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Market Update - 9/13/2020

Fruits and Veggie

  • Tomato – Domestic pricing firmed this week on round tomatoes, cherry and plum solidifying the increases from the previous week. Grape prices increased by $2 for pint cases. Mexican product is showing a similar pattern with increases of $2.50 on grape pints, $1 on Roma 25LB XL. General pricing on the east coast for wholesalers is mid $20’s for round 5x6, low $20’s for cherry pints, low $20’s for grape pints, mid-teens for Roma XL.

  • Onion – Pricing on jumbo red and yellow onions from Idaho, Oregon, Washington are unchanged this week for the second week in a row. We’ve hit the bottom of the market and prices will remain firm on this low side, especially with the Food Box program back in action.

  • Potatoes -- Prices are coming down on Idaho Russets, firm on other points of Origin. AVG FOB prices on Idaho 50 count Norkotah $14, 60 count $12, 80 count $9.5. Prices expected to remain weak through the month. Harvest will be complete in Mid-October. Pricing reevaluation will occur upon completion of harvest.

  • Lettuce –The effects of the heat wave and wildfires in California are starting to hit FOB prices, albeit later than expected. 24ct Icebergs are up $6 per box on average. Romaine is trending a few dollar per box higher but has been above average prices for almost 3 months. At this point, longer-term effects on the fields, especially the young upcoming crops, are yet to show; however, the damage will undoubtedly be felt. Yields, quality, and shelf life are significantly impacted as growers leave behind some acreage due to extensive damage.

  • Cucumbers – Domestic Cucumber quality and availability is low. Pricing is up. Mexican product is rated as good quality and availability. Pricing will remain steady on the upside until he northeastern states begin harvesting in Late September.

  • Oranges – Many growers have enacted their Act of God clauses for Valencia oranges. High heat has caused trees to fruit larger and earlier. Sizes about 88 will be hard to find until Mid-October when the next Navel season begins. Pricing will be escalating regularly.

  • Lemons – Good supply of product coming out of the Coastal District #2 in California. Pricing is firming.


Plastics

Hurricane Laura has caused power outages and railroad disruptions through Texas and Louisiana resin manufacturing locations. Prices have shot up remarkably fast. Though some buyers have been hesitant to purchase at these levels, most are not taking any chances with supply shortages. There will be no issues with the proposed September increases of $.05/LB for PE and $.03/LB for PP, or greater. That would total $.19/LB in PE increases over the last 4 months and $.16/LB for PP.


Eggs

Undertone is steady. Prices are flat across the board. Stocks are rising. Price break coming within 2 weeks.


Soy

The most important piece of information from this week regarding the soy oil complex is that the stocks-to-use ratio in the most current WASDE does not justify the current oil share. In other words, oil is carrying the burden of crush margins right now but usage is not high enough and stocks aren’t low enough to justify the pricing. Soy oil is oversold, bean prices are rising, and meal isn’t selling. A reversal is imminent, the question is when. We’ll likely see a lot of sideways movement when the crop starts coming in.

Bullish sentiment is abundant these days –

  • Good purchases from China, potential food shortage over there, strong purchases of edible oil form all points of origin.

  • Weather not great for finishing this years crop, yield has been lowered, beans prices up.

Bearish sentiment is out there though –

  • Increasing Palm stocks

  • Big plant in South America this year

  • Steady crude prices

  • Soy oil outpacing other bio- d / renewable inputs

Dairy

The USDA reported this week,

“Cheese production, particularly in the Midwest and West, has been very busy. Plentiful milk in both those regions, along with reinvigorated market tones, has both customers and cheesemakers busy. The spot milk market was quiet following the holiday. The spot milk price range did not change from the previous week, from $4 under Class to Class III. Fresh supplies of cheese are moving. Frozen and pizza restaurant cheese sales are keeping mozzarella and other Italian style cheesemakers busy. As mentioned, cheese market tones have strengthened in recent weeks. That said, as of Thursday there is an atypically large block to barrel price gap on the CME which many contacts suggest does not equate to a healthy market tone.”

We're entering an interesting territory. Barrell prices started the week $.16 over the previous weeks average but even with the previous weeks Friday close. This Friday barrels closed $.12 down from the open on Monday. Block cheese started the week $.03 up from the previous weeks Friday close and closed this past week only a penny up. A trend like this often indicates higher prices for both items.


Poultry

WOGS are flat on the week. Tenders and wings are still on the high side but good news is they are flat week over week for the first time in 11 weeks. Good production two weeks ago and stronger weights will help the complex even out further, decreases may still be far off. Bone in cuts are suffering severely at this point. Prices fell again last week and there’s no sign of correction with little interest from the foodservice sector and slow retail sales. With strong slaughter bone in inventory will be very burdensome. It will be interesting to see how producers attempt to keep stocks moving through warehouses. Exports remain suppressed and as such frozen bone in is not selling even at very affordable.


Beef

90, 85 and 50% trim are trading lower this past week. There was good volume and interest this week. Monday 90% started high but was bid down close to $2.23/LB in Tuesday when most sales transacted. 85’s were sold Monday around $1.93 but lost interest throughout the week finishing closer to $1.89. We would assume the lack of interest is dwindling burger sales. 50% was selling well throughout the week at any price below $.45 but had a huge close on Friday when that product breached $.40/LB. At this point it looks like there’s plenty of trim to support the market needs. Cattle weight are still a bit above average which could be adding to the trim availability through feeder cattle are drying up. This decreasing trend will last through September but small advancements up are likely into late fall.

Boxed beef is finding its post summer market value. The shortened slaughter schedule and recovery orders coming off the holiday week has prices mixed. Select Tenderloins actually increased $.50/LB, looks like that was due to low availability. Choice Ribeyes are about $.10/LB up but wont hold that pattern. Select are down $.03/LB and will likely show less seasonal decline that Choice due to lack of Select availability. Brisket remains firm but historically declines all the way into winter at this time of year. Butts are showing their typically post Labor day sell off, dropping about $.10/LB in both grades, but will firm starting in October and move high until after Thanksgiving.

Pork

Hams have begun a firm ascent upward toward holiday prices. The Ham cutout gained $.08/LB this past week and will take on an additional 20% or more into December. The upward movement could be enhanced in Mexico starts buying again and smoke house availability which, throughout the Pandemic, has been far under the required amount. Volatility continues to prevail in the Belly cutout. The shortened slaughter week and seemingly unchanged demand caused prices to increase $.11/LB. Theres not much Belly in cold storage right now so buyers are all bidding on fresh and there wasn’t much fresh available to trade last week. Forward sales are limited on that item which should be an indicator that the lower prices are coming. Some analysts also believe the high prices are supported by sellers trying to recover losses earlier in the year. Its likely that this measure is proving to be profitable in the short term, but with foodservice sales still marginal, it cannot be sustained. Butts are to remain rather flat through September now that BBQ season is over. Ribs declined by $.03/LB on average and the cutout should trade around $1.20/LB through the rest of the year. We wont see remarkably low prices on ribs this winter since cold storage stocks are minimal. Trim is staying pretty firm these days, hogs are on slow growth rations and the backlog is all worked through. Trim value should retain its value in September and then take declines in October closer to annual lows. Forward sales for 22 days out or more are showing numbers in the mid $.30’s for fatty, $.70’s for lean. By then hogs will be readily available again and demand will be dwindling after Octoberfest promos.

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