Market Outlook

May 27, 2022
  • BEEF
  • POULTRY
  • PORK
  • SEAFOOD
  • DAIRY
  • GRAINS & OILS
  • PRODUCE
BEEF

BEEF

Prices will shift back to a more balanced tone going into June as the impact of strong beef production over the next few weeks and only moderate demand from domestic channels is somewhat offset by end users building inventories for later in the calendar year. Last week, U.S. cattle slaughter came in at 680,000 head, which is the highest weekly kill rate since December 4th, 2021. A USDA report released last Friday confirmed that the supply of cattle on U.S. feedlots remains ample, at least by historical comparisons.

Ribeyes:

Prices will take on a more balanced tone over the next several weeks. With current prices of Choice-graded product trading at an 11% discount to the five-year average for the week, buyers seeking value will increase their purchases going into the summer months.

Strips:

Prices will shift to a more moderate tone going into June, contrary to the normal seasonal trend for values to sharply decline after the Memorial Day holiday is “bought” by retail. Features of Strips will be more prominent as current prices represent good value for domestic sales channels.

Tenderloins:

Prices will continue to take on a softer tone over the next several weeks, following normal seasonal trends for the first half of June. At current values, Tenderloins are expensive relative to other middle meats, which will lead buyers to shift their purchasing focus to other sub- primals.

Tri-Tips:

Prices will continue to take on a stronger tone over the next several weeks as the seasonal trend for values to strengthen is very strong. Demand from foodservice will continue to be very strong as tri tips continue to increase presence on menus in multiple dining segments.

Top Butts:

Prices will continue to take on a softer tone going into June as the seasonal trend for values to soften is strong. Buying interest will continue to be modest, even with current prices of Choice-graded product trading at a 15% discount to the five-year average for the week.

Briskets:

Prices will continue to take on a softer tone over the next several weeks, following normal seasonal price trends. Features at retail will be modest while national foodservice chains do not appear to have briskets on their promotional calendars, which will keep demand and prices soft.

Flap Meat:

Prices will continue to take on a balanced tone over the next several weeks, following normal seasonal price trends. Demand from foodservice will remain decent, but supplies will be adequate to meet demand.

Skirt Meat:

Prices will shift to a stronger tone over the next several weeks due to increased demand from domestic retail buyers and to a degree, increased buying interest from Asian markets looking to import.

Inside Rounds:

Prices will shift back to a more neutral tone going into June, following normal seasonal price trends for this time of the year. Foodservice demand will remain brisk, however supplies of “Cap-Off” product will be adequate and keep prices restrained.

Ground Chuck:

Prices will shift to a stronger tone over the next several weeks, following normal seasonal price patterns. Retail buyers will continue to trade down the carcass to lower value ground product, while foodservice demand for product will remain strong.

81/19 Ground Beef:

Prices will continue to take on a moderate tone over the next several weeks. Lean trimmings prices are set to continue their decline, which will keep prices in check in the near term.

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POULTRY

POULTRY

Demand has slowed slightly, but the back half is still in high demand.

WOG’s:

WOG demand slowed this past week.

Breasts/Tenderloins:

Boneless products soften slightly as more product is available on the spot market.

Wings:

Jumbo wings are in a balanced position. Mediums are going for lower prices.

Thighs/Legs/Leg Quarters:

Thighs and drumsticks are selling for a premium to historical values. Thigh meat especially is difficult to find. Boneless leg meat is also going for a premium.

Turkey Whole Birds:

Very little available on the spot market due to AI. Sellers are able to get very high prices when product does become available.

Turkey Breast:

Very similar to the whole bird offering. Demand is up and supply is being limited by AI outbreaks. Not much available on the spot market.

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PORK

PORK

Prices are set to take on a more firm tone going into June as U.S. pork production is set to decline, while demand improves. U.S. hog slaughter last week was 2.414 million head, an increase of 1.6% from prior week and 1.0% higher than the same week last year. Additionally, production of boneless items has increased significantly in recent weeks putting more supply of fabricated product on the market. That being said, supplies of market ready hogs are set to tighten in June which will lead to lower pork production and fewer offerings of uncommitted pork products on the market. On the demand side of the ledger, certain pork items put in their season highs in June/July, a trend that will be reinforced by higher prices for competing proteins. Export demand will continue to be uneven, however, Mexico will likely be an anchor destination as U.S. pork prices continue to trade at a discount to local product.

Bellies:

Prices will shift to a stronger tone over the next several weeks, even though values do not tend to seasonally peak until the beginning of July. The recent set back in belly prices will attract the attention of strategic buyers and be price supportive in the face of declining overall production.

Loins:

Prices will continue to take on a more balanced tone going into June, following normal seasonal price trends. Demand for Loins will be decent overall, however, lower feature rates at retail and increased supplies of boneless product will keep prices in balance.

Ribs:

Prices will continue to take on a neutral tone over the next several weeks as values tend not to seasonally decline until the last week of June. Demand for product is decent from both retail and foodservice, however, supplies will be adequate to keep prices restrained.

Butts:

Prices will shift to a softer tone going into June as the seasonal trend for values to soften in the beginning of June is very strong. Foodservice demand for Butts tends to fall off in certain geographical areas, which, coupled with decent supplies, will keep prices on the soft side.

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Hams:

Prices will continue to take on a firm tone well through the end of the month, following normal seasonal price trends. Demand from Mexico for bone-in hams will remain strong and domestic retailers will be active buyers of boneless product over the next several weeks.

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SEAFOOD

SEAFOOD

Seasonal changes and yields are effecting the seafood outlook.

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Farmed White Shrimp:

Market sentiment is steady to slightly weak on all sizes given the robust import flow and U.S. inflationary pressures. Softer prices for Latin origin product are having a market impact. Growing concerns over lower disposable dollars as inflation continues and large incoming supplies contribute to the ongoing downward trend. The US market is disconnected overseas as higher replacement costs are noted in some cases.

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Farmed Black Tiger Shrimp:

Supply and demand are in general balance, but discounts are occurring where imbalances exist.

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Wild Gulf of Mexico Shrimp:

The season is over. Harvests were lower than usual, and all importers are allocating inventories accordingly.

Warm Water Lobster:

Markets have seen some slight softening as importers look to move some inventory with anticipation of Brazil season opening in a couple short weeks. (Bahamas opening early August). Demand has been moderate with the firmer pricing and inventory remains stable. Short Term: Softening Price

Cold Water Lobster:

Spring season has kicked off and initial offers remain firm. We anticipate seeing some slight softening as we continue into the season and catches increase. Larger sized tails will remain limited until fall. Short Term: Steady Pricing

Lobster Meat:

Spring season has kicked off and initial offers remain firm. We anticipate seeing some slight softening as we continue into the season and catches increase. Larger sized tails will remain limited until fall. Short Term: Steady Pricing

Canadian Snow Crab:

Many importers have made aggressive offers to move product with the new season opening. The quotas have been significantly increased over past years which has brought more product into the market. Markets have softened and inventories are available! Short Term: Soft Pricing

Ahi/Yellow Fin Tuna:

Fishing is underway and plants are working to fulfill their backlog of orders. The uptick in demand and limited raw materials are keeping markets firm! Small quantities of saku blocks are being produced but it will be many months before we see stable supply. Short Term: Firm Pricing

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Pangasius/Swai/Basa:

Plants are processing orders and looking for additional orders. Domestic pricing has seen some softening as importers look to move portion-cut items in the face of new product availability. Supply is expected to become more readily available in the upcoming months and hopes of seeing some market stabilizing/softening. Short Term: Steady to Weak Price

Norwegian Salmon:

After many months of price stability, markets have finally increased as demand continues to rise with the decrease in availability of Chilean product. Short Term: Firm Price

Chilean Salmon:

Markets remains firm and frozen supply is limited. Short Term: Firm Pricing

Mahi Mahi:

Product is adequate to fill current demand. Market is high but steady.

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Catfish Fillets:

Production is slow, overall market is still challenged for product. Pricing steady but firm.

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Scallops:

Demand fair with limited supplies as the new season approaches. Pricing steady but soft.

Blue Swimming Crab:

Blue swimming crab remains steady to about steady across all grades. Increased foodservice demand continues to be reported and remains more active than retail. There is cheaper replacement pricing on available inventory overseas. Additionally, we are seeing far more red swimming crab imported to US this year If foodservice demand stays stagnate, there is potential for street discounting.

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DAIRY

DAIRY

Dairy continues to see steady prices.

Milk / Cream:

Milk output is steady to steady to increasing throughout the U.S. as Spring flush quickly approaches. This is helping to boost both milk and cream supplies on the nearby market, while strong demand for both are keeping prices firm. One of the largest bottlenecks is the ability to process extra milk, or move product in a timely manner given the logistical constraints still plaguing the industry. The USDA’s milk production report showed April output down 0.9%, but also noted a 7,000 head build in herd sizes from March and a steady April herd. Milk and cream prices remain supported as the higher spot values are needed to continue encouraging output amid struggling global supply.

Butter:

Butter prices continued an upward trend after bouncing off of the lower end of its recent price. With inventories still sitting at rather tight levels heading into summer and fall, growing concerns around the ability to grow supplies further has prompted additional stockpiling.  The market also remains well-supported from slower U.S. and global milk production, and the increased demand for U.S. exports.   However, higher prices are encouraging additional output as churns are doing their best to rebuild inventories from historically tight levels.  This was apparent in the USDA’s Dairy Products report that showed U.S. butter output in March up 1.5% YOY, a new monthly record. April butter stocks continued to recover, but at a slower rate than past months and are still 22% lower YOY. Cream supplies are tightening, but still available across the majority of the U.S., while prices are well-supported from seasonal interest from ice cream producers. The sharply higher prices in 2022 are limiting domestic demand, but foodservice orders have improved due to fewer COVID restrictions in the U.S., while retail is starting to run into customer resistance.  Logistics and labor are still a major factor that churns and the market are trying to deal with.

Cheese:

The cheese markets are setting back from the recent highs as Spring flush is approaching in the Midwest, meaning supplies are steady to increasing. However, less favorable weather in the Southwest has limited the Spring flush impact earlier this spring. Domestic milk prices continue to trade near contract highs in an attempt to limit further reductions in output and incentivize producers. Increases to feed, labor, transportation and other costs are still limiting factors to further dairy herd expansion. Even with the reduced YOY milk production, cheese manufacturers continue to get more than enough milk to keep production rates elevated. Reports show increasing availability across most of the U.S. which has given pause to the recent rally in cheese values. Total cheese production in March was 1.1% higher YOY, but cheddar cheese output fell 2.9% YOY. Despite strong domestic and export demand, stocks were able to reverse course in April, coming in 1.2% above last year. This was the largest April stock report since 1984, hinting at strong run rates. Retail demand in the U.S. is showing signs of increased resistance at these lofty prices. Producers are still concerned around the overall labor and logistical issues, which have limited capacity levels at plants across the U.S., but all signs still point to continued strong run rates.

Shell Eggs:

The conventional and cage free shell egg markets are starting to stabilize at the recent lows. There have been a few minor reports of HPAI in Pennsylvania laying flocks this month, but the lack of large operations being impacted has been the sponsor of the massive reversal in shell egg prices. If cases of bird flu remain slower, the threat of seasonally slower demand will place further pressure on the still historically strong prices. The USDA reported May 1st table egg layers were down 6.4% from year ago levels, while overall shell egg production was down 5% in April vs. year ago levels. Shell egg inventories have stabilized at adequate levels, pointing towards supply/demand equilibrium despite the sharp reduction in laying hens. Prices typically bottom out in the late spring – early summer and will likely keep some limitation on flock expansions this year given the higher cost environment. Margins at the wholesale level are still dramatically profitable on the recent rally in prices, but the rampant increase in feed and energy costs are providing some additional support to prices outside of bird flu.

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GRAINS & OILS

GRAINS & OILS

The grain and oilseed markets have set back from their recent highs on better planting weather in the U.S., while market participants look to take profits given the magnitude of the rallies. With very limited exports coming out of Ukraine, global balance sheets remain sensitive to any further downgrades this season. That is why the market continues to find willing buyers of setbacks in prices as there is still plenty of concern around the wet and cool weather in the NW Midwest, drier conditions down in South America, as well as extreme dryness in key HRW wheat regions in the U.S. Corn has seen a sharp increase in planted acres the past few weeks, but the recent price action shows the sensitivity this year to any production issues. HRS wheat planting has not seen as favorable of an increase due to the saturated soils in ND/MN so far this spring. If fields don’t dry out quickly, the concerns of further acreage declines becomes a very real scenario. HRW states remain in severe drought as condition ratings are at record low levels, and in need of some rains over the next few weeks. With so much uncertainty in the U.S. and around the world, dips in grain/oilseed futures remain limited.

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Soybean Oil:

Soybean oil futures remain well supported on the recent break from contract highs. Willing buyers continue to step in given tight global vegetable oil supplies, crude oil values above $110 per barrel, and the strong domestic demand from renewable diesel. Crude soybean oil basis offers remained firm through last week with solid coverage now on the books for much of the industry through Q3. The EPA has sent their final 2020, 2021 and 2022 biofuel blending recommendations to the White House for review and the entire process for approval/changes/etc. is supposed to be completed by June 3rd.

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Canola:

The canola seed futures remains well supported. Planting progress remains a slow go in North Dakota and the southern Canadian prairies as the ground is just starting to dry out. China has lifted their 3 year ban on Canadian canola seed imports but clearly no new shipments are expected by the trade until the new crop.

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Palm Oil:

Palm oil futures are firm as they remain at a sizeable discount to soybean oil on the global cash market, and limiting further declines. Indonesia’s ban on palm oil exports has been lifted today but it was replaced with a domestic sales quota for cooking oil set at 10 million metric tons including keeping back as much as 2 million metric tons in reserve. (Domestic Market Obligation and Domestic Price Obligation)

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PRODUCE

PRODUCE

DOWNLOAD THE MARKON FRESH CROP REPORT

Bell Peppers:

Demand for red bell peppers exceeds supply; expect low yields and high prices through the month of June. Green bell pepper stocks are meeting demand despite elevated markets.

 

Red Bells

  • Markon First Crop (MFC) and Markon Essentials (ESS) Red Bell Peppers are limited; packer label will be substituted as needed for the next four weeks
  • The California desert season is underway
    • Some growers are reporting potential crop failures
    • A combination of temperature fluctuations, water management, and strong winds are causing blossom end rot in some lots
  • The Mexican spring season (crossing into Nogales, Arizona) has ended; summer production will start in Central Mexico (crossing into South Texas) in late June
  • Canadian greenhouse volume is down due to cool/overcast weather last week
  • Expect extremely limited supplies and elevated prices through June until the California crop transitions north to Bakersfield in late June/early July
  • The substitution of orange bell peppers may be needed on a case by case basis through June

 

Green Bells

  • MFC and ESS Green Bell Peppers are available
  • California’s Imperial Valley season will wind down over the next few weeks; recent heat is affecting quality
    • Medium and large sizes are most prevalent
    • The Bakersfield, California growing season is set to start the week of June 6
  • East Coast production is transitioning from Florida to Georgia over the next two weeks; quality is good
  • Mexico’s spring season (crossing into Nogales, Arizona) has ended
  • Expect high markets over the next two to three weeks until supplies ramp up early June
California Oranges:

California’s Valencia orange season is in full production. Supplies of 88- through 163-count fruit are tight.

 

  • MFC and ESS Valencia Oranges are available
  • California Valencia supplies are available; quality is very good
  • The crop is dominated by 48-, 56-, and 72-count fruit this season; as a result, 88-, 113-, 138-, and 163-count sizes will remain snug through the 2022 season
  • Valencia quality concerns include re-greening and softness due to above-normal temperatures
    • The Valencia variety occasionally re-absorbs chlorophyll resulting in a green tint, but the fruit is still very ripe, sweet, and juicy
    • Packinghouses will gas fruit between 24 and 56 hours to brighten color
  • Sugar levels range from 12 to 13 Brix
California Strawberries:

Supplies are ample; demand is steady. Expect low prices for the next two to three weeks.

 

Salinas/Watsonville

  • MFC Strawberries are available
  • Volume is anticipated to climb; favorable weather is forecast
  • Fruit size is large (14-18 per 1-pound clamshell)
  • Quality is excellent: berries are firm with 90%-95% color
  • Expect lower markets and ample stocks for the next two to three weeks

 

Santa Maria

  • Production is nearing its peak of the season
  • Warm weather has increased stocks
  • Fruit size is medium (18-20 per 1-pound clamshell)
  • Quality is good: some green shoulders have been reported

 

Oxnard

  • Supplies are extremely limited; most growers are finished harvesting for the season
  • Remaining quality is fair at best
Cilantro:

Cilantro

Prices are rising due to seasonal weather tendencies that are affecting plant health.

 

  • Ready-Set-Serve (RSS) Cilantro is available
  • Volume is trending down as summer brings high temperatures and humidity to California’s Oxnard, Lompoc, and Salinas Valley growing regions
  • Challenges that cilantro will face during the summer months, including burn, decay, seeder, and yellowing, will reduce harvestable yields
  • RSS Cilantro is currently achieving specified quality and shelf-life
  • Expect markets to continue climbing over the next week at minimum
Green Leaf, Iceberg, and Romaine:

Supplies are steady in the Salinas Valley region of California following this week’s warm weather. Demand is strong, keeping inventory moving.

 

  • MFC Premium Green Leaf is available
    • Though case weights are high, overall yields are being impacted due to lower-than-average quality
    • Problems include minimal fringe burn and weak tip
    • Insect pressure and dirt in the packs have not been an issue so far in Salinas
  • MFC Premium Iceberg and Romaine are available; Markon Best Available is being substituted as needed due to low case weights
    • Romaine lots are being affected with minimal levels of epidermal blistering and peeling, internal burn, and while INSV is present in many lots, it is easily avoided by harvesting crews
    • Iceberg markets will likely rebound a bit after a heavy slump, but ideal weather should help prices stabilize in the low teens through mid-June
Idaho Potatoes:

Idaho storage potato supplies have tightened, as the remaining Norkotah crop will be depleted the first week of June.

 

Storage Crop

  • Idaho Norkotah potatoes are expected to be depleted by June 3
  • Burbanks will be the sole variety on the market until new crop, field run, Norkotahs become available in early August
  • Expect prices to strengthen as suppliers work to extend remaining stocks
  • Sizing:
    • 40- and 50-count stocks are adequate
    • 60- through 80-count supplies are limited
    • 90– through 120-count potatoes are readily available

Quality

  • Pressure and shoulder bruising, along with hollow heart, will be seen sporadically in remaining storage supplies (both Norkotahs and Burbanks)
  • Pressure and shoulder bruising (soft, external indents) result from constant contact with adjacent potatoes, or the floor, while raw product sits in storage piles
  • Hollow heart (small, irregularly shaped internal craters) develops internally during the season when potatoes grow faster than normal due to adverse weather
Squash:

Volume is being affected by inclement weather this week as new crops come online on both coasts.

 

  • The Mexican spring season is quickly winding down
    • Average quality is reported during grading
    • Scuffing and mechanical damage are the main issues
  • California production is underway in the San Joaquin Valley and Santa Maria
    • Cool temperatures (65˚F) in Santa Maria are slowing plant growth/reducing yields
    • Quality is good
  • Expect slightly higher markets over the next two weeks
Tomatoes:

Prices are up. Supplies are snug as harvests are transitioning on both coasts. MFC Tomatoes are available.

 

  • East Coast production has slowed in Florida’s Ruskin/Palmetto region; the season is winding down
    • Roma, round, cherry, and grape tomato quality is good
    • Large sizes are limited; growers are harvesting second and third picks
    • Supplies will tighten over the next two weeks as the Quincy, Florida region is behind schedule
  • Mexican growers are transitioning from the mainland to their summer season in Baja
    • Overall volume and size profile are down; quality is good
    • Grape tomato harvesting is expected to increase to seasonal levels by the first week of June
  • The California desert region is harvesting limited mature green supplies; San Joaquin Valley production will start approximately June 20
  • Expect markets to increase over the next two weeks
Please contact your Shamrock Sales Representative for more information. ©2022 Markon Cooperative, Inc. All rights reserved.
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