HBG Purchasing Solutions

Market Update



Demand remains soft as further weakness in whole birds, tenders, leg quarters, and drums were seen this past week. Seasonally, poultry prices have remained weaker than normal seasonal trends.  The wing market seems to be trending down which is somewhat surprising with football back in full swing.



The U.S. hog and pork market is riddled with uncertainty. Summer trade wars are already taking a toll on lean hog prices, and now African Swine Fever (ASF) in China is adding to the growing list of unknowns. By comparison, beef supply and demand projections into year-end 2018 could be of little concern. The lean hog market is navigating plenty of battles with unknown outcomes. U.S. and Mexican officials are signaling progress toward a bi-lateral trade deal, while negotiations with Canada and China appear farther from the finish line.

The spread of ASF in China is the latest market concern. The world’s largest pork-producing country has reported four outbreaks in three weeks. The disease has canvased the country’s major hog producing regions. Around 1,000 hogs have reportedly died in this short period, and tens of thousands of hogs have been culled to slow disease progression. ASF mortality can approach 100 percent. While it is not contagious to humans, there is no vaccine for hogs.



The Labor Day recovery to the ribeye market is now in the books. Attention will turn to the next 8 weeks. A pullback in values is expected, and recent history has not been kind to the Choice ribeye during this period. The 30-year average decline to the September/October lows is around 9 percent. In the last three years, it has been more 14 percent. Buyers should allow this break to materialize over the next few weeks to better understand the market environment this year. It is also time to start inquiring about holiday needs for the end of the year.

The Choice brisket market rallied to the $2.60s ahead of Labor Day. Processors continue to sell the forward-sold market aggressively. So, expect good demand to support values even if the market weakens into the fall. Buyers are in a tough position. This is the highest August brisket market since 2014 and 2015. Demand is robust.

Now is the time to look for buying opportunities for the outside round. Prices are expected to increase into October. While demand for this cut was weaker than expected in August, overall beef demand is expected to be near ago levels for the roast of the year. Suggesting that prices could be at or slightly below last year given supply expectations.

Prices may find a low in September as supplies will begin to decrease and holiday buying begins for Tenderloins. Lackluster Strip values will hinder the upside potential for short loins but interest for Strips could develop very late year as well. Once holiday purchasing is completed, this cut has modest downside risk into late January, when buyers could once again step into the market as they look ahead to spring 

The Top Sirloin market continues to trend down and as supplies are favorable the market should stay below the past two years pricing.
The ground beef market should continue to fall off now that Labor Day has passed.  We don’t suggest taking position on any product at this time but to wait until October to look at booking for 2019.


Crab meat

We see the crab meat market slowly softening over the next 4 months but pricing will still not get too 2017 prices.  The supply on the Mexican crab meat is in good standing and therefore pricing may be favorable.



Import White Shrimp:  prices are up from the lows of 8 weeks ago. Shrimp Growers are putting less seeds in ponds to stabilize price. USA inventories are very low as importers are only bringing in what they need and very little extra stock. Prices have increased about .05 to .10 per week for the last 5 to 6 weeks. We expect continued increases throughout the year heading into the holidays.



 King Crab: Russian red king crab inventories are extremely thin right now, with pricing at 10-year highs on some sizes. Import volumes of Russian king crab are at the lowest levels since 2013, still lower volumes were seen in 2011. With that said, pricing is currently surpassing both 2011 and 2013 when we look at 16-20 count Russian red king crab..
Snow Crab: Snow Crab prices are stable.  Large sizes from 8/Up and larger are expensive and scarce. There are a few 5/8 in the market but prices remain in the $ 8.50 to $ 8.75 range.



We are seeing Milk pricing to remain unchanged or only slight up for the remainder of 2018.  Due to stronger demand cheese and butter  pricing should continue to climb for the next few months.



In speaking with a couple of key player that deal with the freight/trucking industry on a daily basis the industry is not improving but actually getting worse.

Massive shortage of drivers which causes loads to get left or ignored or not picked up at all

There are 14 loads out there for every 1 driver

The commodities still control their own destiny as far as price but it is the cost of getting raw good to the production facility that is causing the price increases

The biggest items impacted are the popular raw goods like eggs, mayonnaise, flour, etc.

The disposable side of the business is seeing quite a few cost increases

There are several companies like Walmart that are offering a $20K incentive to any driver that comes on and stays for a year.  Even our food distribution partners are offering incentives of up to $5000

The also popular service of e-commerce is driving more drivers out of the 18 wheeler business into smaller trucks/vans who deliver these types of goods.

The ELD (electronic logging device) which was implemented in 2017 but strictly enforced in 2018 has caused more issues because the driver can only go so far and then has to rest.  They can drive for 11 hours but then must rest for 10.

Another potential disruptor is the autonomous vehicle boom. Tesla has already unveiled their electric semi-truck, which has a range of 500 miles on one charge. Pre-orders are piling in from large asset companies, so there is clearly an interest in this technology. No longer having to pay for diesel fuel or the upkeep of maintaining a combustion engine, while having increased visibility from the streamlined cabin of this truck are all alluring factors to many drivers. It looks like right now the only thing holding Tesla back is the 500-mile cap and current lack of charging stations

So as the year moves forward even though the commodity market has followed its usual trends the cost of goods will see increases due to the above factors.


Ag producers more optimistic despite tariffs, trade war: survey

Agricultural producers were more optimistic about their financial prospects last month as USDA announced federal subsidies aimed at offsetting the potential negative impact from trade tariffs.

Researchers at Purdue University’s Center for Commercial Agriculture noted an uptick in the sentiments of ag producers in a survey conducted just after USDA outlined general terms of the $12 billion aid package for those affected by the tariffs. The Purdue Ag Economy Barometer hit 129, after falling to 117 in July, although the most recent level remains well below the 141 reading in May and the 143 posted in June.

Optimism, however, was more muted when ag producers were asked how they feel the relief plan addresses their concerns about the impact of tariffs on their incomes. Nearly half of the respondents say the relief plan will have no affect on their income and another 43 percent believe the package will have “somewhat” of an effect on income. Just 4 percent said the relief plan will “completely” address their concerns and 7 percent were “uncertain” about the overall effect, the researchers reported.

More producers believe that now is a good time to make large investments in their operations, with 26 percent agreeing with the concept, compared with 20 percent in July. The percentage of producers who believe now is a bad time to make investments fell to 65 percent in August from 73 percent in July, the survey reported.

Copyright © 2018 Marketing & Technology Group

Perdue Farms Inc. is looking to investment in meat analogue technologies

Perdue Farms Inc. is looking to join the lineup of meat processors with investments in meat analogue technologies, the company confirmed for Meatingplace.

In an interview with Bloomberg business news wire, Chairman Jim Perdue is quoted as saying, “Our vision is to be the most trusted name in premium protein. It doesn’t say ‘premium meat protein,’ just ‘premium protein.’ That’s where consumers are going.”

Jim Perdue told Bloomberg that the company was considering buying or investing in start-ups, vegan brands and options that combine meat, plant-derived proteins and vegetables.

He has no interest in the cell-cultured, animal-derived protein market at this point. “That’s really, really, really in its infancy, and there may be an option sometime down the road. We would want to do a lot of research on how the consumer views that,” he said.

Copyright © 2018 Marketing & Technology Group