Freshly Picked, May 4, 2021

Alerts & What’s Trending

Produce

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The avocado markets are moving lower despite supplies being historically limited.  U.S. avocado imports from Mexico in recent weeks have been tracking near 20% below the previous year.  Production from California is tracking below 2020 levels as well.  This factor and improving foodservice demand could lift the avocado markets higher in the coming months.  The five-year average move for the Hass 48 count avocado market during the next nine weeks is an increase near 20%.  The larger sized Idaho potato markets continue to firm. 

Grains

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World food oil supplies remain extremely short which is causing world food oil prices to trade at multi-year highs.  The USDA is forecasting the available world food oil supply to remain limited for this year, but some seasonal improvements could occur.  Crude palm oil futures are signaling that lower prices could occur sometime this summer.  

Dairy

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Last week CME spot cheese prices were up and barrels were the costliest in six months. CME spot butter prices finished the lowest in six weeks. Food service cheese demand has been robust and exceeding 2019 comparable levels. This factor and solid exports will likely keep the cheese markets supported.  Butter demand from food service activity is up also but big inventories and strong production has tempered price increases experienced this spring.  But, the downside price risk for butter from current levels may be limited.  Since 2016, CME spot butter prices averaged 5.5% higher in May compared to April.  

Beef

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Last week’s cattle slaughter faded from the week prior, but, at 649,000 head, was 1% larger than 2019 levels. Seasonally, weekly cattle harvests increase slowly into late June, but this year’s pace may be below 2019 levels into the early summer. Still, elevated beef prices are likely to persist and incentivize packers to increase slaughter which may temper the upside risk to the beef markets going forward. The beef 50s prices faded last week which was unexpected, but a resumption of upside potential is projected.  Beef 90s prices continued to rise but imports were unimpressive. Higher 90’s prices are likely this summer.  

Pork

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Last week’s hog harvests held in line with expectations at 2.45 million head, so anticipate tightening slaughter levels into the summer months.  Sharp losses were noted across the belly primal last week which left that primal in the upper $1.50s at week’s end. Again, this price action for bellies is certainly resembling 2014, and another couple of weeks of weakness may be noted, with downside towards the lower $1.50s possibly before price increases reemerges this summer. Also, unfortunately we are watching China regarding a resurgence of ASF. Prices USDA, FOB per pound. 

Poultry

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Weekly chicken slaughter for the week ending April 24th was reported at 164.3 million head and was 3.9% larger than 2019 levels. Heavier bird weights remain, but RTC production is up a more modest 3.7% over the past 6-week comparison with 2019 levels. Overall, tighter broiler production schedules are supporting the chicken complex. The ArrowStream wing index approached the $3.00-mark last week. Breast meat, tenders, and leg quarters prices all remain elevated, and unfortunately tight to short remains the best description of the current chicken parts supply. Moving forward, production is expected to increase into the summer months, but before those eventual improvements, chicken pricing in the interim will likely remain supported.

Seafood

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The Alaskan Bering Sea snow crab fishing season is winding down.  As of late April, 92% of the Bering Sea quota had been landed.  The Canadian snow crab fishing season is progressing with 21% of the Newfoundland quota landed to date.  Canadian snow crab production will improve substantially this year which eventually could bring some modest price relief to the markets.

Oil

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Retail diesel fuel prices last week finished unchanged (w/w) but remain near levels not experienced since December ‘18.  Solid trucking activity and good diesel fuel exports could keep diesel prices supported which usually happens in May.