UPDATED AS OF 14-MAY-08
Pork: February pork cut exports were 65% or 106 million pounds greater than a year ago due in part to notable increases
in trade with China/ Hong Kong (642% or 58.1 million pounds) and Russia (184% or 18.7 million pounds).
Strong pork exports are anticipated to persist. Ham exports to Mexico which have been decelerating during the past
year were a record high for the month. This is a significant event for the ham market and higher ham prices may be
forthcoming.
Seafood: February US shrimp imports were 3.6% larger than last year despite a 4.5% decline in trade with Thailand.
A surge in imports from Indonesia (111.4%), Malaysia (77.9%) and Vietnam (24.5%) helped offset any declines in
trade with other countries. One month does not make a trend though and US shrimp imports this spring could suffer
due to the devalued US dollar. The shrimp markets are mostly steady to firm.
Produce: April 1st US potato stocks were 7.5% greater than a year ago and the largest for the date since 2000. April
Idaho potato holdings were 9.7% more than last year but larger sized (70 count and below) stocks are reported to be
limited. In addition, Idaho potato acreage could decline this year due to the lucrative grain markets. Fairly inflated
Idaho potato prices may persist into June. The lettuce markets are mostly moving lower as Huron output builds. The
principal lettuce harvest area will transition to Salinas later this month which could bring more volatility to the markets.
Dairy: February US nonfat dry milk (305%), butter (795%) and cheese (79%) exports were all considerably larger
than 2007. With Oceania milk output trending well below a year ago as it seasonally declines and the devalued US
dollar strong US dairy exports are anticipated to persist. This factor and inflated feed costs should help support dairy
prices in the coming months. 2008 hay acreage is estimated to be the smallest in 8 years. Hay typically accounts for
roughly 35% of the cost to feed a milk cow.
Canned and Frozen: The canned tomato markets are steady to firm with mixed inventory reports. Whole peeled tomato
stocks for food service do appear to be tightening. Some modest upward pressure on the markets may be
pending. The canned apple market remains firm. Northwest raw product apple prices continue to trade significantly
higher than a year ago. Additionally, most processors are passing through can cost increases.
Oil and Grains: Corn planting in the US is behind due to field conditions which could hurt acreage yields if the delays
continue. Inflated corn prices are expected to endure.
CROP UPDATE
The USDA updated their 2007/08 supply and demand tables for wheat recently with just some modest repositioning.
The wheat crop year runs from June 1 through May 31. 2007/08 crop (year we are in now, product that was harvested
in 2007) feed use for wheat was reduced 50 million bushels, but exports were boosted by the same amount
producing the same ending stocks number. In addition, 5 million bushels a piece of hard winter and hard spring ending
stocks were shifted to soft red ending stocks, further affirming the current tight supplies of high protein wheat.
The USDA updated their corn and soybean product supply and demand tables for the 2007/08 crop year. The corn
and soybean crop years run from September 1 through August 31. As far as corn is concerned, feed (200 million
bushels) and exports (50 million bushels) were increased from their March forecast while ethanol use was reduced
100 million bushels. The net effect was a 155 million bushel reduction in 2007/08 corn ending stocks (what’s left over
at the end of the business day on August 31, 2008) which now are projected at 1.283 billion bushels, just 9.7% of total
use.
Regarding soybeans, the highlight for the domestic total was a 50 million increase in exports from the March forecast
but residual use (catch all) was reduced by 90 million bushels. 2007/08 soybean ending stocks are now projected at
160 million bushels or 5.3% of use.
UPDATED AS OF 14-APRIL-08
Cheese: Block cheese prices on the Chicago Mercantile Exchange remained relatively unchanged for the trading week ended April 4, averaging
$1.81 per pound, up a penny from an average of $1.80 per pound the previous week. Block cheese closed at $1.80 per pound Monday and slightly above $1.80 per pound Tuesday and Wednesday. Prices advanced to a closing
price of $1.82 per pound Thursday, pulling back to finish the week slightly above $1.81 per pound.
Wheat: Wheat for May delivery closed at $13.25 per bushel Friday on the Minneapolis Grain Exchange, up from a closing price of $12.75 per
bushel the previous day. Prices had closed at $11.94 per bushel Monday and rose slightly to a closing price of $11.55 per bushel Tuesday and
$12.15 Wednesday. Friday’s close was slightly higher than the previous Friday, when wheat finished the trading week at $13.19 per bushel.
Gasoline and Diesel Fuel: The nationwide average for regular unleaded gasoline was $3.39 per gallon April 7, according to AAA and the Oil
Price Information Service, up 10 cents from this time last week. Prices were up 6 percent from an average of $3.20 a month ago and up 23 percent
from an average of $2.76 this time last year. Mid-range unleaded averaged $3.55, while premium unleaded stood at $3.67 per gallon. The
nationwide average price for diesel fuel stood at $4 per gallon April 7, down slightly from an average of $4.02 per gallon last week. Diesel prices
are up 38 percent from an average of $2.90 per gallon this time last year.
Natural Gas: Natural gas spot prices increased in all regions in the lower 48 states for the period from March 27 to April 2, according to the Department
of Energy. The Henry Hub spot price increased 34 cents to $9.59 per MMBtuu April 2. Cold temperatures continued for a portion of the
week in the Northeast and for most of the week in the West,
Beef: The March 1st US cattle in feedlot inventory was 2.2% more than last year. Cattle placements into feedlots during February were 3.9%
greater than 2007 which is bullish for cattle supplies this spring. Still, for the 3rd month in a row cattle placement gains were at lighter weights
which will likely lead to a decline in slaughter weights in the coming months which is bearish for overall beef output. Most of the beef markets
remain soft but some upward pressure on the markets is expected during the next few weeks.
Poultry: The March 1st broiler type breeding inventory was .8% bigger than last year. In addition, pullet (young hen) placement data suggests
that the broiler type hatchery should continue to grow compared to year ago levels. These factors indicate that strong chicken output growth could
persist. However unless chicken prices improve soon, chicken suppliers may reduce overall chicken output in an effort to pressure prices upward
to counteract rising feed costs. The jumbo cut chicken wing market is trading at its lowest level in 15 months and additional price decreases are
anticipated.
Pork: Hog farmer margins have waned this winter. Some liquidation of the swine breeding herd is likely underway as farmers attempt to decrease
the available hog supply and pressure prices upward to compensate for the rise in feed costs. February sow slaughter, after the leap day
adjustment, was 5% more than a year ago. Most pork markets typically move upward in April but any increases this year should be tempered.
February 29th pork stocks were 21% more than 2007.
Seafood: The shrimp markets are relatively steady. Overall shrimp supplies are adequate however the challenged US economy could dampen
shrimp demand in the coming months which would be bearish for shrimp prices. Still, the deflated value of the US dollar is anticipated to continue
to mitigate US shrimp imports throughout this year which is likely to lessen the available supply. The salmon filet market is relatively firm.
Produce: Tomato shipments from Florida last week rose 4% but were still 6% less than a year ago. The mature green tomato markets remain
fairly inflated but additional price relief is anticipated in the coming weeks. The major lettuce growing area is beginning to shift north in California
to the San Joaquin Valley. However acreage declines amongst other challenges could limit overall lettuce supplies during the next few weeks.
Modest upward pressure on the lettuce markets may occur. Later in April, the principal lettuce growing region will transition to the Salinas area for
the summer.
Dairy: Milk farmer margins have deteriorated this winter. In turn, February milk cow slaughter, after the leap day adjustment, was 2.3% more than
last year. Milk cow slaughter is anticipated to accelerate this spring. During February, a net 24 million pounds were added to the American cheese
inventory which is the most for the month since 2002. The CME cheese markets are fairly steady. February butter stocks grew by 13 million
pounds marking the second smallest gain for the month in 10 years.
Canned and Frozen: There are mixed inventory reports on whole peeled tomatoes. Overall canned tomato stocks will tighten as the spring progresses
and the new crop nears (July). Modest market increases may be impending. Most canned vegetable product supplies for food service
are fairly limited and processors are beginning to announce forthcoming price increases. Higher canned vegetable markets are expected this
spring.
UPDATED AS OF 18-MARCH-08
Beef: Beef production last week was 2.9% more than last year. The percentage of cattle grading choice remains high which has enhanced choice beef supplies. 2008 choice beef output through February 17th is estimated to be 4.6% larger than 2007. Once the lighter weighted cattle that were placed into feedlots this winter begin to enter slaughter houses this spring, the proportion of cattle grading choice is likely to wane which may be bullish for beef prices. 08 prime beef output through mid February was 3% less than 2007
Poultry: The broiler-feed price ratio was 4.1 during February indicating poor chicken supplier margins. February marked the 4th consecutive month of a below 4.5 level- the first time this has occurred in over 15 years. With current chicken breast and wing prices softening the likelihood that suppliers will slow output in the coming months is increasing which could bring a boost to overall chicken prices later this year. The chicken wing markets are anticipated to trend lower into June. Strong exports are projected to continue to support chicken leg quarter prices.
Pork: The February hog-feed price ratio improved from January but was the lowest for the month on record suggesting historically poor margins for hog farmers. US and Canadian hog farmers are anticipated to reduce the breeding herd in the coming months which initially could be bearish for pork trimming prices. However, eventually (2009?) overall pork prices are anticipated to become inflated due to the herd contraction. Pork output last week was 16.7% more than 2007.
Seafood: ISA (Infectious Salmon Anemia) disease appears to be spreading in Chilean salmon farms, not good news for the industry and salmon buyers alike. This factor and the devalued US dollar could mitigate US salmon imports in the coming months. Consequently, the salmon markets may move upward this spring. The US imported 317 million pounds of salmon filet/steaks in 2007, 3.2% more than 2006.
Produce: Tomato shipments from Florida declined 15% last week as the harvest remained short due to January?s freeze and high wind damage. However, Mexican tomato shipments are reported to be improving which is easing the tightness of supplies. In addition, inflated tomato prices in recent weeks have likely curbed demand. In short, tomato prices may have topped. Still, relatively elevated tomato prices may persist over the next few weeks. Lettuce stocks are fairly adequate. Good weather is forecasted in the lettuce growing areas for the next 10 days which may heighten supplies
Dairy: The February milk-feed price ratio fell to its lowest level in a year as inflated grain prices continued to pinch milk farmer margins despite the elevated milk markets. Waning profitability is likely to propel milk farmers to begin reducing the US milk cow herd later this year which in the long run will be bullish for the dairy markets. As the Oceania milk and dairy product production season winds down in the coming months US dairy exports could improve. The butter market is trending higher.
Canned and Frozen: Much of the current industry talk revolves around contracting acreage for 2008. With grain prices inflated, the returns on those crops are attracting tomato farmers. The canned tomato markets are steady. Existing green bean supplies are limited due to the shortened output last year and due to the significant recall of various New Era Canning products. Higher canned green bean prices are likely this summer.
Oil and Grains: Volatility continues for all of the grain markets. Relatively tight supply levels are expected to cause erratic grain prices to persevere into the summer.
UPDATED AS OF 07-MARCH-08
Beef: The February 1st US cattle in feedlot inventory was 2.1% larger than a year ago. January cattle placements into feedlots were 5.7% more than 2007. Still, all of the increase in placements were in the lighter weight categories which may be bearish for spring beef output. March near slaughter ready cattle are projected to be 1.9% less than last year. Buyers securing product for the spring grill season may pressure beef prices upward soon. The 5 year average surge for the choice boxed beef cutout during the next 2 weeks is 5%.
Poultry: Sanderson Farms, a major US chicken producer, recently suggested that chicken output cutbacks are likely to occur in the next 3 to 4 months. The 6 week moving average for broiler egg sets is trending 2.7% above last year and 1.6% above 2006. However, the 6 week moving average has declined .1% since the beginning of the year which is fairly atypical. Broiler eggs are set roughly 10 weeks before being sent to slaughter as a live bird. Spring US chicken output is projected to be 2.5 to 3.5% higher than 2007. Chicken wing prices could trend seasonally lower deep into the spring.
Pork: Mixed signals continue for the anticipated contraction of the US swine breeding herd. January US sow slaughter was 6.3% more than last year and the largest for any month this decade but as a percent of total hog slaughter it was below average. Some swine herd contraction is likely in the coming months which may mitigate pork output later this year. Most of the pork markets are tracking lower. Last year the USDA pork cutout fell 5.2% during the next 4 weeks.
Seafood: A major Chilean salmon producer has announced that they will cut 25% of their workforce due to Infectious Salmon Anemia (ISA) disease problems. The ISA disease could shorten Chilean salmon output appreciably in the coming months putting upward pressure on the salmon markets. ISA disease is not harmful to humans. January US Gulf of Mexico shrimp landings were even with the 5 year average for the month.
Produce: Most of the tomato markets are jumping higher. January?s inclement weather in South Florida caused notable blossom drop for tomato plants set to produce in late February and March. Thus limited tomato shipments from Florida are expected to occur for the next 4 weeks. Florida typically accounts for roughly 70% of the total US winter tomato supply with almost all of the rest originating in Mexico. Volatile tomato prices are expected throughout the next month. The lettuce market is moving upward although favorable weather could boost supplies during the next 10 days.
Dairy: January 31st American cheese stocks were 10% less than the prior year and the smallest for any month since the same month in 2005. January American cheese holdings declined 20.8 million pounds from December marking the first time since 2001 that American cheese stocks did not expand in January. Cheese supplies are limited and the cheese markets are inflated but some market relief is anticipated in the coming months. The butter market has likely bottomed and increases may be pending.
Canned and Frozen: 2008 US tomato for canning output is forecasted at 11.8 million tons which if realized would be 6.4% less than a year ago but 6% more than the 10 year average. The canned tomato markets are steady. January 31st frozen green pea (6%), cut corn (4%) and green bean (2%) stocks were all larger than the previous year while cob corn holdings were 6% less than 2007. The processed vegetable markets are firm.
Oil and Grains: The soybean oil market continues to trek upward mirroring rising soybean prices. Inflated food oil markets are anticipated to persevere.