Market Update - 8/4/2020

Fruits and Veggie

  • Tomato – National pricing improved tremendously this week on grape and cherry dropping at least $2 per 12 pint case. Round tomatoes remain mostly firm, but supplies are improving steadily. Romas tomatoes are short and pricing are increasing by up to $4 per 25 LB box.

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

  • Potatoes- Potatoes remained steady this week with the help of new crop Washington product. We’ll look for sustained high prices until Idaho begins to harvest in 3 weeks.

  • Lettuce – Iceberg increased over $1 per case in the beginning of the week but improvements in supply late in the week helped keep pricing at bay. We are still firm on the mid to high end of pricing but improvements are on the horizon. Romaine remains in a demand exceeds supply situation taking gains of about $3 per case this week.

  • Cucumbers – Good quality continues. The market is steady. With nationally local production ramping up, markets may soften.

  • 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.


Exceptional international resin demand has been a driving force to the current upcycle, though fresh PE export transactions also slowed this week as the vast majority of July business had already been booked. However, there is plenty of demand waiting on deck for fresh August offers. Widespec PP continued to be sent offshore, while strong domestic prices have limited Prime export availability. Price increases are implementing for July resin contracts. Polyethylene will secure its $.05/lb hike, bringing the 2-month tally to $.09/lb, with yet another nickel on the table for August. Polypropylene producers will pass through a large cost-push price increase which could now exceed the $.065/lb estimate and still leave room for a similar sized increase already imminently eyed for August. The Hurricane season is heating up along with the waters in the gulf, forecasters predict a particularly active season, so please be mindful of your resin supplies and plan accordingly.


Undertone is Steady and pricing is lower than the previous session. Supplies are lower last week than the previous week but still above the current demand. Were looking at low prices for beginning August before entering the customary accent into holiday pricing.


August-September oil spread is in a steep inversion depicting the immense short term demand and lack of available oil. The US is very competitive against South America due to South Americas logistic issues and a weakened dollar. Crush was lower than expected for June. We are not in dire straits on paper, but the oil is still seeing disruptions as downtime has slowed the refilling of the oil pipeline despite strong crush numbers on a historical basis. One major reason for the oil shortages is the strong demand for biodiesel feedstock. Data for May was recently released and showed that soybean oil made up 70.2% of the total feedstock for the biofuel. This is largely due to other oils being harder to source than soy. Corn, Lard, Tallow, Canola, all can and do work their way into biodiesel. Clearly soy was cheap and available in April when biodiesel managers were putting together their blending plans.


Cheese production remains stable to strong. Widely available milk supplies, with reported Midwestern Class III spot prices discounted from $1 to $5 under Class this week, have kept cheese production apace. Order reports, and cheese inventory reports, vary by manufacturer, but both East and West contacts say orders have begun to ebb some particularly in foodservice. Some Midwestern plant managers say inventories are tight specifically in Mozzarella going to pizza chains. Cheese markets have begun to meet recent predictions from cheese market actors since block prices reached their $3 peak on July 13th. Block prices have slid down to converge with barrel prices early in the week and fell below them later this week. Contacts have said prices are currently too high to compete internationally. Block and barrel availability is reported as tight to nonexistent. Most contacts agree that a similar block/barrel price is a benchmark of steadying market tones. USDA announced another round of spending for the Farmers to Families Food Box program in September and October. Between the food boxes, CARES Act, Section 32, and Trade Mitigation programs, USDA is expected to spend more than $1 billion on dairy product purchases this year. The government is sopping up a lot of cheese, which likely sparked the recent shortage and drove the spot market to all-time highs. Front end and deferred milk futures took significant loss over the past week as a result of the unsustainable cheese prices. Based on futures prices, were looking at September before cheese prices decline to match the AVG highs of last year.


WOGS are down slightly this week on the Urner Barry and the 5 day weighted average. Production is remains strong but the lack of chick placements still has us running short on supply from last year. Though with limited foodservice sales the short may not be as much of an issue as some analysts expected. Jumbo bird numbers are low and that shortage is showing in the escalating prices of jumbo tenders, wings, and breasts. Freezers are full and exports remain stunted so bone in dark meat cuts are staying firmly suppressed and are a great purchase.


Were starting to see prices on firm on choice ribeyes and sirloin cuts. Were 4 weeks out from the next grilling holiday and retail stores are preparing for their promos. Ground beef remains weak in price and low in production and sales volumes. We will begin to see a resurgence in price on grinds and chucks later in August. Lean trim continues its slow decline in price back to stable levels. Fatty trim increased slightly this week due to low trim availability.


Sow slaughter is up 15% year over year. This is less of an indicator of breeding heard liquidation and more of a thinning of over weight gilts. Hams made strong concessions last week. This move looks to be a partial correction after stronger than expected increases the week before. Hams are to remain active into the fall as cold storage build stock for Holidays. Bellies lost a little ground and will likely remain weak in August. Demand is unknown a this point put further processors are expected to remain active in cold storage expansion for winter programs. The large slaughter backlog should keep this complex under control. 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, and the increasing price is creating the perception of stronger demand, relative to the harvest levels. However, it is not a factor of harvest levels or stronger demand, but continued labor difficulties at plants to consistently supply product. The seasonal demand should be fading, which should ease last week's gains. Harvest levels are not going to fall away, but rather steadily increase into the fall, and the combined impact should cause 72s to fall away.

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