Business Insights

December Market Outlook

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Beef

General comments

As of Wednesday, cash cattle exchanged hands at prices of $117.50-$118 presaging what will likely be a higher market this week. Currently, owners are offering cattle mainly at $120; bids are mostly attempting steady prices of last week’s $118. Expectations are for the cash cattle to trend upward; this will keep an upward bias on most beef cuts.

Two full slaughter weeks, including this week, will make up the slaughter for the balance of the year. Progress maintaining the full slaughter schedule – which packers will be encouraged to do – will nevertheless always be subject to weather. Storm interruptions both leave retail counters short of necessary supplies of beef and leave feedyards with undelivered inventory. Most feedyards are operating near capacity and cancelled shipments are disruptive. Winter storms can have a bullish effect on prices as long as the storms do not curb demand.

Tighter cattle supplies appear to be weighing on production, and are expected to temper year-over-year gains into the winter months. Buying interest for beef typically slows in post-holiday periods. Next week “should” be the beginning of that slowdown. In general, most items in the Rib and Loin Primals should start to migrate lower next week and the most items in the Round and Chuck Primals should start to see price increases on seasonal interest. Grinds are expected to move higher late in the year.

Loins

Top Butts: Choice prices moved lower while Select pricing held its ground. Top butts have outperformed seasonal price trends, and current prices are consequently higher than seasonally average. Short Term: Steady to firm pricing.

Strips: Choice prices climbed and Select values declined this week. Unlike top butts, strips pricing has mirrored seasonal price trends for most of the fall, and current prices are just below seasonally average for both Choice and Select. Short Term: Steady pricing.

Tenderloins: Prices moved lower this week for both Choice and Select cuts. Prices typically deflate through the month of December, and recent price action has suggested that this year will be no different. Current prices are still higher than seasonally average. Short Term: Steady to lower pricing.

Tri-Tips: Choice values weakened and Select prices rallied. Prices will likely hold steady for the remainder of the year, and current prices are just under seasonally average. Short Term: Steady pricing.

Ribs

Ribeyes: Choice pricing saw sharp increases this week while Selects strengthened to a much lesser degree. Both cuts remain well above their respective seasonal averages, but prices typically deflate through the month of December. Short Term: Steady to lower pricing.

Chucks

Chuck Rolls: Values fell for both Choice and Select chuck rolls. Prices have tracked downward seasonal price trends over the past few weeks, but current prices remain higher than seasonally average. Short Term: Steady pricing.

Teres Majors: Choice prices were lower, but Selects rallied this week. The market will likely hold steady for the remainder of the year, and current prices are now just above seasonally average. Short Term: steady pricing.

Briskets: Prices were lower this week, but Select cuts saw steeper declines than Choice. As previously mentioned, briskets have outperformed seasonal price trends for more than two months, so current prices remain higher than seasonally average. Short Term: Steady to firm pricing.

Thin meats

Ball Tips: Prices continue to dwindle lower for ball tips, as both Choice and Select prices were lower again this week. Prices will likely hold mostly steady, and current prices represent bargain buys well below seasonally average prices. Short Term: Steady to lower pricing.

Flap Meat: Select prices rallied, but Choice values declined. Although prices have trended downward for the better side of a month, current prices remain higher than seasonally average. Fortunately, prices are expected to continue their decline. Short Term: Steady to lower pricing.

Skirt Meat: Inside and Outside skirt prices saw moderate losses this week. Expectations are unchanged, and prices should be steady to slightly weaker in December. Short Term: Steady to lower pricing.

Flank: Choice values were sharply higher this week while Select flanks were slightly higher. The advances made this week will push prices even further above seasonally average prices, but prices a

Rounds

Peeled Knuckles: Prices rebounded this week with both Choice and Select values edging higher. Prices will likely decline over the course of the next month, but they will likely remain higher than seasonally average. Short Term: Steady to lower pricing. 

Inside Rounds: Prices were lower for the second week in a row. Current prices are at bargain levels, and will likely remain there for the rest of the year. Short Term: Steady to lower pricing. 

Bottom Round Flats: Both Choice and Select prices receded this week. Current prices remain below seasonally average levels, and prices are expected to trade sideways for the remainder of the year. Short Term: Steady to lower pricing.

Eye of Rounds: The market diverged with Select values climbing significantly higher, and Choice prices declining moderately. Current prices are well below seasonally average, and prices will likely trade sideways through year’s end. Short Term: Steady to lower pricing.

Grinds

Ground Chuck: Prices were lower this week, but current prices remain marginally higher than year-ago prices. As with grinds, prices are likely to trade up in the coming weeks. Short Term: Steady pricing.

81/19 Beef Grind: Prices were lower this week, and current prices year-ago prices. However, the market began to strengthen around this time last year. Short Term: Steady pricing.

Poultry

general comments

Broiler-Type Eggs Set in The United States Up 1 Percent – Hatcheries in the United States weekly program set 228 million eggs in incubators during the week ending November 24, 2018, up 1 percent from a year ago.

Broiler-Type Chicks Placed in the United States Down 1 Percent – Broiler growers in the United States weekly program placed 173 million chicks for meat production during the week ending November 24, 2018, down 1 percent from a year ago. Cumulative placements from the week ending January 6, 2018 through November 24, 2018 for the United States were 8.55 billion up 1 percent from a year earlier.

Wogs

Whole bird prices were steady. Expectations are unchanged and the market is still expected to dwindle in the coming weeks. Short Term: Steady to soft pricing.

Breast meat & tenderloins

Breast and tenderloin prices ended the short term reviews flat. Prices continue to linger near record lows, and current prices present a tremendous buying opportunity. The market is expected to trade sideways for the remainder of the year, so prices will likely remain very low. Short Term: Steady low prices.

Wings

Wing prices firmed this week, but the market bias still leans to the weaker side. As noted last week, the downside of the wing market is limited, and prices are expected to firm slightly in the month of December. Short Term: Steady pricing.

Thighs

Thigh prices were higher on a week-to-week basis, but prices gradually softened throughout the week. Prices are expected to weaken in accordance with dwindling demand in the coming weeks. Short Term: Steady to lower pricing.

Turkey whole birds

Prices were stable again this week. Sellers’ ability to keep sales prices relatively stable has altered the market bias to steady firm. Short Term: Steady pricing.

Turkey breast meat

The market was unchanged this week. Light to moderate offerings continue to be met with the same light to moderate demand. Short Term: Steady pricing.

Pork

General comments

African Swine Fever Update
China’s agriculture ministry said this week it has confirmed additional outbreaks of new African swine fever. While not large herds it appears the disease is still spreading. The highly contagious fever has killed around a million pigs worldwide and recently spread rapidly across China, which has reported 80 cases since early August. Vietnam is taking steps to prevent the spread of the disease as it risks transmission from neighboring China. No new outbreaks elsewhere have been reported. We will continue to monitor the situation and keep you informed.

Loins

Prices climbed higher this week. The advance in the current market have had little effect on where current prices stand relative to year-ago and seasonally average pricing. Short Term: Steady to firm.

Tenders

Tenderloin prices were moving slightly higher. As with loins, current prices remain well below seasonally average pricing and year-ago pricing. Short Term: Steady pricing.

Butts

Prices were soft this week after rallying last week. Current prices are now resting just below seasonally average market, and the market should hold mostly steady in the short term. Short Term: Steady pricing.

Belly

Belly prices rallied this week. Current prices still represent bargains as they are below both year-ago and seasonally average prices. The market should hold steady over the coming weeks. Short Term: Steady to firm.

Ribs

The rib complex moved higher this week with backrib prices seeing the largest gain. The demand for pork ribs remains strong, but prices are expected to hold mostly steady. Short Term: Steady pricing.

Hams

Ham prices were higher this week after falling last week. Ham prices typically decline after the Thanksgiving holiday, and prices are still expected to decline in the coming weeks. Short Term: Steady to soft pricing.

Dairy

Butter

Cream supplies are becoming more available around the nation which is helping increase production. However, with holiday orders beginning to slow, some producers are beginning to scale back production. In the East, production was active due to heavier cream supplies. Western market participants reported that retail sales have been strong. Lastly, Central butter markets are on their seasonal decline. Short Term: Steady to Firm pricing.

Cheese

Cheese demand is ramping up nationally. In the Midwest, cheese shredders are busier this week, but overall production is lower. Northeastern cheese production is stable to slightly lower, and demand is ramping up. Lastly, Western cheese prices pushed lower this week, and export demand is increasing in the region. Short Term: Steady to lower pricing.

Shell eggs

Retail demand varies by region depending on promotional activity, and as a whole movement is about average for this time of year. Wholesale traders also vary depending on their customer base and their regional promotional activity. Short Term: Steady to firm pricing.

Milk & cream

Nationally milk production remains lower than expected for this time of year. Fortunately, Western market participants reported that milk is plentiful for processing needs. On the other hand, Central and Eastern contacts reported that poor feed quality is negatively affecting component levels.

Although cream is becoming more readily available nationally, contacts are having difficulty finding loads where it is not immediately available. Eastern cream supplies were slightly higher this week, which is helping butter producers prepare for holiday orders. But in the West, cream supplies are tighter than usual, but a few loads are becoming available for spot orders. Lastly, Midwestern contacts reported that cream is becoming more readily available, supplies remain tighter than usual. Short Term: Steady to firm pricing.

Seafood

Shellfish & shrimp

Shrimp: Demand was strong again this week, but the oversupply situation continues to dominate the narrative. As such, the majority of the white shrimp complex is still subject to discounting.

Farmed White: Market values ranged from barely steady to weak. Discounting is prevalent in 31-35 through 41-50 HLSO products from Asian origins. The remainder of the white shrimp complex was mostly steady, but there remained a willingness to discount.

Farmed Black Tiger: The market for large black tiger shrimp continues to firm and many products are now subject to premiums. Meanwhile, smaller count shrimp are still being discounted.

Wild, Gulf of Mexico: The fishery season is nearing a close, and the market is holding steady. White shrimp inventories are considered limited.

North American Lobster: There weren’t any notable changes recorded in the tail market this week, but prices are still fully supported. Concurrently meat prices range from barely steady to weaker due to slower demand. Short Term: Steady to firm pricing.

Warm Water Lobster Tails: Prices are holding steady. It was noted last week that the market bias was transitioning from firm to steady, and activity this week seems to confirm that. Short Term: Steady pricing.

Live Lobster: Initial landings are finally coming in after a five-day delay. Unsurprisingly, catches are reportedly lower than last year and the market undertone is unsettled. Short Term: Steady pricing.

Scallops: Due to lighter landings in recent weeks, pricing on U.S. origin U/10 scallops is firm. But, abundant landings from earlier in the year are grounding prices for the time being. Short Term: Steady to firm pricing.

King Crab: Russian origin king crab products were steady this week. It was reported this week that Norway will cut its king crab quota for 2019 by 20%, which could lend support to prices in the future. Short Term: Steady to firm pricing.

Snow Crab: Snow crab prices were unchanged this week. Pricing on 5-8s and lower are steady to slightly weaker, while 8 and 10 ups are more firm due to a more active demand. Short Term: Steady to firm pricing.

Crab Meat: Both blue and red swimming crab meat markets are unchanged this week. The market bias for blue swimming crab meat remains weak, and supplies are adequate for current demand conditions. On the other hand, red swimming crab meat supplies remain light and demand is moderate. Short Term: Steady pricing.

Finfish

Salmon: West Coast Fish prices were unchanged this week. Supplies are well balanced for a fair demand. Northeastern Whole Fish markets adjusted lower this week on 12-14 and 14-16 lb. fish and the predominant size available in the Northeast has transitioned to larger fish. Conversely, Norwegian Whole Fish markets moved higher on 5-6 lb. fish, but the remainder of the market was unchanged. Lastly, Chilean Whole Fish prices were unchanged.

Atlantic Cod: The supply shortage from earlier in the year still serves as the market headline for Atlantic Cod. As such, prices remain firm. Short Term: Steady to firm.

Pacific Cod: Once again the market was unchanged. Prices will likely remain higher than year-ago prices for the remainder of 2018 as market conditions are not expected to improve. Short Term: Steady to firm pricing.

Pollock: The market was unchanged and supplies are still considered good. Despite adequate supplies, current prices are still higher than year-ago prices. Short Term: Steady pricing.

Basa: Prices adjusted higher on all sizes of basa this week. Although the market is expected to hold mostly steady for the remainder of the year, the firming prices can be attributed to the supply issues from Chinese origin products. Short Term: Steady to firm pricing.

Catfish: Prices were steady this week but the overall market bias remains firm. Current values are sitting just above year-ago prices, but values may still deflate with lower buyer activity in coming weeks. Short Term: Steady pricing.

Whole Fish Tilapia: The market held steady once again this week, and it’s expected to remain steady through the end of the year. Short Term: Steady pricing.

Mahi Mahi Fillets: Initial landings for Ecuadorian and Peruvian mahi are starting to pour in, but it remains unclear as to whether supplies will be better or worse than last year. Short Term: Steady to lower pricing.

Grains & oils

Grain & crop summary

The market remains optimistic announcements will be made, at some point, regarding Chinese government purchases of U.S. agriculture products. Rumors remain widespread about the potential size of purchases and commodities involved, but there does seem to be a general feeling of not wanting to be on the short side of the market for the time being with such announcements anticipated to be coming. There are ideas initial soybean purchases could be in the 5 to 8 million metric ton (MMT) range, although JCI (a Chinese analytical firm) recently said they could be as much as 10 MMT. There are also rumors/thoughts/ideas corn, ethanol, wheat could all be involved as well, which would appear to be more on a goodwill gesture than based on need in our opinion. At this point it remains pure speculation on when, which commodities and how much may be involved.

Soybean oil

USDA reported October U.S.-wide soybean oil production was 2.128 billion pounds, up from 1.937 billion in September and compared to 2.017 billion pounds last year October. The October soybean oil yield jumped to 11.63 pounds/bushel from 11.44 in September and compared to just 11.47 last year October in confirmation that the oil content in this year’s crop is markedly better than that of last year’s. Based on estimated exports for the month, we see soybean oil domestic usage in October was up roughly 1% year-over-year and followed September domestic usage which was up nearly 22%, August up 7% and July up 3%. This is neutral/friendly for soybean oil prices.

Canola

USDA reported canola seeds crushed for crude oil was 175,960 tons in October 2018, compared with 178,162 tons in September 2018 and 184,463 tons in October 2017. Canola crude oil produced was 146 million pounds down 4 percent from September 2018 and down 6 percent from October 2017. Canola once refined oil production at 132 million pounds during October 2018 was down 18 percent from September 2018 and down 9 percent from October 2017.

Statistics Canada issued updated crop production estimates this morning, the canola crop was revised down to 20.343 million metric tons (MMT) from 21.0 MMT estimated in September and was below the average trade estimate of 20.8 MMT (20.3 to 21.3 MMT estimate range) and compares to last year’s 21.3 MMT. This is neutral to friendly for canola oil prices.

Palm oil

The Malaysian Palm Oil Board will release its monthly report on December 10th. Average market expectations of November palm oil production are 1.923 million metric tons (MMT) (1.867 to 2.024 MMT estimated range) vs 1.965 MMT in October and 1.943 MMT last year. End of November palm oil stocks are estimated at 3.016 MMT (2.977 to 3.099 MMT estimated range), up sharply from 2.529 MMT in October, well above year ago November stocks of 2.554 MMT and would be, most likely, all-time record large in surpassing November 2015’s 2.911 MMT. Current data availability goes back to 2000. November exports are estimated at 1.405 MMT (1.380 to 1.534 MMT estimated range) vs 1.571 MMT in October and 1.356 MMT last year. This is neutral to friendly for palm oil prices.

Produce

Elevated markets expected through mid-december

Many commodity markets are elevated and are expected to remain elevated through the week of December 10. There are varying factors which have contributed to the market volatility, including lower temperatures. Cooler than normal weather over the past two-to-three weeks in the growing regions of Central Mexico and desert growing regions of California and Arizona has slowed plant maturity of the following items:

  • Broccoli
  • Cauliflower
  • Celery
  • Iceberg
  • Green leaf
  • Romaine
  • Tender leaf items
  • Strawberries

Slowed plant maturity, coupled with the current romaine E.coli crisis has pushed the produce industry into a state of disruption for the last two weeks. Markon is not expecting any easing in the coming week. The above mentioned items will experience limited supplies through the week of December 10. Which will keep both commodity and value added markets elevated. Simply put, there simply is not enough supply to cover demand. To further reduce availability, the weather forecast for Yuma, Arizona through mid week calls for high temperatures to not exceed the mid-60 degree mark. In comparison, Yuma’s average high temperature for November and December is 78 and 69 degrees respectively. This cooler weather will further tighten supplies, impacting markets.

Brussels sprouts

  • Ready-Set-Serve (RSS) Brussels Sprouts and RSS Brussels Sprout Halves are limited
  • Cold weather has decreased yields in California’s growing regions
  • Expect limited stocks and elevated prices for the next couple weeks

Red bell peppers

  • The market continues to rise
  • Supplies are extremely tight; the California season is coming to an end
  • Mexican stocks are beginning to trickle into Arizona and Texas; expect more plentiful supplies the week of December 17
  • Florida volume is low

Strawberries

  • Prices are elevated
  • Rain continues to affect growing conditions in California and Florida, limiting availability
  • Expect extremely limited supplies over the next two weeks
  • Florida volume will increase as the season ramps up

Celery

The market is climbing; demand is strong. Supplies are limited in all growing regions.

  • Yields are down dramatically in the Oxnard, California growing region due to a disease called Fusarium
  • Supplies out of Florida and Arizona are extremely limited due to unfavorable growing conditions

Highlights

  • Low temperatures are causing lettuce ice in the Yuma, Arizona growing region. Harvesting delays and lower volume are forecast.
  • Expect high prices and tight broccoli, cauliflower, iceberg, and tender leaf supplies. Sustained cold weather is slowing maturity in the Arizona/California desert region.

Produce Highlights

Grapes

  • Markon Essentials® (ESS) Red Seedless Grapes are not available.
  • Green seedless and portion packed supplies will ship from storage through late December/early January.

Red Bell Peppers

  • Expect high prices and extremely low volume until the Mexican season ramps up in mid-December.
  • The California desert season is coming to an end; many growers have finished harvesting for the season.

Romaine

  • Prices are elevated.
  • The recent FDA ban on romaine has been lifted for products not grown in Central or Northern California.

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