current LTO’s by QSR for future price direction. Short Term: Steady pricing.

Flap Meat: Prices have continued steady however normal seasonal demand tends to support prices; current prices are trading below the long-term average and buying interest has started to come in such that we expect to see firming soon. Short Term: Steady pricing.

Skirt Meat: Prices have retained their neutral tone this week with loads being traded at prices near the long-term average for the first week of April. Short Term: Steady pricing.

Inside Rounds: Prices have taken on a more neutral tone as feature activity from retailers has moderated in recent weeks and seasonal demand tends to fall off in April. Short Term: Steady pricing.

Ground Chuck: Prices will maintain a bullish tone as strong feature activity for grinding meats overall will be support for ground chuck prices going into grilling season. Short Term: Firm pricing.

81/19 Ground Beef: Ground beef continues firm. Although beef imports were up 4% last week over prior year according the USDA’s Imported Meat Passed for Entry in the US report, strong feature activity by retailers will be supportive for prices. Short Term: Firm pricing.

Poultry

The broiler statistics continue to be strong and retail and foodservice continue to keep production sustainable. Average weights have increased just slightly as the weather conditions have moderated.

WOG’s: WOG prices have moderated after taking a slight increase a few weeks ago. Historical trends indicate strength in the market as summer gets closer. Short Term: Firm pricing.

Breasts / Tenderloins: The breast and tenderloin markets have stabilized for the short term. Expect seasonal increases going into the summer. Short Term: Firm pricing.

Wings: Although past trends for wings are varied, the expectation is that the market should be moving lower as the basketball events wind down and America’s favorite finger food is replaced by more seasonal items. Short Term: Lower pricing.

Thighs: Thigh meat has stabilized over the past week but look for prices to move upward in the coming weeks. Export volumes are driving some other dark parts higher. Short Term: Steady pricing.

Turkey Whole Birds: Markets remain sluggish as demand is quiet. Short Term: Steady pricing.

Turkey Breast: Markets continue sluggish as well. Market prices are stuck in neutral but there is indication that seasonal price moderation is on the way. Short Term: Steady pricing.

Pork

Pork prices have retained much of their strength across the board. While export commitments from China were very strong at the beginning of March orders have been significantly smaller in the past three weeks. The potential for U.S. pork demand to backfill lost production in China due to African Swine Fever has the market on watch for higher prices given the generally positive reports on the progress of US/China trade discussions. The March 1st USDA Hogs and Pigs report indicated all Hogs and Pigs at 74.296 million head, 102.1% of last year’s inventory level. African Swine Flu update: China has reported 2 additional outbreaks this week with 1 report in an area that had not previously reported any outbreaks.

Bellies: Prices have taken on a neutral tone as buying interest, especially forward purchases, have moderated after several successive weeks of price increases. Short term: Steady pricing.

Loins: Loins will maintain their strength due to increased seasonal demand from retailers and foodservice channels as well as promotional interest from QSR. Short term: Firm pricing.

Ribs: Prices have taken on a bullish tone this week as normal seasonal demand typically increases in April. Short term: Firm pricing.

Butts: Prices have begun moving higher primarily due to increased export demand and U.S exports of butts have been tracking ahead of last year’s pace for the last eight weeks. There is also seasonal strength and demand. Short term: Firm pricing.

Hams: Hams have taken a softer tone this week as prices had gotten ahead of themselves over the last few weeks and buying demand has quieted down considerably. Exports of hams to Mexico, which buys approximately 85% of all U.S. exported ham was down 4.8% according to January trade data released last week. Short term: Lower pricing.

Seafood

Farmed White Shrimp: Prices continue to be firm on most sizes of raw headless blocks and raw peeled and deveined. Sizes 21/25 and larger continue to strengthen as overseas production is seasonally limited. 51/60 -71/90 peeled deveined tail off are seeing some early discounting. Market depending on sizes is mixed. Overall market is steady.

Farmed Black Tiger Shrimp: All forms of large black tiger shrimp are steady in price with premiums noted in 8/12 and larger counts. Black Tiger shrimp will be under pressure for price decline as the white shrimp market prices are lower. Market is steady for now.

Wild Gulf of Mexico Shrimp: The final fishing effort for White Mexican shrimp ended March 15th with final catches continuing to be imported into the USA. Market prices remain steady while expectations are for increases in U/10. Short Term: Steady pricing.

Warm Water Lobster: The Caribbean origin tails are unchanged. Market remains solid and firm. Supplies are short and holes continue to develop in inventory. Prices remain firm. Demand remains active.

Cold Water Lobster: Premiums were reflected in the market for 6-7 through 10-12oz tails. Demand is active, supplies are limited and processing seasonally light. Short Term: Steady to firm pricing.

Lobster Meat: Premiums continue to develop on both KC and KCL meat as supplies have tightened. Short Term: Steady pricing.

Canadian Snow Crab: Market remains full steady. 8/Up Crab supplies are nil and quotations have been removed until the new season begins. Short Term: Steady to firm Pricing.

King Crab Legs: The market is full steady on both Red and Gold King Crab. Supplies of both Red and Gold king crab out of Russia is light. Short Term: Firming Pricing.

Ahi/Yellow Fin Tuna: Market remains unchanged. Supplies are adequate for an active steady demand. Short Term: Steady pricing.

Pangasius / Swai / Basa: Overall market remains soft as more inventory overseas is offered at lower prices. Supplies are fully adequate for a lackluster demand. Short Term: Softening pricing.

Norwegian Salmon: Market has adjusted higher. Demand in Europe has increased causing prices to increase. Supplies are adequate. Short Term: Firming price.

Chilean Salmon: Market is unchanged with adequate supplies and dull demand. Supplies are steady. Short Term: Stable pricing.

Mahi Mahi: The market on imported mahi trended lower this week. Supplies are adequate for a moderate demand. Short Term: Steady to declining pricing.

Catfish Fillets: Import prices are slightly up but much of the 10% tariff was absorbed into the market. No change has been reported. Demand remains stable to flat. Inventory is available. Short Term: Stable Pricing.

Scallops: Prices adjusted lower as the 2019 season opened this week with increased quotas. Short term: Softening prices.

Atlantic Cod: Overall the Atlantic cod stock is good. 8/16 cod from Iceland is very tight, 16/32s are in good supply. Atlantic – Cod twice frozen from China – Fishing has been good with prices holding firm or slightly increasing. Market: Steady to Firm

Pacific Cod: Fishing has been steady. Prices are holding steady to firm. Expect this to continue in the short term. All size loins are available. Pricing should start to soften in the next several weeks.

Pollock: Single frozen pollock fishing has been good. Prices are up 8-10% over prior year ,this is due to strong demand globally and expected to continue in the short term. Twice frozen china -Pricing pressure is upward due to the single frozen market being up. Supply on 4/6s continues to be tight. Demand is high for this size.

Dairy

Milk / Cream: Milk production throughout the majority of the U.S. is realizing weekly improvements as current inventories are still comfortable. However, demand continues to improve given elevated product run rates. Seasonal holiday demand and summer ice cream demand adding to the stronger prices. Cow slaughter remains elevated and should underpin prices.

Butter: Prices are trending sideways as elevated churn rates continue to put more supplies into cold storage for use later in the year. Demand has improved, but cream is still available and manufacturers are comfortable in the current price range.

Cheese: The higher priced cheese markets this past week have started to push buyers to the sidelines as the market has started to set back and consolidate. Demand is steady and the market is looking more balanced than prior weeks. Overall inventories did tighten up some on the most recent cold storage report, but remain plentiful. Plenty of discounted milk supplies are still clearing into facilities, keeping production elevated and should help stabilize prices.

Shell Eggs: After trading sideways for 3 weeks, prices are attempting to put in some new nearby lows. The lack of holiday buying yet, in tandem with a record laying flock have pushed shell egg inventories to record levels. Once seasonal stockpiling begins, prices will likely work higher.

Grain & crop

The USDA Quarterly Stocks and Prospective Plantings reports last week provided plenty of new information to digest. Most was decidedly negative to prices as old crop stocks came in above expectations, and corn acreage for the new crop was also above expectations. Soybean acres are estimated to decline more than anticipated. However, the U.S. markets are being supported by ongoing flooding concerns and the daily talks around a trade deal with China getting closer and closer. There is still very little risk premium in prices with the whole growing season still ahead.

Soybean Oil: Soybean oil prices have found support off of recent lows as the soybean market has worked higher on fewer new crop acres and a more optimistic outlook for a trade deal with China. Demand remains strong for soybean oil as the crude market rally is making biodiesel more profitable. Also some speculative rebalancing added to the higher price outlook.

Canola: China announced the suspension of the 3rd major Canadian canola exporter as their trade spat is ongoing. This has kept canola seed prices at depressed values given Canada typically sends 40% of their crop to China. Until this gets cleared up, prices seem to be stuck in limbo.

Palm Oil: Palm oil prices are moving higher as the cheaper prices incentivize some increased export demand. March exports from Malaysia were reported up 28.1%. It’s a start but there is still a long road ahead to bring burdensome global stocks back in balance.

Produce

Limited Avocado Supplies
Mexico’s winter season is wrapping up; stocks are limited. Prices are escalating.

  • Size is currently dominated by 40-count and larger fruit; 48-count and smaller sizes are tight
  • Limited quantities of California fruit are on the market; crop estimates are down approximately 50% from last season due to warmer-than-normal temperatures in Southern California in late July 2018
  • Prices are expected to remain elevated into June, when summer crop volume increases

Onions
Storage crop Markon First Crop (MFC) Red and Yellow Onions from the Northwest will remain on the market through late April/early May.

  • The start of the Texas-grown, fresh-run MFC Onion season has been delayed due to rain, but it will begin next week
  • Expect ample supplies of yellow onions
  • MFC Red Onions will be limited at the start of the season, but stocks will increase the week of April 15
  • Fresh-run MFC Onions will be available in California’s Imperial Valley the week of April 22
  • MFC Onions from New Mexico will start shipping in early June

Grapes Transitioning to Mexico
The Chilean grape season will come to an end in early June; prices will climb. Mexican supplies will hit the market in May.

  • Chilean-grown Lunch Bunch Grapes will be available through mid-June; Mexican-grown stocks are anticipated to start shipping at the same time to avoid any supply gaps
  • Mexican-grown green and red seedless supplies are expected enter the market late May
  • Prices will ease when Mexican supplies ramp up in early June

Celery Supplies Remain Limited
Expect high celery prices and tight supplies through May 2019.

  • Overall acreage in the Arizona and California growing regions is below normal this season
  • Weather has caused quality problems and low yields for commodity and value-added packs
  • The Salinas Valley is on schedule to start harvests in early June; stocks will increase at that time

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