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Chicken slaughter throughout December looks to have been down an average of 2.5% from the year prior, with ready-to-cook output off about the same as slaughter weights have moderated from earlier year levels. Broiler production isn’t looking as if it will increase much into the new year with chick placement data continuing to run well below year ago levels. The white meat complex remains mixed, with breast meat prices running below a year ago while wings and tender prices are holding firm over last year. Breast meat prices are expected to head higher, seasonally into late winter to early spring while the wing markets should soften from their recent record levels. Dark meat prices remain low, but upside potential is likely this winter and the early spring.
The past two weeks of holiday shortened slaughter are likely to support wholesale beef prices modestly through early January but once fill-in buying is done, prices are likely to retreat later this month. While prices across the rib cuts have been down sharply, they remain modestly above year ago levels, but further weakness is likely into early February. The beef 50s prices found a bit of support to end 2020 but are still in the lower $0.30s. While upside typically emerges, seasonally, lackluster foodservice demand may keep a lid on the fat trim markets. Domestic 90s prices are edging up and a slow uptrend is likely to persist.
Wholesale pork prices rebounded sharply into year’s end, with the bellies making up most of the move, closing the year near the $1.00 price level. Seasonally, belly prices tend to trend higher into late January before easing into late winter, but wholesale prices will likely be higher than a year ago. Pork 42s prices have retreated in line with seasonal expectations, closing the year in the $0.20’s but the 72 pork trim market is a bit higher than typically normal. Both pork trim specs should appreciate modestly this winter but another price runaway isn’t likely.
The salmon markets remain relatively deflated due in a large part to lackluster foodservice demand in Europe and the U.S. Also contributing to the low-price levels has been solid U.S. imports which were up 10.1% in October compared to the previous year. The downside price risk in the salmon markets from here, however, may be limited and higher prices are anticipated later in 2021.
The tomato markets have firmed during the last week as cooler weather in recent weeks has slowed growing patterns. Tomato supplies are typically vulnerable during this time of the year as Florida experiences some of its coldest temperatures. History suggests that relatively inflated tomato prices could persist throughout this month and be at some of the most expensive levels of the year. But lower prices are expected thereafter. The large sized mature green tomato market has averaged below January in February in seven of the last 10 years.
THE KITCHEN SINK
CME cheese block and barrel prices were mixed last week but are lower by at least 8.5% (y/y). U.S. November cheese stocks were up 1.7% (y/y) and grew by 0.3% from the prior month. Domestic butter inventories in November were up a whopping 39.4% (y/y) but fell 16.0% from October which is seasonally typical. The USDA is forecasting Q1 milk output to be 1.5% more than a year ago (leap year adjusted) which is adequate for pending cheese and butter production. Still, cheese price declines may be tempered with solid exports. Due to historically depressed butter prices, the downside risk may be nominal.
Domestic corn and soybean supplies are limited due in a large part to strong export demand. The South American harvest will get underway relatively shortly however adverse weather could dampen production. Thus, the corn and soybean markets are expected to remain erratic this month.
Last week nearby WTI crude oil futures were up modestly (w/w) but were still 21.3% below a year ago. U.S. petroleum product exports have been solid due in part to the softening greenback. But big price resistance for WTI crude oil is $50/bbl.