The Dish Market Report – August 2, 2018

Top of Mind News

The Farm


Chicken output for the week ending July 21st rose .1% from the previous week and was 1.1% larger than the same week in 2017. Currently, year-to-date chicken production is trending only modestly more than last year. Yet, output is forecasted to track 2.1% above a year ago from July through December. The chicken breast markets are the lowest for this time of year since at least 2008. Anticipate strong feature activity for boneless skinless chicken breasts as the Labor Day holiday approaches which should influence prices higher. Since 2013, the average price move for the ARA Chicken Breast Index during the next three weeks was up 3.2%. Look for bone-in chicken wing prices to appreciate in the coming weeks as football season nears.



Beef output last week rose .9% and was 1.4% better than the same week last year. The July 1st cattle on feed inventory was 4.3% larger than 2017 with June placements into feedlots up by 1.3%. But, the average placement weight was down 3 pounds from the prior year. Slaughter ready cattle supplies should be sufficient in the near term, but there is some concern that cattle numbers could tighten this fall. Solid retail feature activity is occurring and anticipated to persist into the Labor Day holiday. This should boost demand and support ground beef and steak cut prices in the near term. Since 2013, the average move for the choice ribeye market during the next four weeks was 5.6% higher.



Pork output fell 16.8% last week and was 10.6% smaller than a year ago. Note: the USDA now excludes lard from their weekly output data. Year-over-year pork production gains are likely into the fall due in part to solid hog numbers. This hints that the upside risk for the pork markets may be limited. June 30th U.S. pork inventories were .2% more than 2017 with ribs (3.3%), trimmings (38%) and bellies (130%) holdings higher. But, picnics (-5.6%) and hams (-16.5%) were lower. The USDA pork cutout usually weakens through early-September.

The Sea


Despite a firm U.S. dollar which is encouraging seafood imports, worldwide demand for seafood remains strong. Most domestic seafood markets are pricing above year ago levels, except shrimp. The greenback looks poised to remain firm which will make the U.S. an attractive buyer. Still, the various seafood markets will likely price above 2017 levels into the fall.



The Garden


During the summer, the northern tomato crops play a key role in providing sufficient tomato supplies to consumers. Temperatures have been hot, but rainfall has been prevalent. Weather forecasts look promising for good development of future tomatoes. Since 2013, the average move for mature green large tomato prices over the next two weeks is a decline of 15.8%. California iceberg lettuce crops can experience some weather challenges also in the late summer. Over the last five years, the average move for the iceberg lettuce market in the next two weeks was up 15.3%.



The Kitchen Sink


CME butter prices have found modest support lately. June 30th U.S. butter stocks were 8.5% more than a year ago and 19.1% larger than the five-year average for the date. This factor and active production have tempered this summer’s price gains. Still, export demand and seasonally fading output could support the butter market this month. June 30th cheese inventories were 5.7% bigger than a year ago. U.S. cheese supplies remain historically high and recent import tariffs from Mexico may limit expected seasonal price gains. The cheese markets usually trend higher in August.



The wheat markets have firmed as of late with Minnesota spring wheat climbing to a nine-week high. Weather challenges globally have put in question some pending wheat production forecasts. That said, wheat prices may correct modestly downward in the near term but could have more upside potential before September.




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Nearby diesel fuel futures have declined over the last week and are pricing 9.1% below the 42-month high set in May. Still the most recent average retail price is 27.5% more expensive than a year ago. Diesel fuel prices usually fade in August.