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Market Update - 8/13/2020

Fruits and Veggies

  • Tomato – National pricing is flat week over week on round tomatoes. Pricing from Alabama is lower but concerns over damage from the recent hurricane has kept NC and VA pricing firm. We may see marked lower pricing next week to keep cases moving through quality concerns. Cherry and grape tomatoes are also holding firm but off the farm prices are declining especially on Mexican product. Romas are down $1-$2 per 25LB week over week.

  • Onion – Idaho onions are being dug now. Pricing is declining.

  • Potatoes - New Crop Washington and Idaho Norkotah are steady this week above $20 FOB for larger sizes. Old crop Burbank declined by $.50 to $1.50 per case but quality is poor.

  • Lettuce – Iceberg decreased over $3.50 FOB this week as conditions and supply improve out west. Prices should maintain themselves at this level for the remainder of August and invoices should reflect the decline within 2 weeks. Romaine is about $1.50 lower FOB but is not expected to retreat any further for August. Supply remains tight and pricing is overall steady.

  • Cucumbers – Pricing are up and likely to continue to go up. Eastern fields were recked by the recent hurricane. North Carolina crop is likely done which puts demand on Michigan and Virginia until New Jersey comes on line.

  • Oranges –The valencia market is hot and inventory is down. Foodservice availability is limited. USDA farm to family program is also taking majority of the valencias and the business towards covering other orders. Spot loads are available but at pricing at a premium.

  • Lemons – California lemons are recovering as imports begin to arrive and Ventura opens a new district. Quality has been great and the fruit is nice.


Plastics

Sales volume on both Polypropylene and Polyethylene continue to soar supporting both domestic and International demand. There was some pushback this week when sellers countered bids with slight increases of $.015/LB and were met with resistance, ultimately causing retreat. July ended with another $.04/LB premium over June totaling $.09/LB. Shortages, production delays and logistic issues have carried this market up for the past two plus months and another $.05/LB is likely for August, with a follow up increase likely to be elected for September. Export sales are calming down with rising prices so its possible the September increase wont stick.


Eggs

Northeastern pricing is firm for L and XL, weak for MED. Southeastern pricing is up for L and XL, lower for MED. Inventories in the south are only moderate and prices set to increase. Northern prices inventories are stable. Pricing is fully steady with little chance of downward movement.

Soy

August oil is in a huge inversion compared to deferred contracts. Logistics Issues in South America and a weakened dollar is positioning the United states to be the oil provider of choice for many import contracts. Showing higher figures on a historical basis, crush is considered low compared to demand and prices are on the rise as the oil pipeline continues to be refilled. One major reason for the oil shortages is the strong demand for biodiesel feedstock. Soy oil is also the refineries substrate of choice right now, or should I say was the substrate of choice when blending plans were established during the depressed spring market. China continues to buy US soy oil and Brazilian bean. China should be well supplied with oil and enough bean to crush to keep stocks flourishing. China is still battling widespread flooding that has decimated a reported 50% of their rapeseed crop. Canola prices have reacted with large increases. If China is in dire need of oil to replace the rapeseed loss, further purchasing of US soy oil could be a very bullish mark, and US Futures could react sharply.


Dairy

Butter has been showing continued decline in pricing for over two months now, however churns are running consistently, and supplies are ample. Potential good news for holiday pricing. Commodity cheese took enormous losses this week as foodservice demand weakens and cold storage supplies begin to find a footing. Cheese production hit 1.1 billion pounds in June, 3.5% more than in 2019. Don’t expect pricing to remain this weak though, buyers will take advantage of the opportunity to fill reserves and book some product for export at a later date. Exports hit record highs in June, feeding off the discounts from April and May. Export shipments are likely to decline for July though due to as high prices trail into market value and formulas. Milk is readily available and Class futures are declining. Call III is selling at a discount. It looks like we’ll start seeing invoice prices turn south by the beginning of September.


Poultry

Mid-sized WOGS firmed this past, likely following strong support for wings and tenders. Clipped tenders increased $.10/LB and Jumbo breasts increased $.04/LB. White meat trim is noteworthy as it has shown an increase of $.14 per pound over the last 3+ months after its 52-week low in April. An indication that deboning plants are still not at full capacity. Trim reached 52 weak high on July 8th and has continued to increase about $.01 a week since then. AVG weights are up .09LB this week and jumbo slaughter is up. Weekly slaughter is still below last years levels but cumulative annual slaughter to date is on par with last year. Even though we are off on weekly slaughter levels, supply is reported as adequate for foodservice and retail demand.

Beef

Rib Cutout took on gains in Choice and Select as retail booking for Labor day roll in. We should see good easing after the holiday week. Lean trim values continue their modest decent. 85% trim has made it below $2 per pound. Prior to the shutdown, 85% trim had not been below $2 since November of last year. One could say that trim markets are acting “normal”, and following historic patterns of decline as post summer weakness sets in. At this cattle weights are above average but are coming under control. With the cattle backlog and heavier weights, trim should be under control for the foreseeable future. Grinds remain depressed with abundant supply. Unusual activity is occurring with Choice top butts. There are very few commodity trim top butts available and that market seems to be reacting with instability. Extra Trim product is available but demand seems to be high enough that competition for each load is fierce and pricing has surged past the $3.10/LB mark. We sax similar conditions last year. Following those historic notes we should see top butts hit a decline in late fall. However given the general uncertainty of the markets and the second decline in foodservice demand, we may see softening sooner.


Pork

Reuters reported this week that WH Group, the China based owner of Smithfield Foods, is indicating that pork exports to China will be reduced in the second half of 2020 due to rising costs of production. Chinese pork prices have risen 137% higher than this time one year ago due to the Impacts of COVID-19. The prices will keep margins high but depress sales tremendously.


Belly complex hitting $110 was not in the cards. The supply for value added product is coming largely from fresh now instead of frozen so competitive offers are moving pricing up. It likely that further processors are doing what they need to do to secure inventory for the next holiday rush. demand for bellies is shifting away from cold storage and pulling slightly more from the fresh supply. We’ll see another week of highs before a shift down. Ribs will be moving for the next major holiday. With demand for fresh product after the big cold storage drawdown in June, the upward price risk will be consistent for the next three or four weeks. Look for the current complex to add another $5 to $10 before the end of August, followed by a similar concession through September. Lean trimmings moved higher last week, against what was forecast. The consistent harvest levels should be ample enough to provide for the lean trimming markets, but there is still a labor component that is needed on boning lines to achieve the product. We typically see prices about 15% lower on lean trim currently in the year but the products that support the raw material costs are in high demand still.

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