Freshly Picked, August 25, 2020

Alerts & What’s Trending


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The Idaho potato markets have been mixed during the last week.  The harvest in the Northwest is progressing with Washington at 33% and Oregon at 29% complete as of August 17th.  Idaho stands at just 5%.  Oregon is behind schedule while Washington and Idaho are at least on schedule.  Idaho potato crop ratings continue to impress with 98% rated in either good or excellent condition.  However, smaller fall potato acreage this year could temper the pending seasonal downturn in the markets.  The lettuce markets could be erratic in the near term.  


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The feed markets have been somewhat erratic as of late as the trade attempts to digest damage from the derecho earlier this month.  Pro Farmer’s crop tour last week suggested that the impact on total supplies may not be as bad as originally feared.  Fairly ample corn supplies are projected to persist into 2021. 


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The cheese block market was up modestly last week but the cheese barrel market was the lowest in 13 weeks.  The spot butter market finished higher but is the cheapest for this time of year since 2013.  Per the USDA, July milk production was 1.5% more than last year due to a .4% larger milk cow herd and a 1.1% rise in milk-per-cow yields.  Milk farmers added a net 2k head to the herd during the month, marking the first increase since March.  This suggests solid dairy supplies this fall and into 2021.  Cheese prices are likely to remain volatile.  Some forward buying of your pending butter needs could be considered. 


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Cattle slaughter picked up last week, estimated at 652k head, 12k over the week prior but 5k less than last year.  Still, beef production was larger than a year ago.  The Choice boxed beef cutout continued to increase, up $0.13 from the prior week, led by the middle meats.  Seasonally, beef prices are expected to break down in the early fall before increasing during the latter fall holiday buying period.  Beef 50s have been struggling, falling back below the $0.50-mark and price weakness is expected to extend into October.  Domestic 90s have been flat in the mid-$2.20s and inflation is not forecast in the near term.  


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Pork production remains robust, with last week’s 551.8 million pounds being 4.9% larger than a year ago. Throughout last week, most of the USDA pork cutout items posted gains, but pork belly values faded from the week prior.  Total spot pork sales were their smallest for any week since early May, and the larger production schedules are expected to keep a lid on any notable price gains in the near-term.  Seasonally, belly prices usually fall before setting a late summer low, but this year’s trade has been choppy since late May.


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Total chicken slaughter for the week ending August 16th was down 3.8% from a year ago, but bird weights edged higher, seasonally.  The six-week sum of ready-to-cook chicken output was, as well, down 3.8% (y/y) and continues to support prices across the white meat complex.  Wing prices are above $2.00/lb. and the ArrowStream network data suggest that restaurant wing purchases are running near year ago levels.  Retail, as well has been active in the wing market, so price support may remain.  Leg quarter prices remain a drag on the chicken index, with leg quarters falling to their lowest level since early 2016.  Absent escalating broiler exports, dark meat prices should continue to struggle.  


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The salmon markets remain relatively attractive due in part to strong trade and lackluster demand from foodservice.  During June, U.S. salmon imports were 11.8% better than the previous year.  Farmed salmon filet imports were up similarly- this time by 9.7%.  World salmon demand is anticipated to continue to struggle during the next several months.  This should temper any upside in salmon prices.


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Last week nearby diesel fuel futures finished up (w/w) and had the highest weekly close in five weeks.  Slowly improving truck shipping activity in the U.S. is boosting diesel fuel demand.  Still nearby diesel fuel futures are still below year ago levels and should experience price resistance at $1.378/gal.