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The lettuce markets have firmed during the last week due in part to adverse weather negatively impacting the crop. Lettuce prices could remain inflated in the near term. Further, the seasonal tendency for iceberg lettuce prices is upward. The five-year average move for the iceberg lettuce market during the next five weeks is an increase of 83%. The fall potato harvest continues, roughly halfway complete in Oregon and Washington. The Idaho harvest will pick up considerably in the coming weeks. Further downside in potato prices could occur.
The USDA lowered their 2020-21 domestic corn and soybean crop estimates on Friday due to adverse weather during the last several weeks. Although the corn and soybean supply are now projected to be tighter than earlier this summer fairly adequate supplies are forecasted. This could temper any further upside in the markets.
The butter market remains relatively flat at historically attractive price levels due in a large part to slack foodservice demand. Although recent action suggests that a bottom in the butter market is near, the upside may be limited this fall. CME cheese prices have mostly firmed during the last week. However, milk continues to trade below class. Further, the premium in CME cheese blocks to barrels on Friday was near a record. The last time cheese blocks carried a similar premium cheese block prices fell sharply during the next several weeks. Thus, the downside price risk in cheese should be respected.
The holiday shortened kill week came in about as expected, and beef production, at 479.7 million pounds, was up 2.8% from the same holiday week a year ago. Seasonal cutout declines are well underway, but the slide slowed to end last week, with strength reemerging across the end meats. Still, we continue to look for lower prices ahead – at last for another week or two. The middle meats will begin to move higher ahead of holiday interest, and the trim and grinds will follow suit shortly after. Beef 50s closed on Friday at $0.3929, but we’re not looking for substantially lower pricing from here.
Pork production was up 5.3% from the corresponding holiday week a year ago, but larger production schedules have done little to stem the recent price upside. The belly and ham markets have been the drivers of the increases, with the ham primal at its highest for mid-September since 2016. Bellies have moved sharply, and counter-seasonally higher, averaging $1.308 throughout last week’s trade. While belly exports aren’t a big-ticket item, this may be some front running seasonal “pork month” needs. Seasonally, weaker prices are ahead.
Total chicken slaughter for the week ending September 5 was the second largest of 2020, and heavier bird weights pushed RTC production to its largest of the year. Still, wholesale chicken prices remain mixed with firmness across the wing market holding while the leg quarter index continues to fade. Seasonally, the wing market breaks into the fall months, and we’re looking for this to occur this year, but pricing above the $1.90s may hold well into late fall. Tender prices look to be rolling over, and losses are expected into seasonal November lows. Leg quarters, at $0.19 are their lowest for the time frame since 2002, and interest still remains absent. Sharp upside appears unlikely nearby.
World snow crab supplies remain relatively tight despite subpar foodservice demand. During July, U.S. snow crab imports were strong compared to the prior year up 47%. Still, it took expensive price levels to encourage such imports. The Alaskan Bering Sea snow crab fishing season quota is expected to be published in the coming weeks. However, inflated snow crab markets could endure this fall.
Ethanol production has lagged during the last several months due in a large part to lower crude oil and gasoline prices. The ethanol output for the week ending September 4th was 8% less than the same week last year. Ethanol prices could remain above year ago levels this fall.