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Weekly chicken slaughter for the week ending April 3rd fell to 161.9 million birds and that was the smallest for any non-holiday (and non-winter weather) week of the year. But forward broiler production levels look to be improving, as the most recent Broiler Hatchery report indicates that producers are placing more eggs into incubators which should result in more active chicken slaughter heading into the early summer. But current tepid broiler output continues to underpin prices amongst the chicken complex. Yet, expect to see the wing markets break a bit lower into the summer as it looks like retail is taking a step back from featuring chicken amid the persistently higher prices.
Last week’s beef production schedules were boosted from the holiday shortened prior week, and, at 530.9 million pounds, was well over last year’s (w/w) COVID reduced slaughter. Still, the USDA beef cutouts continued to rise throughout the week, and the fact that packers are paying up for cattle likely means little price relief to the beef market in the near-term. While the middle meats led last week’s price increases, the beef 50s were also sharply higher, ending last week just over $0.90/lb. There looks to be limited price relief on the horizon as cattle supplies look tight heading into the summer and beef demand is rising.
Last week’s hog harvest remained in the sub 2.5 million head area, and based on the latest WASDE report, it appears that only modest hog slaughter rates will occur in the near future. The USDA, expectedly, whacked 2021 pork production projections by 405 million lbs, and this suggests that pork prices will likely remain inflated well into the summer. Pork bellies pushed over the $2.05/lb. at week’s end but expect some modest downside potential into the late spring. Still, tighter cold storage belly stocks may temper those seasonal losses.
U.S. shrimp imports remained relatively strong during February at mostly lower price levels from January. During the month, the U.S. imported 2.5% more shrimp than the previous year. As the world economy improves, the U.S. could face stiffer competition for shrimp imports which could be supportive of the markets. However, this is not likely to occur until later this year.
The avocado markets remain relatively firm. Supplies from California are starting to hit the market at higher price levels than imports from Mexico. The California harvest is off to a slower start than a year ago with total shipments tracking 57% below 2020. Strong imports from Mexico, however, are keeping a lid on avocado prices. History suggests that the avocado markets may move higher during the next several months before peaking in the late summer. The lettuce markets are moving downward due in part to ample supplies.
THE KITCHEN SINK
Last week cheese block prices were the highest in 12 weeks and barrel prices the costliest since November. U.S. cheese exports in February were down 2.3% (y/y) but were the fourth best for the month since 2000. Spot butter prices last week finished the highest in over nine months. February butter exports were up 109.7% (y/y) and highest for the month in seven years. The USDA raised their 2021 milk output forecast higher by 400 million lbs. and is projected to be 2.5% more than 2020. This will support pending cheese and butter output, but prices will likely remain counter-seasonal firm this spring.
The corn and soybean markets remain relatively inflated. The South American harvests are progressing however the markets are now focused on the disappointing U.S. plantings numbers from the USDA last month. The corn and soybean markets will likely need to remain well supported to encourage further production.
Nearby WTI crude oil futures were down (w/w) last week but are pricing 53% above the 2020 price average. Less friendly U.S. government support for domestic crude oil output along with growing geo-political tensions will keep oil prices firm.