Business Insights

October Market Outlook

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Beef

General comments

Last week’s Federally Inspected (F.I.) harvest was estimated at 650,000 head. This was slightly lower than the previous week. Live cattle weights moved 3 more pounds higher this week, reported at 1355 pounds. Dressed carcass weights were 825 pounds, a 1-pound increase from last week’s report. The composite cutouts continue to be steady to slightly lower. Tenderloins and Ribs are rising in price due to many buyers booking early on their holiday purchases. Strips & Butts are remaining relatively steady, along with Chucks & Rounds. After some pressure on the grind markets, prices are leveled off now showing steady pricing. The choice/select spread is $12. Expectations are that buyers will procure their product for the holiday season in the coming weeks.

Loins

Top Butts: Pricing diverged once again this week, but Choice values rose while Selects moved lower. Overall, prices have moved lower in accordance with seasonal tendencies, and they should continue to slide through the month of October. Short Term: Steady to lower pricing.

Strips: Strip pricing has been stagnant, as both Choice and Selects held steady this week. Current prices sit on opposite sides of their respective seasonal averages, with Choice prices sitting above their five year weighted average and Selects resting below their seasonal average. Short Term: Steady to lower pricing.

Tenderloins: Tenderloin values jumped higher this week. Both Choice and Select tenderloin prices climbed back toward their respective seasonal averages, but still remain below it. Short Term: Steady to firm pricing.

Tri-Tips: Price action was negligible at the beginning of the week, but Choice prices spiked at the end of the week and now mirror their ten year weighted average price. Conversely, Selects pricing held steady. Short Term: Steady to firm.

Ribs

Ribeyes: Ribeyes remain in high demand, and current prices reflect that. Both Choice and Select prices climbed again this week, and current prices are well above seasonally average prices. Short Term: Firm pricing.

Chucks

Chuck Rolls: There was notable price divergence in Chuck Rolls this week, with Choice values sharply rising and Select prices sharply declining. After outperforming seasonally average prices and defying seasonal trends for most of the summer, current prices for both Choice and Selects are now below seasonally average prices. Short Term: Steady to lower pricing.

Teres Majors: Teres Majors pricing succumbed to last week’s strong undertone and increased this week. The price increase on both Choice and Selects leaves current prices sitting near their respective seasonal averages. Short Term: Steady to increasing.

Briskets: Prices held mostly steady this week with Selects moving slightly lower. This week’s prices moved against seasonal price trends which typically see brisket prices appreciate through the month of October. Short Term: Steady pricing.

Thin Meats

Ball Tips: Choice and Select ball tip prices declined this week. Current prices are now well below their respective seasonal averages, and seasonal trends indicate that prices will continue to move lower. Short Term: Lower pricing.

Flap Meat: Select flaps declined while Choice flaps were steady. As noted last week, current prices are well above seasonal average and the weakness shown over the last two weeks may suggest that prices will begin regressing back to their seasonal averages. Short Term: Lower pricing.

Skirt Meat: Skirt prices were mostly steady this week. The only notable difference would be Inside skirt meat’s stronger undertone and Outside skirt meat’s weaker undertone. Price declines are typical for this time of year. Short Term: Steady to lower pricing.

Flank: Both Choice and Select prices declined this week. Prices have moved lower in accordance with seasonal tendencies, but current prices remain above seasonal averages. Short Term: Lower pricing.

Rounds

Peeled Knuckles: Peeled knuckle prices declined after increasing last week. Both Choice and Select prices represent bargains as they sit well below their seasonally average prices. Prices should hold mostly steady over the next few weeks. Short Term: Steady to lower pricing.

Inside Rounds: Choice prices moved marginally higher while Selects moved slightly lower. The steadiness of the market may suggest that inside rounds prices are bottoming out as they are well below their seasonal average. Short Term: Steady pricing.

Bottom Round Flats: Choice prices climbed for the second week in a row while Select values were steady. Current prices remain below seasonally average, but Choice values are climbing closer to seasonally average prices as each week progresses. Short Term: Steady to firm pricing.

Eye of Rounds: The market gradually strengthened throughout the week, both Choice and Selects continue to follow seasonal price trends. Current prices remain below seasonally average, but the market is firming. Short Term: Firm pricing.

Grinds

Ground Chuck: Prices saw a sharp decline this week. Current prices are hovering around seasonally average prices, and as with 81/19 beef ground, the market is usually steady to weaker this time of year. Short Term: Steady to lower pricing.

81/19 Beef Grind: Prices were mostly steady this week. Current prices are just below year-ago and seasonally average prices and prices are typically steady to weaker this time of year.

Poultry

General comments

Broiler-Type Eggs Set in the United States Down Slightly – Hatcheries in the United States weekly program set 214 million eggs in incubators during the week ending September 29, 2018, down slightly from a year ago. While egg sets are down slightly the average weights in the industry have increased and offset the egg set number.

Broiler-Type Chicks Placed in the United States Up Slightly – Broiler growers in the United States weekly program placed 175 million chicks for meat production during the week ending September 29, 2018, up slightly from a year ago. Cumulative placements were up 1 percent from the same period a year earlier.

Whole birds were slightly lower last week. Wings continue to see support. Relative to recent years, wings are considered of very good value. Breast meat was steady and may be at a price level that spurs demand. Dark meat markets were steady.

Wogs

Whole Bird and WOG prices were mostly steady with a weaker undertone this week. The steadiness of the market may be attributed to the lower sales volume this week. Short Term: Steady pricing.

Breast meat & tenderloins

Breast meat values have continued to hold steady and tenderloin values were just slightly stronger. A report last week noted that breast and tenderloin prices were hovering around a typical support level, so the market may see strength in the near future. Short Term: Steady pricing.

Wings

Wing prices have held steady after the trend had been moving upwards. Expectations of increased buyer activity came to fruition this week, and the market could maintain its strength in the near term. Short Term: Firm pricing.

Thighs

Thigh and dark meat prices rebounded this week after last week’s decline. The strength in this market may be short lived, as seasonal expectations have dark meat values trending lower during this time of year. Short Term: Steady to lower pricing.

Turkey whole birds

Whole bird prices were steady this week. Pricing should hold steady through most of October, but the market will likely strengthen approaching November and Thanksgiving. Short Term: Steady pricing.

Turkey breast meat

Breast meat prices were mostly steady this week. Prices should hold mostly steady in the near term. Short Term: Steady firm pricing.

Pork

General comments

Total pork production for the week ending September 29, 2018 was estimated at 534.5 million lbs. This was 9.8 percent above the previous week, but only .5 percent over last year. Average live weights, at 279 pounds, were a pound higher than last week and 3 pounds lighter than last year.

All plant shutdowns due to Hurricane Florence have ended and fresh pork output should begin catching up with demand. Price jumps experienced due to the shutdowns should recede in the coming weeks. Last week, loins, tenders, and hams saw weaker pricing. Butts, bellies and ribs remained firm.

African Swine Fever Update
There was very little in the reporting of new outbreaks this past week. As of last week, there have been 29 outbreaks in China since the first case was reported August 3. China has said it has culled nearly 40,000 pigs in response. There has also been a separate outbreak in Belgium where 4,000 domestic pigs have been culled. Thirteen countries have banned some sort of pork imports from Belgium. We will continue to monitor the situation and keep you informed.

Loins

Prices continue to defy seasonal trends and declined for the second week in a row. Current prices are currently higher than year ago prices, but remain below seasonally average. Short Term: Steady to lower pricing.

Tenders

As with loins, tenderloin prices fell for the second straight week. The weakness in the market is expected when examining seasonal price trends and current prices are still better than seasonally average. Short Term: Steady to lower pricing.

Butts

Pork butt prices have a stronger undertone this week. Current prices sit just above seasonally average prices, but they should recede in coming weeks. Short Term: Steady to lower pricing.

Belly

Pork belly prices continue to gradually strengthen the past few weeks. The price movement in pork bellies continues to move against seasonal downtrends, and is moving closer to seasonally average pricing. Short Term: Steady to strong pricing.

Ribs

Backrib and primal rib prices made slight advances this week. Despite the increase, both aspects of the rib complex are still below seasonally average pricing. Short Term: Steady pricing.

Hams

Ham prices continue very mixed again this week, but remain below seasonally average pricing. The market should hold mostly steady through the fall. Short Term: Steady pricing.

Dairy

Butter

Production is steady around the nation, and is expected to increase in anticipation of the year-end holidays. Cream volumes moving into butter manufacturing are improving in line with seasonal production. In the Western Region, cream is mostly available for day-to-day churning, but some have reported that spot cream loads of cream are limited for use in butter production. In the Central Region, producers reported running churns only to meet their contractual needs because cream prices are trending upward. Lastly, Northeastern butter markets are trending higher and butter suppliers are monitoring indicators to stay ahead of the curve. Short Term: Steady to firm pricing.

Cheese

Cheese production is mixed throughout the country due to regional milk availability issues. In the Midwest and the Northeast, limited milk supplies are limiting cheese manufacturers from running full production schedules, but production still remains steady. Mozzarella and provolone orders are steady to increasing in both regions. In the Western region, domestic retail and food service demand is rising, which is lending support to block cheese prices. So much so that some processors that make packaged retail goods say that they are over committed through the end of the year. Short Term: Steady pricing.

Shell eggs

Production is reported as stable for shell eggs this week. Retail demand was reported as fair to good, and supplies of extra-large through medium sized eggs are well balanced. Short Term: Steady pricing.

Milk & cream

Fluid milk production is stable to increasing in most parts of the country, except in the Midwest and the Northeast where production is fluctuating. Bottling milk demand is slightly lower. In the Northeast, milk production is fluctuating because output off the farms is slightly up. In the West, production is flat to increasing. Lastly, Midwestern fluid milk levels vary, with some producers noting lower levels and others reporting balanced levels.

Demand for cream is steady to increasing. In the Northeast, availability is tight which is lending support to cream prices. In the Midwest, cream prices are rising because of the strained supply levels. Lastly, in the West, demand for cream hasn’t changed much. Inventories in this region are steady to slightly less. Short Term: Firm pricing.

Seafood

Shellfish & shrimp

Shrimp: This week’s imported shrimp offerings were in line with last week’s, but the market’s landscape is becoming more competitive as demand appears to be softening.

Farmed White: Slow demand continues to trump tightened supplies and some discounting is starting to appear in the HLSO Latin American origin shrimp. The majority of the market is moving ahead full steady, but discounting may become more common in order to stimulate buyer interest.

Farmed Black Tiger: The largest sized orders for farmed black tiger shrimp remain in high demand with a limited supply. Consequently, premiums have developed in the market for black tiger shrimp.

Wild, Gulf of Mexico: The market is unchanged, but pricing remains scattered and is largely determined by individual holdings.

North American Lobster: Tail prices have garnered support from the limited supply available in the market. Processors will continue to focus on building stocks, and sell off the remnants at a premium. Short Term: Steady firm pricing.

Warm Water Lobster Tails: Importers reported that product flow into the country is diminished, and that arrivals continue to move through the system with ease. Unsurprisingly, the market ranges from full steady to firm across Brazil and Caribbean origin products as a result. Short Term: Steady to firm.

Live Lobster: Poor fishing conditions in the New England hampered recent landings, and Hard Shell supplies are very tight. Short Term: Steady firm pricing.

Scallops: The scallop complex firmed on U/10-20/30 sized count orders. U.S. origin scallops remain firm. Short Term: Steady firm pricing.

King Crab: The king crab complex is mostly steady. But it should be noted that Russian red king crab supplies remain tight, while Alaskan and Russian golden king crab supplies remain adequate. Short Term: Steady to firm pricing.

Snow Crab: The market remains unchanged, and the supply shortage persists. However, buyers may find some relief in the near future as Alaskan snow crab season begins October 15. Short Term: Steady firm pricing.

Crab Meat: Red Swimming Crab meat prices are firming due to limited supplies and already thin inventories. Meanwhile, the blue swimming crab meat continues to soften on colossal, jumbo lump, and super lump crab. Supplies for blue swimming crab meat remains fully adequate. Short Term: Steady firm pricing on red swimming crab meat; and steady to weaker pricing on blue swimming crab meat.

Finfish

Salmon: Demand is increasing on West Coast Whole Fish, and prices are firming up as a result. Likewise, prices have firmed on Northeastern Whole Fish, but that was due to the severe weather. Conversely, Norwegian Whole Fish prices have softened this week on 5-6s and 6-7s. Lastly, Chilean Whole Fish is holding steady with adequate supplies available.

Atlantic Cod: Cod prices were steady in accordance with last week’s expectations. Prices will remain slightly elevated due to the lack of production during this time of year. Short Term: Steady to firm pricing.

Pacific Cod: Asking prices will remain elevated for the foreseeable future as the result of allowable catch restrictions and elevated raw material prices. Short Term: Firm pricing.

Pollock: News this week documented that Pollock will not be exempt from Chinese tariffs, which will likely put upward pressure on pricing in the near term. Short Term: Steady to firm pricing.

Basa: Basa prices maintained their strength from the Chinese holiday weekend last week. Short Term: Steady to firm pricing.

Catfish: Demand is strong, but prices are holding steady. The market undertone will remain firm as long as the current demand conditions endure. Short Term: Steady to firm pricing.

Mahi Mahi Fillets: Costs and supplies are steady for the active demand that Mahi filets are receiving. The market is currently balanced, and will likely hold steady. Short Term: Steady pricing.

Grains & oils

Grain & crop summary

The wheat market rallied sharply late in the session Tuesday on wire service reports that the Russian agricultural watchdog agency, Rosselkhoznadzor, threatened to suspend operations at 30 inland grain loading operations in two of Russia’s largest exporting regions due to quality issues with grains being sent to export from those locations. Major importers have, reportedly, been expressing concerns about the declining quality of Russian grain, leading the watchdog group to issue the warning to clean things up or risk being shut down. Some view this as a possible indication that Russia may use “quality concerns” as a way to limit exports at some point. Rosselkhoznadzor also stated there are no immediate plans to suspend loading operations at Black Sea ports around the key export hub in Krasnodar. Nonetheless, simply the mention/risk of reduced Russian grain exports has proven to be enough to spark excitement in the wheat market in recent months.

Soybean oil

U.S. soybean crush/soybean oil stocks in August mostly in line with expectations. USDA reported U.S.-wide soybean crush in August was 169.6 million bushels, in line with average market expectations of 169.3 million (169.0 to 170.0 million range of ideas) and was nearly 12% above last year’s August crush of 151.6 million bushels.

U.S. soybean oil production in August was 1.945 billion pounds vs. 2.043 billion in July and 1.762 billion last year, while the average soybean oil yield ticked up to 11.47 pounds/bushel in August from 11.42 in July, but was still well below last year’s same-month yield of 11.62. End August U.S.-wide soybean oil stocks were reported at 2.215 billion pounds, mostly in line with average market expectations of 2.236 billion (2.193 to 2.360 billion range of ideas) and was down from July’s 2.384 billion pounds, but still 22% above year ago August stocks of 1.810 billion pounds. Based on estimated exports for the month, domestic soybean oil usage was implied up 5% from last year in August. This is friendly for soybean oil prices.

Canola

Canola prices were stronger this week rising above C$500.00 per ton in the nearby November contract for the first time since late August. Cool and wet conditions across much of western Canada, including snow in many areas, continue to cause harvest delays and concerns over yield and quality losses underpinned prices. A weaker tone in the Canadian dollar added to the firmer tone in canola. This is friendly for canola oil prices.

Palm oil

Oil World analyst Thomas Mielke sees Malaysian palm oil futures trading 2,200 to 2,600 ringgit/ton ($532.00 to $628.00) in the first half of 2019, reflecting an increase from current benchmark futures trading at 2,174 ringgit/ton ($526.00), based on expected improving demand from the biodiesel industry. He sees Indonesian palm oil production in 2019 rising to 41.0 metric tons from this year’s estimated 39.4 million metric tons (MMT), while Malaysian production next year is estimated at 20.3 MMT vs. 19.6 MMT this year. The overall expectation is for palm oil stocks to remain historically high though the end of 2018, but for demand to outpace production in 2019, resulting in stocks declining providing a supportive element to prices. Should China see a reduction in soybean crushing, it could prompt an increase in palm oil and soybean oil imports, he said, as well. Asian crude palm oil futures continued to rise for a third straight session Thursday, rising 1.7% and supported by rival soybean oil prices. Adding to the strength are higher crude oil prices that increases use of palm oil for making biodiesel. This is friendly for palm oil prices.

Produce

Green onions

  • The green onion market remains active; heavy rains from Tropical Storm Rosa continue to affect harvesting
  • Supplies are limited in the Baja and Mexicali, Mexico growing regions
  • Prices are high

Strawberries

  • Supplies will be available in the Salinas/Watsonville, California region through October
  • Mexico supplies should ramp up in late October, while Florida strawberries will be on the market in mid- to late November
  • Quality defects may increase as California’s Salinas Valley experienced a light rain yesterday
  • Prices are steady

White russet potatoes

  • White Russet potatoes will be unavailable until January 7, 2019
  • Growers have started harvesting new crop White Russets, but have opted to delay shipment until they clear the sweat process
  • Issues with White Russet stock seed resulted in growers decreasing acreage by one third
  • The Norkotah variety is filling the void left by the delay in White Russets

Highlights

  • High squash prices persist; stocks are tight. Markon First Crop® (MFC) Squash is limited; packer label is being substituted as necessary.
  • New crop Washington MFC Fuji, Gala, Golden Delicious, Granny Smith, and Red Delicious Apples are on the market. Packer label Honeycrisps are also being shipped. Packer label Braeburn apples will be available the week of October 15.
  • The iceberg harvesting transition from the Salinas Valley to Huron, California (the San Joaquin Valley region) will begin the week of October 15 and run through November. Salinas Valley growers will continue to harvest iceberg and leafy greens through mid-November.

Produce Highlights

Green Onions

  • Heavy rains from Tropical Storm Rosa are preventing growers from harvesting. Precipitation totals are now projected to reach four to six inches.
  • Prices are rising.

Melons

  • Expect elevated markets for two weeks.
  • The San Joaquin Valley season is ending, while the Arizona/California desert season is just getting started.

Strawberries

  • Although the Salinas/ Watsonville, California season is winding down; supplies will be available through October.
  • New crop Santa Maria and Oxnard stocks are limited, but will increase over the next several weeks.

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