THE MEAT MARKET - MAY 11.2020
Good Morning – I hope you had a good weekend; North American beef and pork continues to be virtually nonexistent. Spot demand for fresh and frozen pork, beef and poultry continues to outpace the overall availability of supply by quite a stretch – Sending beef and pork prices soaring to historically high values. It has been three weeks of record gains across the beef and pork carcass; At this time, I am not sure there is an end to this bull run in sight. Sure, plants are reopening however productivity and efficiencies have gone out the window and the overall output of production is a mere drop in the bucket compared to what we had been accustomed to. For the time being, buyers have had no choice but to pay up week after week for their beef and pork needs – It has been either this or be left without any product. Which one is worse? No different than what happened with China back in 2019; the high-priced environment our N. American industry finds itself in has begun to attract offers from offshore destinations. Timing however remains top of mind; demand has begun to pickup (No surprises here) at a time when the N. American market finds itself in one of the shortest supply environments in modern history. For the time being, prices will continue to rise - Export offerings are a mere 5 weeks out from confirmation and in my opinion that is the only hope buyers will have to get a handle on their input cost structure.
Retail Ads for the current week were pork and poultry driven; unfortunately for the retailers the supply situation was the same across all species. Ground beef continues to be the top performing item across the meat department; it literally pays to grind every cut at current time! From a pork perspective; extremely short supply continues to drive record high prices and low availabilities across the retail items. Processor cuts have continued to remain more readily available however it appeared as if the availability for boneless shoulder and ham meat was starting to mirror the one of boneless pork loins – None to be had. The reality of out of stocks across some core meat department items has become a reality for many retailers; prices continue to rise while availabilities dwindled down to zero. Imported product from Mexico and the EU will continue to flood the market as long as our prices and availability remain status quo. It would be extremely challenging to plan anything out front aside from frozen and further processed items. Opportunities around lean boneless beef trimmings and processor type pork cuts will keep a lid on the domestic prices; there is no shortage of pork in the world – Just a shortage of pork in N. America at current time.
On the beef side, domestic fresh beef availabilities continued to remain challenging – What a great opportunity for the Mexican beef industry. Buyers in the US and CAD continue to scramble at getting coverage on their regular turn business. I would argue most buyers feel that the prices at which US and CAD beef are trading at are unsustainable levels for almost every retail/end user price point that is currently established in the marketplace. Canadian beef plants resumed operations this past week however their overall output continues to be crippled by labour shortages – buyers will have to deal with current market conditions for at least another couple of weeks. As availabilities grow, so will demand – Which one will outpace the other? We know the effect that demand outpacing supply has on prices. How about supply outpacing demand? How long could it take for the market to erode as fast as it exploded? The industry finds itself in a very unique situation; never before have we found ourselves so short of frozen stocks at the beginning of peak season of demand. Cattle weights continued to rise as well with packers enjoying the extra poundage in order to try and offset their reduced throughput. Opportunities to capitalize on merchandising beef through the memorial day long weekend may be a stretch; I am not sure we have enough time to fill up the pipeline before the official start to BBQ season.
On the pork side, overall slaughter #’s ticked up higher this week by an estimated +200,000 head. This continues to be a historically low # for modern times; prices continued to react to this shortage in production with the base carcass price finishing +$19.89cwt over previous week. The belly primal led the gains once again this past week posting gains of $62.70cwt over previous week. Conversely, the BI pork legs were the only primal group to show weakness finishing off the week with a loss of -$4.91cwt. How could the hams be soft and the bellies strong? Is demand for bacon that much better than hams? Not necessarily; the deboning process of a pork leg is almost completely manual; whereas the bellies get mechanically cut and slice making them an almost ideal item for this type of labour-constrained market. Over and above this; on the processing side of the business bacon sales should continue to pick up. The re-opening of food service along with breakfast traffic at QSR should continue to send belly prices higher for the foreseeable future. There was plenty of product coming out of the packers this past week fresh in combos – Retailers and secondary processors snapped these up in an effort to shield themselves from potential out of stocks: Desperate times call for desperate measures? Offshore retail type opportunities should not be overlooked by the domestic retailers – Boneless loins particularly. We have proven how well COV frozen pork works – Why not take this opportunity and make frozen pork a category within your meat department?
FOOD FOR THOUGHT?
How will you go about planning your meat needs out front in current market conditions?
Out Front & Spot Buying Opportunities
** PRICING – INQUIRE VIA EMAIL/PHONE**
BI Hams – Fresh Combos
BI Hams – Frozen
BI Picnics – Fresh Combos
BI Loins - Fresh Combos
Bellies – Rind On Frozen
Bnls Rollout Hams – Frozen
Have A Great Week,