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For the week ending March 23rd, total chicken slaughter was up 3.8% (yoy), but the six-week rolling average was up just shy of 1% year- over-year. Chicken output gains continue due mostly to heavier bird categories (up 3.2%) being processed. Lighter birds (under 4.25lb. and 4.25-6.25lb.) being killed were down 2.2% during the past 6 weeks. Chicken breast prices remain on the rise, while chicken tender prices have moderated from earlier increases. As expected, the tender-breast price spread has narrowed sharply and should continue to narrow as further seasonal gains for breast meat prices occur. Wing prices are likely to move seasonally lower this spring.
Last week, beef production fell 3.1% from the prior week’s weather-related make up run, but was 2.6% better than a year ago. Cattle slaughter schedules are expected to seasonally ramp up from now heading into May. This is when increasing demand occurs due to grilling season and is expected to support beef prices. Domestic 90’s continue to be choppy with prices between $2.15 and $2.20 and could persist in that price range into mid-summer. Yet, the upside price risk remains for the 90’s possibly into the $2.30’s this fall. Expectations are for herd rebuilding amid good pasture conditions which can bring less cows to market.
Weekly hog harvests continue running near 2.5 million head but are likely to moderate into mid-spring. Still, year-over-year pork production gains are expected to run between 3% to 4% this quarter. Last week’s pork output was up an estimated 5.6% (yoy), but the USDA pork cutout still edged higher for the fifth straight week. Pork belly prices are 44% over year ago but look over extended. The downside risk needs to be respected in the near-term. However, bacon demand should seasonal rise this summer and is anticipated to support the various belly markets.
The salmon markets are mostly averaging below year ago levels due in part to solid imports. During January, the U.S. imported 4.1% more salmon than the previous year. Still, history suggests that the Atlantic salmon filet market could firm during the early spring. This market has averaged higher in April compared to March in four of the last five years.
Lettuce supplies have improved as of late, pushing the markets downward. The major lettuce harvest area has shifted to the Huron, California region and will transition north again to Salinas, California in the coming weeks. At this point, no major supply gaps are anticipated. Still, seasonal charts suggest that the risk in the iceberg lettuce markets in the near term is to the upside. The avocado markets are on the rise as the Mexican harvest slows. However, avocado supplies are anticipated to improve later this month.
The kitchen sink
The cheese markets remain firm and near levels not seen since last fall. U.S. cheese prices are attractive for global buyers and are encouraging exports. Domestic January cheese exports were up 3.5% from the previous year. Still, high inventories could be a headwind for notable price increases from here. The cheese markets typically fade modestly from mid-April through mid-May. The spot butter market remains steady, but international butter prices are also rising also which can boost exports. Still, in January butter exports were down .4% (yoy). Butter prices usually rise during the spring.
Corn plantings are estimated by the USDA in the U.S. at 92.8 million acres, up 4.1% from the prior crop and the largest in three years. Both soybean (84.6 million, down 5.1%) and wheat (45.8 million, down 4.3%) acres are projected to be lower. Any adverse weather could sway the grain markets during the next several months.
Nearby RBOB gasoline futures have risen this past week and are up 48.9% this year. As of April 1st, the EIA’s national average retail gasoline price was $2.770/gal, but was 1.7% lower than the prior year. Gasoline prices typically appreciate during the spring, but this year’s seasonal increase may be less intense.