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Chicken slaughter for the week ending September 26th was down 2.6% from the year prior, but heavier bird weights left ready-to-cook production down a lighter 1.7% (y/y). Tighter production schedules have been underpinning price support across the wholesale chicken markets, with everything but the tender market finding support recently. Seasonally, breast meat prices usually fade into the late fall, and the chicken wing markets typically decline into the fall, as well. While shell egg prices have been mostly flat, the egg product markets are starting to head higher as demand is reportedly improving. As restaurants look to regionally reopen, the egg products market may still find support.
Beef production jumped last week (w/w) and marked the second consecutive week of record beef output for those respective weeks. Despite the sharp rise in production, beef cutout prices continued higher, with both Choice and Select cutouts pricing above a year ago. Last week’s price support was largely from the rib primal, but the chuck cuts contributed modestly as well. The beef 50s are back in the $0.50 price area, and further upside may occur deeper into the fall. Domestic 90s prices continued to retreat reaching their lowest level since January 2019. Further downside potential is likely this month.
Last week, both hog slaughter and pork output were estimated to be 2.1% smaller than the year prior. Anticipate lighter production schedules into mid-to-late October, but the recent Hogs and Pigs report indicated that there may be additional pork inventories available around the corner. Amid tighter production, exports have remained active and have likely tightened spot pork supplies. The USDA pork cutout continues to increase, but the belly and ham markets have retreated some over the past week. Still, price support may continue until production rebounds.
The snow crab markets remain historically inflated and have found better demand as of late due in part to improving foodservice sales. The Alaskan Bering Sea snow crab fishing season will officially get underway on October 15th with the quota expected to be close to last year’s level of 34 million pounds. However, the bulk of the snow crab landings are not expected to occur until the winter.
Most of the tomato markets have continued to firm with the vine ripe markets rising to their most expensive levels since February. Domestic sourced tomato shipments as of late have been tracking more than 20% below year ago levels due mostly to crop challenges in the East. Tomato supplies could remain erratic throughout this month which is likely to underpin the markets. History suggests that the tomato markets will firm in the coming weeks anyways. The Hass 48 count avocado market has declined to an 18-month low.
THE KITCHEN SINK
The cheese markets remained firm last week. The cheese block price premium over barrels narrowed but is still historically wide. Global cheese prices are lower than domestic cheese which should continue to temper exports. The cheese markets usually find some support in October but from the current price level for blocks, the downside risk should be respected. The CME spot butter market last week continued to weaken due in part to still struggling fine dining activity. Solid butter inventories and active butter manufacturing could temper the seasonal price increases that usually occur for butter in the fall.
The USDA September 1st quarterly corn and soybean domestic stocks data released last week were below expectations. This is due in part to the 2019-20 domestic crops likely being smaller than earlier USDA estimates. The margin of error with the new crop corn and soybeans has tightened and these markets could remain erratic.
Last week nearby CME gasoline futures finished 7.5% lower (w/w) but will likely find some support this week as another hurricane (Delta) is taking aim at Louisiana’s petroleum production later this week. Expect gasoline prices to be volatile.