The Dish Market Report, March 28, 2019

top of mind news

the farm


For the week ending March 16th, chicken slaughter was about flat week-to-week but 1% better than a year ago. Continually lighter bird weights have tempered ready-to-cook (RTC) production which was down 1% (yoy), leaving the six-week average production down 1% as well.  Year over year production gains have been narrowing recently, but expectations remain for output to exceed year ago levels in the coming months.  Chicken wing prices made another move higher, as fill-in buying amid March Madness is still occurring, a sign of good demand.  That said, the chicken wing markets are expected to soon hit their annual apex, with lower pricing anticipated throughout 2019.




Following severe winter weather that shut down parts of the Plains and Midwest, beef production last week bounced back sharply, up 5.4% percent from the week prior.  Carryover cattle from the previous week were slaughtered in addition to the already planned output schedules.  The boxed beef cutouts have remained firm, failing to give way to seasonal weakness.  The spring grilling season will be here soon, but forecasts are for beef prices to hold higher lows than a year ago, and gains could be tempered as well. Beef 50s are moving steady to higher, but the upside potential of prices reaching the $1.00 mark by late spring exists.  Price USDA, FOB per pound.



Pork production last week rebounded modestly as slaughter rates edged back over 2.5 million head and should remain strong as weather affected pork processing plants are back up and running. Strength across the hams and bellies continued to drive the USDA pork cutout higher, but there is likely downside risk as the substantial buying appears to have slowed. With production schedules expected to expand this spring, larger pork supplies should temper any notable price gains, but international woes are likely to keep foreign buyers active.


The Sea


The shrimp markets continue to track below year ago levels.  This is due in a large part to strong imports.  During December, the U.S. imported 4.2% more shrimp than the previous year.  A slowing world economy should only boost U.S. shrimp imports further.  Seasonal patterns suggest that the shrimp markets could trend downward in the coming months.



The Garden


The avocado markets have firmed as of late but remain well below year ago levels.  The California harvest should build in the coming months, but avocado output this year is anticipated to be down sharply.  This will put more of the supply onus on Mexico.  History suggests that the avocado markets may continue to rise during the next several months before topping during the late summer.  The five year average move for the Hass 48 count avocado market from this week until mid-September is an increase of 37.6%.



The kitchen sink


The cheese markets are pricing at their highest levels since last fall. Per the USDA, February 28th cheese stocks were up 4% from the prior year and were a record for the month. But it was the smallest February inventory build for cheese since 2014.  Over the last five years, the average price move for cheese blocks from mid-April through mid-May was down 3.1%. Domestic butter inventories at the end of February were 8.8% less than the prior year and were the lowest for the month since 2016. Since 2015, the average move for spot butter prices from mid-March through late-June was up 15.9%.



The wheat markets have found modest support as of late with the futures markets rising to multi-week highs.  Export demand for U.S. wheat has been erratic despite historically tight supplies from the world’s largest exporter, Russia.  However, a good U.S. winter wheat harvest could temper the upside potential in wheat prices into the spring.




Nearby diesel futures are down slightly this past week but are up 18.4% this year. As of March 25th, the EIA’s national average retail diesel fuel price was $3.080/gal, which is 3.6% higher than the prior year.  Since 2014, the average move for nearby diesel fuel futures from mid-April through early-June was up 4.1%.