The Dish Market Report, September 6, 2018

Top of mind news

The Farm


Chicken production for the week ending August 25th was down 1.5% from the prior week but 5.5% bigger than the same week last year. Chicken output during the six-week period ending August 25th was 1.8% more than 2017, the best six-week period since December. Reasonable feed costs should lead to year-over-year chicken production expansion this fall. The chicken breast and chicken tender markets are seasonally fading. The ARA Chicken Breast Index is already at price levels not seen since December, and history suggests that even further declines are still likely. The ARA Chicken Wing Index is the cheapest for this time of year since 2011. But, rising demand from football viewers should support wing prices during the next several weeks.



Beef production last week rose .2% and was 1.3% better than the same week last year. Year-to-date beef output is running 3.1% stronger than 2017. Slaughter ready cattle supplies are projected to remain ample into the fall. The USDA is calling Q4 beef production to be.4.8% more than last year. The beef markets typically trend lower during September but find support thereafter when demand rises for holiday items such as tenderloins. Since 2013, the average move for 189a choice tenderloin prices from early-October through mid-November was up 11.5%. But, any notable price increases this fall for the beef markets may be tempered by solid year-over-year gains in production.



Pork output last week was down 2.4% but was 5.7% larger than the same week in 2017. Year-to-date production is 5.3% better than a year ago. Solid year-over-year pork output gains should persist and will likely temper seasonal price hikes. Since 2013, the average move for the USDA pork cutout from mid-September through mid-October was up 5.2%. There is growing concern about the spreading African Swine Fever in China where seven regional cases have been reported. If the ASF problem worsens, it will boost U.S. pork exports this fall.




The Sea


Elevated fuel prices and relatively low shrimp prices are helping curb U.S. shrimp landings. During July, U.S. Gulf of Mexico shrimp landings were 1.1% smaller than the prior year and the second lowest for the month in the last five years. Still, the elevated U.S. dollar value should encourage shrimp imports this fall tempering any notable upside price risk.




The Garden


The Idaho potato markets are on the seasonal decline as the fall harvest builds. Idaho potato acreage this year is estimated to be 1.6% bigger than 2017, while total U.S. plantings are projected to be up .4%. Further, growing conditions in Idaho have been historically very good which has boosted the crop. All of these factors could continue to pressure potato prices lower. The five-year average move for the 70 count Idaho potato market during the next two-weeks is a decline of 30.5%. Iceberg lettuce prices have fallen to a three-week low.

The Kitchen Sink


The CME butter market is tracking below year ago levels. World butter prices are declining due to building output. This is tempering U.S. butter export sales. Yet, history suggests that butter prices could find modest support in the near term. The CME butter market has averaged flat to higher in September from August in seven of the last ten years. The CME cheese markets have been well supported as of late due in part to more milk being channeled to schools. The CME cheese block market has averaged slightly lower in September from August in three of the last four years.


Earlier this week the world’s largest wheat exporter, Russia, decided against restricting or taxing wheat exports to slow trade. This could weigh heavy on the wheat markets in the near term. However, U.S. wheat exports could improve in 2019 due in part to new export tariffs set in place by Argentina.


Despite the quick moving Hurricane Gordon hitting the Gulf Coast refinery region, the petroleum markets are down from last week. Adequate petroleum supplies and fading seasonal driving activity may influence petroleum prices lower.