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Weekly young chicken harvests for the last full week of August were up 4.1% from a year ago, with heavier bird weights continuing to add pounds to production. The six-week sum of RTC chicken production is up 3.5% from last year, but year-over-year gains are narrowing as comparisons are made against last year’s rising production schedules. Still, RTC output is expected to be historically large. Amid increasing output, wholesale chicken prices are starting to fall with breast meat and tenders fading seasonally. The already elevated wing markets are struggling to find seasonal price support this month. Look for the larger broiler output to weigh on prices this fall.
Beef output was down sharply on one less slaughter day last week, and was still 2.5% smaller than the same week the year prior. Current production schedules remain ample, enough to cover immediate demand, but may tighten if packer margins begin to slip. The beef cutouts are falling rapidly following the mid-August plant disruption, with losses across the middle meats leading the decline. There may not be much downside left in the rib complex, however, as buying is likely to pick up in the early fall, before prices peak by late November. Yet, higher beef prices may have tempered some early holiday beef interest.
Pork production last week was 1.2% less than the same Labor Day shortened week last year, but year-over-year output increases are anticipated from the early fall into late year. Wholesale pork prices are engaging, for the most part, with bellies failing to find support as of late, but hams are starting their seasonal rise. This summer the pork trim markets were supported due in part to sharply higher beef trim prices, and pork 42s are nearing their early fall highs posted last year. Expect modestly lower pork trim prices heading deeper into the fall.
The Atlantic salmon filet market continues to trend near year ago levels. U.S. salmon imports in July were 9.4% larger than the prior year with strong filet trade with Chile. A firm value of the U.S. dollar is anticipated to drive solid U.S. salmon imports during the fall. History suggests that the salmon markets could continue to soften. The Atlantic salmon filet market typically averages 2% lower in October from the prior month.
The avocado markets are on the decline with imports, once again, surging from Mexico. Last week, the U.S. imported 16.9% more advocados than the previous week and 60.9% more than the same week last year. Smaller sized avocados are said to be in tighter supply, but no major overall avocado supply gaps are anticipated during the next several weeks. The five-year average move for the 48 count Hass avocado market from this week through the end of the year is a decline of 36.4%. But look for seasonal weakness this year to be less intense.
THE KITCHEN SINK
Cheese block prices this week are above $2.00/lb. for the first time since November 2014. Domestic cheese demand has been solid. The USDA reported that cheese production in July was up .5% from the prior year. Cheese buyers need to be cautious at these levels and maintain patience for the anticipated fall-time seasonal price declines. Spot butter prices are up modestly since last week but are down 9.6% from the July high ($2.435). July U.S. butter output was 6% better than last year. The fall holiday season is nearing which boosts butter usage. Butter prices may be firm in the near term.
The corn and soybean crops continue to progress with some minimal harvest underway. Initial yield reports from the early harvest have been disappointing, but these crops still have a long way to go. Further, the weather has been nearly ideal during the last two months which should aid the crops. Engaging feed prices could persist.
Nearby natural gas futures are up since last week and hit the highest level since May. Hurricane season is here and Hurricane Dorian was a reminder about the possibility of natural gas operation disruptions. Natural gas price may near $3.000.