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Chicken production for the six-week period ending August 4th increased 1.2% from last year. Year to date chicken output is tracking modestly above 2017 levels but is expected to improve going forward. The USDA is calling Q4 chicken production to be 2.2% larger than last year. Chicken wing prices are at the lowest for this time of since 2011. Still, bone-in chicken wing demand is anticipated to rise as the football season begins. Over the last five years, the average move for the ARA chicken wing index during the next seven weeks was up 6.5%. The chicken breast markets are the cheapest for this time of year since 2000. Since 2013, the average move for the ARA chicken breast index from late-August through Thanksgiving was down 38%.
Beef production last week increased 3.1% and was .3% larger than the same week last year. Year to date weekly beef output is tracking 3.2% above 2017. Only modest near slaughter ready cattle may be available next month which could result in a temporary supply gap. This could limit seasonal price declines for beef which usually occur in the early fall. Still, the USDA is calling Q4 beef production to be 4.8% above last year. Beef demand is expected to slow after retailers secure final beef commitments for the Labor Day holiday. Since 2013, the average move for 81/19 ground prices over the next two weeks was down 4%. But, this same ground beef market averaged 14.6% lower in September.
Pork output last week rose .4% and was 2% better than the same week in 2017. Hog numbers are big and pork production is likely to expand in the coming months. The USDA is forecasting Q4 pork output to be 6.3% larger than last year. The pork belly markets have fallen sharply in recent weeks and are expected to remain below 2017 levels due in part to strong production and ample inventories. History hints that even lower pork belly prices can occur in the coming weeks. In 2019, the average per capita pork supply is projected to be up 4.2% from 2018.
The shrimp markets continue to track below year-ago levels for the most part. This is despite lackluster imports during June. During the month, the U.S. imported 7.7% less shrimp than the previous year. This follows a decline in imports during May. A rising dollar value should only encourage shrimp imports in the coming months which could temper prices.
The tomato markets have firmed modestly during the last week. Bouts of challenging weather has tempered the tomato harvests both in the west and east. Total tomato shipments last week fell 9.8% from the previous week and were 20.3% less than the same week last year. Due to the continued shift in harvest areas during the late summer in the east, it could cause some volatility in the tomato markets. The five-year average move in the large-sized mature green tomato market during the next five weeks is an increase of 20.8%
The Kitchen Sink
The cheese markets have firmed during the last week as the U.S. milk supply seasonally declines and more milk is diverted to fill the school pipelines. Cheese supplies are historically ample for this time of the year. Further, prices are now near international levels which should slow export orders. Thus, any further price gains in the cheese markets may be relatively short-lived. The CME butter market has found support as of late also due in part to the aforementioned factors. But, the upside risk for butter prices is likely limited in the coming months as well due to adequate supplies.
The USDA raised their 2018-19 domestic corn and soybean harvest estimates larger than expected last week. The U.S. corn crop is projected to be nearly the largest ever while the soybean crop is forecasted to be a record. Consequently, fairly engaging feed prices are anticipated to persist into the fall.
Nearby WTI crude oil futures have fallen over the last week and are down 5.1% this month. Last week, U.S. crude oil stocks grew by 6.8 million barrels and daily production was a big 10.9 barrels per day. Lower crude oil prices are still possible