top of mind news
- Restaurants Continued To Add More Jobs Last Month
- Courts Are Challenging The Biden Administration’s Prioritization Of Women And Minorities For Restaurant Relief Grants
- Paycheck Protection Program Comes to a Close
- They’re Back! Restaurant Guests Returning to the Fold
- Understanding the Staffing Shortage in Restaurants
Chicken production for the last full week of May was a decent 165.6 million birds, but the initial estimate for the Memorial Day week put throughput at its smallest for the holiday week since 2016. Still, despite the production slowdowns, the chicken markets continue to show some softening undertones, with both breast meat, as well as wing prices fading from their recent highs. While chicken integrators look disinterested in increasing production, a backing off from buying may be in the works, as, seasonally, wings tend to have a muted feature role until late summer to early fall (but some Fourth of July ads may be noted this year). Anticipate some seasonal downside price action for the chicken markets, but abrupt declines are likely not in the cards just yet.
Despite slowdowns to start last week, total weekly cattle slaughter made up a bit of ground, but at 538k head, there are still about 40k to 50k head left to be processed from those slaughter delays. Packer plant issues supported the beef markets throughout last week but anticipate a seasonal top to be forged for the Choice cutout heading into mid-to-late June. Still, a sharp move lower is not expected in the near-term as active purchases are still taking place. The beef 50s made some wide price swings last week but ended the week near $1.00/lb. While seasonally appropriate, that upside movement was more abrupt than usual (50s).
Hog slaughter was relatively lackluster last week, coming in at a mere 1.98 million head. Holiday week notwithstanding, that put last week’s throughput well below expectations. Pork supplies are tight amid smaller production, which is providing support across the wholesale markets. Pork bellies are approaching $2.00/lb. again and loins and butts last week tacked on sizable price increases, as well. Plus, exports remain brisk and continue to remove product from the domestic wholesale market. Unfortunately, price relief for pork is likely limited for now.
Most seafood markets are now tracking above year ago levels due to the low prices in the spring of 2020 due to COVID reduced demand. Foodservice demand is improving considerably however, restaurants are limiting menu items in part to labor issues and sales volatility. This could temper any increase in seafood demand for foodservice during the next several months.
The Idaho potato markets remain relatively firm. Supplies are seasonally declining and are not expected to improve until late August. This factor and the improving foodservice demand could be supportive of the potato markets for the next several weeks. History suggests that potato prices will not peak until mid-August. The avocado markets have strengthened during the last week with additional price increases likely to occur. Typically, the 48 count Hass avocado market firms during the next two months.
THE KITCHEN SINK
Last week CME cheese block prices finished the lowest since May 2020. CME spot butter prices were down modestly (w/w). Per the USDA, April cheese production was up 8.0% (y/y) and was a record for the month. Butter output in April was down 18.4% (y/y) but still the second best for the month on record. Added cheese block making capacity this year could influence prices modestly lower in the near term, but history suggests that notable price declines during this time of year is not typical. Despite solid production, improving butter demand could support prices which usually happens during the summer.
The initial domestic corn crop ratings from the USDA last week were encouraging with 76% of the 2021-22 crop rated in either good or excellent condition. This is only the fourth time in the last two decades that initial crop ratings have been this high. However, there is a long way to go with these crops. Erratic prices will continue.
Nearby WTI crude oil futures last week finished notably higher (w/w) and had the highest weekly close since October 2018. Growing Middle East geo-political tensions (think: Iran) and growing U.S. petroleum demand will keep crude prices high.