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For the holiday shortened week of September 8th, chicken production dropped 13.2% from the prior week, but was .2% better than the same week a year ago. The six-week total of chicken output was 3.9% larger than 2017. The USDA is forecasting Q4 chicken production to be 2.2% more than a year ago. Hurricane Florence was estimated to have killed at least 1.5 million chickens in North Carolina which would account for only .4% of the total chick slaughtered in August. This could bring some support to the chicken markets which have been lackluster as of late. August retail chicken breast prices were down 8% from the prior year and the cheapest in over a decade. Wholesale chicken breast prices tend to weaken further in the fall.
Beef production last week increased 15.9% from the previous holiday shortened week but was .4% smaller than a year ago. During the last six weeks, choice beef output was down 2.7% versus last year. Less cattle grading choice could bring an earlier than usual seasonal bottom of the beef markets. August retail beef prices were down .1% from July, but up .8% from 2017. Retail ground beef prices were up 1.6% from last year and sirloin steak was higher by 3.8%. Strong demand is giving retailers confidence to feature beef this fall. This could provide added support to the various beef markets, including tenderloins and ribeyes, as the holiday season approaches.
Pork output last week grew 4.3% from the previous Labor Day shortened week but was 7.3% less than the same week last year. Hurricane Florence halted North Carolina pork production facilities which has supported prices. The USDA pork cutout is up 20.4% during the last five business days. But, despite some hog losses, most all facilities are likely to be running by early next week. August retail pork prices were down 1.5% from 2017. August retail bacon prices were the highest since January. Still, wholesale pork belly prices usually fall in Q4.
The salmon markets have climbed above year ago levels. This is despite solid salmon imports. During July, U.S. salmon imports were 7% more than the prior year. Strong imports are expected to continue. This factor, elevated retail prices, and ample alternative protein supplies could temper domestic consumption this fall which could weigh on the wholesale markets.
The avocado markets continue to track well below year ago levels. Avocado imports from Mexico have been much more consistent than this time last year which is weighing heavy on the markets. California avocado shipments will seasonally decline in the coming weeks, but this should be made up, and then some with imports from South America. History suggests lower avocado prices could be forthcoming. The five-year average trend for 48 count Hass avocados is a decline of 26% from this week through the end of the year.
The Kitchen sink
The butter markets have remained range-bound but trading well below year ago levels. Lower international butter prices have weighed on the domestic markets as of late. History suggests the CME butter market is likely to remain near current levels for the next few weeks before peaking for the rest of the year. The cheese markets have been on the defensive as of late with barrels declining to multi-month lows. Cheese prices typically make their fall top during the last few weeks of October. Domestic nonfat dry milk stocks were 7.4% bigger than 2017. This may temper any further upside risk.
In their latest forecasts, the USDA raised their estimated 2018-19 U.S. corn and soybean yields to record highs. Big crops and large carryover supply from the previous crops should push farmers to sell in the coming weeks. This is likely to temper the upside potential in the feed markets into the fall.