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For the week ending April 4th, total chicken slaughter declined from the week prior, but was still up 0.3% from a year ago. Ready-to-cook chicken production was also off sharply (w/w) but was still 0.8% over a year ago. Expect tempered broiler production schedules for the balance of April. The effects of the cancelled NCAA tournament are being noted in the wing markets, as prices have fallen to their lowest levels since 2011. Additionally, tenders and leg quarter prices have been on the decline, as well, and the breast meat markets have been freefalling, notching their lowest prices since at least 2000. Still, some chicken price firmness should occur as production cuts tighten supplies.
Last week, cattle harvests fell 14.4% from the week prior and were 16% below a year ago. COVID-19 related plant closures were the primary cause of the slowdowns, so anticipate at least another week to two weeks of decreased beef production. While the USDA beef cutouts continued to plummet throughout last week, strength remains across the end meats, with the round primal even finding modest gains from the week prior. Spot sales for 190e ribs last week were record large. Look for retail to begin their spring beef merchandising as panicked consumer traffic returns to more normal. Beef prices may firm into late month.
Sharp weekly production cuts were seen last week, but pork output was still 0.9% more than a year ago. While the pork cutouts have been plummeting, including butts, picnics, and ribs, the persistent weakness in hams and bellies has finally stalled. Additionally, the 42% and 72% pork trim markets are struggling. Given the recent production cutbacks along with the continuation of active exports, anticipate a bottom to occur for the USDA pork cutout. Yet, while a sharp upside move may not be in the cards, some price firmness is expected into late April.
World snow crab supplies are limited. U.S. snow crab imports during February were essentially flat with the previous year. The Newfoundland snow crab fishing season has been delayed due to COVID-19 but is set to get underway in the next week. However, initial fishing could be slow. COVID-19 is disrupting the shrimp harvest in parts of the world also, including India. This may underpin seafood prices in the near term.
The tomato markets have found support during the last week due in part to shorter supplies from Florida and Mexico. Some product in Florida is being left on the ground due to the lack of food service demand. Field workers have been challenging to obtain as well. This could cause the tomato markets, and various other produce markets, to be somewhat erratic in the near term. History suggests, however, that the upside price risk in tomatoes during the next few weeks should be limited. Avocado imports from Mexico remained below year ago levels last week. Avocado supplies could improve.
THE KITCHEN SINK
Cheese block prices this week are the lowest in 17 years and cheese barrel prices are the cheapest in 11 years. The spot butter market is the lowest since January 2015. The COVID-19 challenge has deteriorated cheese and butter demand from the food service industry. The USDA is currently forecasting domestic milk production for H2 of 2020 to be 1.2% better than last year. However, with rapidly declining margins for dairy farmers, that year-over-year forecasted gains for milk output will likely be tempered. Therefore, forward buying some of your longer-term cheese and butter needs could be considered.
With the decline in gasoline usage and fuel prices due to COVID-19, ethanol demand has plummeted. This has pushed ethanol producer margins into the red forcing them to limit production. Thus, corn demand for ethanol has plummeted as well. This could keep a lid on corn prices in the near term.
Despite OPEC announcing coordinated crude oil production cuts with Russia, nearby WTI crude oil futures remain at price levels not seen since 2002. Until travel activity begins to improve, expect the crude oil markets to remain under pressure.