Business Insights

November Market Outlook

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Beef

General comments

As of Thursday, very little traded in the cash cattle market after a very active previous week where plenty of cattle switched ownership at $114-$115, $3-$4 higher than the previous six weeks. The bids remain at $114 with most cattle owners offering their cattle at $118. The beef cutout continues to move higher with good demand across all cuts. The 50% grind has stabilized and moved higher in recent trading. Retailers are signaling good demand and they are ready to build inventories for the holidays.

Looking on the retail side, the holiday season is approaching and with the economy in overdrive, look for beef sales to be good this holiday season. The middle meats will lead the way. We may see an extra night out for a high dollar steak or simply a prime rib roast on a special occasion. Football games and outdoor events with cooler weather can help encourage beef features. Tenderloins and ribeye’s continue to rise in cost due to holiday demand. Round, chucks, flanks, strip-loins and top butts are holding steady.

Loins

Top Butts: The top butts markets trended higher this week with Choice and Select prices advancing throughout the week. Seasonally, prices tend to firm or stabilize heading into the month of November, and current prices are no exception. Short Term: Steady to firm pricing.

Strips: Strips pricing was steady again this week, with Choice prices adjusting slightly lower. Choice and Select values have traded sideways to lower over the course of the last month, and are expected to hold mostly steady through the end of the year. Short Term: Steady pricing.

Tenderloins: Tenderloin values continued their upward march this week in accordance with seasonal price trends. Current Choice and Select pricing is higher than seasonally average, and should continue to move higher in the coming weeks. Short Term: Firm pricing.

Tri-Tips: Tri-tip values diverged with Choice prices climbing higher and Selects pricing moving moderately lower. Although prices typically trend sideways this time of year, Choice values continue to appreciate and are now well above seasonally average pricing. Short Term: Steady to firm pricing.

Ribs

Ribeyes: Choice ribeyes were mostly steady with a stronger undertone while Select prices increased. Current prices for both Choice and Select cuts are well above seasonally average pricing, and will likely hold its strength through November and into December. Short Term: Firm pricing.

Chucks

Chuck Rolls: Choice and Select chuck rolls saw significant inclines this week. Prices typically appreciate this time of year, so the spike in prices isn’t abnormal, and current prices are still below seasonally average for both Choice and Select chuck rolls. Short Term: Steady to firm pricing.

Teres Majors: Teres majors traded sideways this week with Choice and Selects staying mostly steady. However, current prices have bucked seasonal downtrends, and both Choice and Select prices remain above seasonally average prices. Short Term: Steady pricing.

Briskets: Brisket prices trended higher for both Choice and Select. Brisket values have outperformed seasonal price trends and are higher than seasonally average pricing. Short Term: Steady to firm pricing.

Thin meats

Ball Tips: Choice and Select values increased after holding steady last week. The price increase may suggest that the market found support due to current prices resting well below seasonally average pricing. Short Term: Steady pricing.

Flap Meat: Flap meat values trended higher this week following last week’s stronger undertone. Recent price action has bucked seasonal downtrends, and prices continue to climb. Fortunately, expectations are for prices to stabilize. Short Term: Steady to firm pricing.

Skirt Meat: Outside skirt prices were higher this week, while Inside skirt values remained mostly the same. Prices continue to move with seasonal trends, and they should continue to soften in the short term. Short Term: Steady to lower pricing.

Flank: Choice and Select flank values were steady with a stronger undertone this week. Prices typically decline this time of year, and flank values have tracked seasonal price trends for the majority of this year. Short Term: Steady to lower pricing.

Rounds

Peeled Knuckles: Peeled knuckle values say a sharp increase this week. Prices have gradually inched closer to seasonally average pricing, but current prices remain well below seasonally average. Short Term: Steady to firm pricing.

Inside Rounds: Choice prices appreciated while Select prices declined. Prices have trended upward for the majority of the month of October, but current prices remain below seasonally average prices. Short Term: Steady to firm pricing.

Bottom Round Flats: Choice prices climbed while Select pricing was steady. Current prices present bargain-buys because they are well below seasonally average prices, and prices are expected to hold mostly steady over the course of the next month. Short Term: Steady pricing.

Eye of Rounds: The rally continued for eye of rounds this week. Both Choice and Select prices climbed higher, but prices still remain below seasonally average pricing. Short Term: Steady firm pricing.

Grinds

Ground Chuck: Ground Chuck prices were higher again this week, but not by much. But, current prices remain below year-ago prices and are now in line with seasonally average pricing.

81/19 Beef Grind: Prices trended higher again this week. Despite the increase, current prices remain below year-ago and seasonally average prices. The market should hold mostly steady in the near term. Short Term: Steady pricing.

Poultry

General comments

Broiler-Type Eggs Set in the United States Down Slightly – Hatcheries in the United States weekly program set 219 million eggs in incubators during the week ending October 27, 2018, down slightly from a year ago.

Broiler-Type Chicks Placed in the United States Down 1 Percent – Broiler growers in the United States weekly program placed 174 million chicks for meat production during the week ending October 27, 2018, down slightly from a year ago. Cumulative placements from the week ending January 6, 2018 through October 27, 2018 for the United States were 7.85 billion up 1 percent from the same period a year earlier.

Whole broiler/fryer prices are steady to firm for most sizes. Supplies are light to moderate with heavier sizes more available. Demand into retail and food service channels is light to moderate. In the parts structure, small wings are steady-firm; the balance of white items is steady to weak with jumbo boneless skinless breasts weakest. The market for dark items is steady to weak. Supply and demand of tenders and wings is in fairly good equilibrium.

WOGS

Whole Bird and WOG markets were mixed this week, but they could continue to find seasonal strength over the course of the next week. Smaller sized whole birds are still in short supply, but supply conditions are expected to improve. Short Term: Steady to firm pricing.

Breast Meat & tenderloins

Breast meat and tenderloin markets continue to decline. Breast meat prices continue to hover around record lows and present a tremendous buying opportunity. Short Term: Steady to lower pricing.

Wings

Wing prices have declined slightly. Expectations are for wing markets to be mostly stable in the coming weeks. Short Term: Steady to firm pricing.

Thighs

Dark meat and thigh prices held steady this week and are expected to trade in a similar manner in the coming weeks. Short Term: Steady to lower pricing.

Turkey whole birds

Supply conditions improved slightly this week which helped hold prices steady. The market will likely firm before Thanksgiving. Short Term: Steady pricing.

Turkey breast meat

Breast meat values trended slightly higher again this week. Expectations were for demand to soften as the fall progressed, but that has yet to happen. Short Term: Steady to firm pricing.

Pork

General comments

Total pork production for the week ending October 27, 2018 was estimated at 538.8 million lbs. This was .4 percent under the previous week, and 1.3 percent over last year. In the coming weeks, plentiful hogs, at heavier weights are expected to boost year-over-year pork production gains.

The pork market seems to be holding steady besides ham, which is up in price due to holiday demand. Since 2015, the average move for the 23-27 lb. ham market in the first two weeks of November is up 3.6%.

Lions

Loin prices are called steady after the early month decline. Current prices are now in line with year-ago and seasonally average pricing. Prices are expected to hold mostly steady over the next month. Short Term: Steady pricing.

Tenders

Tenderloin pricing climbed slightly higher this week. The increase is likely short lived considering that prices typically trend downward seasonally. Short Term: Steady pricing.

Butts

Prices edged higher this week. Butt prices have traced seasonal trends for the majority of the fall, but this latest price increase leaves current prices slightly higher than seasonally average pricing. Short Term: Steady pricing.

Belly

Belly prices declined this week. After weeks of outperforming seasonal price trends, it appears that gravity is starting to catch up to pork bellies. Current prices are well above seasonally average, but the market should soften in the near term. Short Term: Steady to lower pricing.

Ribs

The rib complex was weaker this week, with backrib prices and primal rib prices seeing the most significant declines. Current prices are now well below seasonally average prices, and the market should hold mostly steady. Short Term: Steady to lower pricing.

Hams

Hams were somewhat steady with a weaker undertone. Current prices remain well below seasonally average, and the market is expected to trade sideways in the coming weeks. Short Term: Steady pricing.

Dairy

Butter

Bulk orders from wholesalers, retailers, and food service businesses are officially starting to ramp up nationwide in anticipation of year-end holiday baking season. In the Western region, the market undertone for butter is strong, and buyers are reportedly very active. In the Northeast, cream is becoming more available which is allowing for increased production. Conversely, cream supplies are tight in the Central region which is hampering butter production in the region. Short Term: Steady firm pricing.

Cheese

Milk availability is rising in the Western and Northeastern regions, but decreasing in the Midwest. Nationally, cheese production is reportedly stable to increasing. In the West, there is more than enough available milk for cheese production and cheese inventory is heavy. Similarly, in the Northeast, cheese production is higher despite slightly tighter cream supplies. Lastly, in the Midwestern cheese makers are beginning to build inventories as buyers hesitate to take on extra cheese. Short Term: Steady pricing.

Shell eggs

Retail demand ranges from fair to good, and orders continue to hinge on features but are generally improving as we edge closer to Thanksgiving and into baking season. Short Term: Steady to firm pricing.

Milk & cream

Milk production varies by region. In the East, farm-level milk production is ramping up but not as much in the areas affected by the recent hurricane. In the Midwest, milk volumes are heavier but there is regional tightness because buyers are actively seeking out milk loads. Lastly, in the West, production is stable to flat and cooler weather conditions are ideal for production.

Cream supplies vary by region. In the East, cream is tight and buyers are purchasing cream in the spot market at a premium. In the West, cream demand is growing and more cream is being used in the manufacturing process of sour cream, eggnog, and cream cheese for upcoming holidays. In the Midwest, cream prices are climbing due to the limited availability. Short Term: Firm pricing.

Seafood

Shellfish & shrimp

Shrimp: The import market is well supplied, competitive, and the market is barely steady to weak across the majority of the imported white shrimp complex.

Farmed White: Sellers are still willing to discount HLSO shrimp in order to stimulate sales activity. Additionally, discounting is beginning to appear in the 50-60 and 60-70 easy peel sizes.

Farmed Black Tiger: 16-20 and smaller count shrimp are weaker, but the larger black tiger shrimp remain firm and wanted.

Wild, Gulf of Mexico: Offerings are determinant on sellers’ individual holdings, but the sentiment of the market is mostly unchanged. Brown shrimp production remains active, and discounting was reported on the 10-15 and 16-20 HLSO shrimp.

North American Lobster: Tail prices are still firm and processors are still primarily focused on building stocks. Poor landings have limited inventory growth, which is lending strength to spot market prices. Short Term: Steady firm pricing.

Warm Water Lobster Tails: Demand continues to outpace supply which is limiting producers from amalgamating inventories. Consequently, the market is firm as new seasonal arrivals continue to land. Short Term: Steady firm.

Live Lobster: Better landings and steady inventories are helping deflate the prices of smaller sized live lobsters, specifically the 1 and ¼ lb. quarters and smaller. Short Term: Steady pricing.

Scallops: The market is unchanged this week, and supply conditions continue to improve on smaller sized orders. But larger sized orders remain mostly firm. Short Term: Steady to firm pricing.

King Crab: Supply conditions are unchanged from last week, which leaves smaller 14/17 and 16/20 count sized orders in tight supply. Short Term: Steady to firm pricing.

Snow Crab: The global supply shortage of Snow Crab persists, but is expected to garner some relief in the coming months. Short Term: Steady to firm pricing.

Crab Meat: Market conditions for blue swimming crab meat is unchanged, leaving downward pricing pressure prevalent on larger sized crab meat. Meanwhile, red swimming crab meat is firming on colossal, jumbo lump, and jumbo crab meat. The strength of the market is due to limited supplies entering the U.S. from China. Short Term: Steady pricing on blue swimming crab meat; Steady firm pricing on red swimming crab meat.

Finfish

Salmon: The West Coast Whole Fish Market is weaker on smaller sized fish. Similarly, the Northwestern Whole Fish Market is weak on smaller fish and continues to adjust lower on 6-8 and 10-12s trended lower. Norwegian Whole Fish prices are lower on all sizes, and sales activity is still quiet. Lastly, Chilean Whole Fish markets are unchanged, with a somewhat unsettled undertone.

Atlantic Cod: The market is unchanged and remains steady firm as supply shortages continue to burden buyers. Short Term: Steady firm pricing.

Pacific Cod: The market continues to firm due to allowable catch restrictions on Alaskan fishing grounds. Short Term: Steady to firm pricing.

Pollock: Pollock prices are steady this week, and supplies are good progressing through the fall Pollock season. Short Term: Steady pricing.

Basa: Basa prices edged slightly higher this week as the U.S. continues its transition to Vietnam as a primary supplier. It’s still uncertain whether the price change is a shorter to medium term change or a longer term change. Short Term: Steady to firm pricing.

Catfish: Catfish prices were steady this week despite the seasonally slower demand. There is a chance that offerings become more competitive with declining demand. Short Term: Steady to lower pricing.

Whole Fish Tilapia: The tilapia market was steady again this week, with ample supplies. Current prices are lower than year ago prices, and the market is expected to remain mostly steady. Short Term: Steady pricing.

Mahi Mahi Fillets: Mahi supplies were reported as “burdensome” for stagnated demand conditions which is placing additional downward pricing pressure on the market. Short Term: Steady to lower pricing.

Grains & oils

Grain & crop summary

Yesterday’s (11/1) USDA oilseeds crushing report showed soybeans crushed for crude oil was 5.08 million tons (169 million bushels) in September 2018, compared with 5.09 million tons (170 million bushels) in August 2018 and 4.36 million tons (145 million bushels) in September 2017. Crude oil produced was 1.94 billion pounds down slightly from August 2018 but up 14 percent from September 2017. Canola seeds crushed for crude oil was 178,162 tons in September 2018, compared with 170,472 tons in August 2018 and 193,523 tons in September 2017. Canola crude oil produced was 152 million pounds up 9 percent from August 2018 but down 8 percent from September 2017. The reported numbers were below market expectations and hence viewed as supportive to oil prices.

Soybean oil

Brazil’s National Council for Energy Policies proposed raising the country’s mandatory biodiesel blend from 10% currently to 15% over the coming years, in 1% annual increments. The move is seen raising Brazil’s domestic biodiesel production from 5.4 billion liters (1.4 billion gallons) to more than 10 billion liters (2.6 billion gallons) over the 5-year period. This is friendly for soybean oil prices.

Canola

IGC estimates Canada’s 2018/19 rapeseed/canola production down 4% from last year at 20.5 million metric tons (MMT), due to cool and wet weather. Western Canada’s canola harvest will see snow events this weekend and next week that stall progress for the last 20% of harvest. This is friendly for canola oil prices.

Palm oil

Indonesian domestic biodiesel consumption during the January to September period totaled just 2.06 million kiloliters, running well behind the government’s 2018 annual target of 3.92 million kiloliters, which implies usage thru September should have been around 2.94 million.

An Indonesian deputy energy manager confirmed, at a regional energy conference, that the government implemented its mandatory locally produced B20 biodiesel blending requirement for all diesel machinery in September. He expects the move to raise annual use of domestic B20 fuel consumption in the farming sector to around 6 million kiloliters (1.585 billion gallons) from 4 million kiloliters (1.057 billion gallons) used currently. This is friendly for palm oil prices.

Produce

Potatoes

The 2018 Idaho potato harvest is complete. Carton prices are expected to increase, but will decline as November progresses when more retail bags are produced for Thanksgiving.

  • Markon First Crop (MFC) Norkotah Potatoes are readily available
  • MFC Burbank Potatoes will begin shipping from storage the week of November 5
  • Strong demand for the Thanksgiving holiday typically begins in early November, decreasing carton prices, as foodservice cartons are a by-product of retail supplies
  • Storage crop Idaho White Russet potatoes will not be available until the first week of January

Rising avocado prices

Avocado prices are rising. Production is winding down in California, Chile, and Peru, making Mexico the primary growing region. This allows Mexican growers to manage shipments and push up pricing.

  • Markets will rise sharply next week due to limited stocks crossing into U.S.
  • Avocado packing sheds are anticipating extremely limited availability for the next few weeks, with possible order allocations taking place throughout the industry

Melons

Markon First Crop Cantaloupes and Honeydews are limited; packer label will be substituted as needed.

  • The California crop is facing weather challenges as the season winds down (typically late-November)
    • Quality is fair due to wet weather
    • Shelf life is shorter than normal
    • Markon recommends ordering for quick turns
  • Mexican cantaloupes and honeydews are on the market; quality is average
  • Offshore imports will begin arriving to the East Coast the week of November 19
  • Markon branded melons will not be available during the import season

Highlights

  • Tight supplies of Markon First Crop® (MFC) Premium Green Leaf, Iceberg, and Romaine are expected through the end of the Salinas season as the industry transitions to the Arizona desert growing regions.
  • Initial reports from the desert growing regions have vegetable row crops five to eight days behind schedule.
  • Although green bell pepper prices are rebounding, red bell markets are higher than last week.

Produce Highlights

Broccoli

  • The market is elevated.
  • Stocks are ample, but hollow core is an industry wide problem that is reducing shippable volume.

Oranges

  • The California Navel orange harvest has begun. Fruit will have a deeper orange color and fewer seeds than the California Valencia variety.
  • Sugar levels are on the low side, ranging from 9 to 10 Brix, which is typical to start the season.

Strawberries

  • Overall quality is improving.
  • Cold nights have caused some uneven color and reduced size a bit.

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