COMMODITIES

Commodity Insights

Competitive Commodity Insights: Holiday meats outlook

Where are holiday meat supplies headed?

Hams. USDA reports the U.S. pork sector appears to be fully back on its feet following losses last year from the disease Porcine Epidemic Diarrhea, which took out a large portion of young pigs. Pork supplies are expected to finish 2015 with year-over-year production gains of 7.3 percent, which is 5.7 percent higher than even 2013's production, before pig farms began feeling the effects of the disease. Fourth quarter commercial pork production is expected to be 6.5 billion pounds, 5.4 percent greater than the same period a year ago. That supply increase will hold prices down from 5 percent to 10 percent compared to the average for 2015 as a whole. For the first half of 2016, USDA expects production to be nearly equal to the first half of 2015, at 12.1 billion pounds, holding off any price increases until at least second quarter.

Turkey. U.S. turkey meat production in third-quarter 2015 was down 9 percent from a year earlier, at 1.35 billion pounds. That lower production combined with already lower stocks boosted wholesale prices for whole hen turkeys 17 percent above the previous year's level at this time, to $1.36 in October. September turkey shipments decreased 38 percent from a year ago, totaling just 43 million pounds. Since April, the average weight of birds at slaughter has been lower than the previous year, for a period of 6 consecutive months—reflecting the impact of bird flu in spring which caused processors to slaughter birds earlier than they normally would in order to maintain supply levels. Turkey meat production in fourth-quarter 2015 is forecast to total 1.4 billion pound, which would be 8 percent lower than in fourth-quarter 2014. This decrease is expected to come from both a smaller number of turkeys slaughtered and a decrease in the average live weight per bird at slaughter. Production in 2016 is forecast at 6 billion pounds, which would be an increase of 8 percent from year; however much of the increase won't be here until holiday season 2016.

Lamb. A marked reduction in the number of lambs and sheep coming through the slaughter chain in 2015 relative to last year leads USDA to predict third-quarter 2015 commercial lamb and mutton production will be down nearly 3 percent from the same period in 2014, at 37 million pounds. Unlike in 2014, most slaughter lamb market prices thus far in 2015 have been below the 3-year average, despite this tighter supply. USDA theorizes the increasing strength in slaughter lamb prices is likely due to greater demand and an infusion of younger market-ready higher quality lambs. Imports of lamb and mutton remain strong despite record stocks in cold storage. Based on the NASS Cold Storage report, September 2015 beginning stocks for lamb and mutton were roughly 4 percent higher than this time last year, at 41.9 million pounds.

Change in meat supplies this year over last

Competitive Commodity Insights: Five ideas to extend the grilling season

How to keep customers grilling into fall

Summer has ended, but that doesn't mean the grilling season has to. Here are five ways to extend the grilling season and the high-margin commodity sales that accompany it:

Believe it. Retailers themselves may fall into habit of respecting season over consumer preference when they automatically abandon grilling features once the traditional three-month summer window closes. But they do so at their risk. According to CPG sales and marketing agency Acosta, more than six in 10 surveyed shoppers grill at least eight months out of the year, and nearly one in four grill year-round. Thirty-nine percent of all U.S. shoppers say they used a grill for meal preparation in the past six months, Acosta shows.

Promote it. That extended grilling season means extended opportunity for promoting grillable sales and educating shoppers on unique applications, says Acosta's Marianne Quinlan-Sacksteder. “Grilling is popular as a year-round cooking method, so food manufacturers and retailers can promote grilling items in the spring, fall and winter – beyond the traditional Memorial Day to Labor Day timeframe – and still drive sales,” she urges.

Respect it. "A person could even argue that autumn’s eating is better: It is the harvest season, for crying out loud," Washington Post food columnist Jim Shahin wrote in a glorification of fall grilling. "Before we started trucking and flying everything from everywhere, obliterating seasons, the natural foods of autumn were cabbage, potatoes, onions, beets, Brussels sprouts, eggplant, garlic (yes, garlic), Hatch chilies, potatoes, all sorts of squashes and tomatillos, not to mention apples and pears. They take to a little fire and smoke just as those summer gems do," he writes.

That appeal to the tradition of fall outdoor cooking and smoking opens numerous opportunities for the retailer. Burgers still top Acosta's list with 80 percent of grillers cooking these in the last six months. Chicken came in second with 77 percent, followed by beef steak and hotdogs or sausages, which 66 percent of US grillers cook. Acosta notes that as Millennial dads shoulder more of the shopping role traditionally held by women in the household, grilling moves forward in cooking method preference, as a greater proportion of men than women choose to grill over other methods.

Adapt it. Meahwhile, Acosta's survey also found Americans are branching out and grilling more non-traditional fare, like seafood, at 31 percent; vegetables, at 46 percent; and fruit, at 10 percent. Adding warmer fall tastes to traditional fare can adapt the summer meal to the cool autumn by adding chutneys and salsas, for example--two additions that benefit from the added flavor of the grill. Even pizza, which not only benefits in flavor from grilling but becomes a communal event around the hearth. Adaptation also applies beyond food choices to venue, too: Think Thanksgiving meal preparation and tailgating opportunities brought on by football season's beginning and baseball's post-season.

Spice it up. The cooler evenings of fall invite the opportunity to try something different on the grill from duck to ham. Citrus slices on top, liquor-based marinades and low smokey heat over flavored wood chips can all spice up grill staples with some drama. The Washington Post's Shahin, for instance, suggests wood-smoked poached pears in red wine, orange and vanilla syrup or smoky green apple salsa verde.

Competitive Commodity Insights: Where have the beef supplies gone, and when will they return?

Oh where, oh where has the cattle herd gone?

Two recent USDA reports illustrate the good news/bad news aspect of current U.S. beef cattle markets. The survey data confirm the good news that American cattle farmers are actively expanding the beef-cattle herd, which will eventually lead to greater beef supplies and more moderate prices as a result. The bad news: That rebuilding process is going to be long and slow, at least to start.

Supplies are still tight. USDA's July Cattle report contained USDA’s first estimate of the 2015 calf crop and it came in 1.2 percent higher than that of 2014, at 34.3 million head. If the estimate is true, 2015 will be the first year the calf crop has grown by 1 percent or more in more than two decades, according to Iowa State ag economists Chad Hart and Lee Schulz. Young female cattle now make up 16.1 percent of the total U.S. cow herd--another 20-year high mark--which means cattle ranchers are now holding females off the market at a rate consistent with levels during the large expansionary phase of the early 1990s, diverting them into producing more calves down the road, but temporarily cutting into the beef supply as they do so.

Heifers are being held to spur expansion

We have a long way to go to recover from the lost numbers brought on by continued drought during the last decade. The number of "feeder calves," those ready to go onto the final phase of feeding before being marketed as beef, are still tight. Feeder cattle supplies have been within the range of 34.87 and 35.50 million for the past four years, and that 35.25 million average of those four years still falls 8.4 percent lower than the average for 2004 through 2010—the last years in which we saw what they consider an overall increase in feeder cattle supplies.

Feeder cattle supplies are still tight

Much of that year-over-year increase in feeder cattle supplies is being fed by a relatively larger increase in the number of light calves, those under 500 pounds. What that statistic means is that even though the overall supply of calves available to put on feed is increasing, the majority of those are those light calves, which won't be big enough to go into feedlots until late in the year and into next year. So don't expect any significant impact on beef supplies to appear until 2016. Beef cattle inventories are increasing right now, but the supply of beef will actually fall another 1 percent or 2 percent in 2015 following the 5.7 percent year over year decrease in 2014. That adds up to sustained high wholesale prices for the near future.

Competitive Commodity Insights: Egg shortage to persist

Egg outlook unclear

USDA reports that driven by the decrease in the number of layers in the table egg flock, primarily in Iowa, due to the avian flu outbreak, total U.S. table egg production dropped 7 percent in May to 571 million dozen. During May, the number of hens in the table egg laying flock averaged 283 million, down 7 percent from a year earlier. The strong decline in May has caused the forecast for second-quarter 2015 to be reduced by 15 million dozen to 1.7 billion dozen, down almost 6 percent from the previous year. Year-over-year table egg production is forecast to be lower than the previous year during the second half of 2015 and into the first quarter of 2016, reflecting the time needed to get replacement pullets to repopulate farms and into production.

The size of the table egg flock was reduced by the impact of the HPAI outbreak, but since the broiler sector has not been significantly impacted, the size of the hatching egg flock and egg production have remained above the previous year. In May, hatching egg production totaled 95 million dozen, 4 percent higher than a year earlier. With this strong increase, the forecast for second-quarter hatching egg production was raised to 280 million dozen. Broiler-type egg production dominates this sector of the industry, and hatching egg production is forecast to remain above the previous year throughout 2015 and through the first half of 2016 as the broiler industry expands. Wholesale prices for grade A large eggs in the New York market averaged $1.70 per dozen in second-quarter 2015, up 27 percent from the previous year. Over the last 2 weeks of June and carrying over into the beginning of July, wholesale egg prices had been steady at $1.89 per dozen, but have moved higher in recent days. Lower table egg production during the second half of 2015 is expected to keep upward pressure on prices, and the forecast is for wholesale prices in the New York market to remain well above year-earlier levels.

Total egg exports (shell eggs and egg products) reached the shell egg equivalent of 26 million dozen in May, 16 percent lower than in the previous year. The decline was primarily due to a sharp decrease in exports to Mexico. Shipments to Mexico were 34 percent lower in May compared with a year earlier. Egg exports in 2015 are now expected to total 364 million dozen. The forecast for 2016 exports remains at 385 million dozen.

Competitive Commodity Insights: Milk and dairy supply outlook

Dairy supply outlook

So much milk is now available in this country that a 1,200-dairy New England marketing cooperative last month, for the first time in 50 years, started dumping milk, according to a report by Bloomberg Business News. Dairies in that region dumped 31 percent more milk over the first half of this year than they did during the same time in 2014, Bloomberg cites USDA data as showing. The co-op says the common alternative of shipping surplus milk to this part of the country isn't viable today because no plants have available capacity to process it.

What’s going on with dairy supply?

U.S. domestic output in May reached 18.4 billion pounds, the most in any month and up 1.7 percent from April, and it will likely rise to a record 208.7 billion pounds this year, according to USDA date. Meanwhile, worldwide milk production is also on the climb, increasing 2.1 percent to a record 582.52 million tons. Each U.S. cow averaged 1,911 pounds pounds of milk in April, 19 pounds above April 2014, even as the number of cows increased to 9.305 million head, or about 65,000 head more than April 2014 and about a thousand head more than March 2015. Only California, still crippled by drought, produced less milk compared to this time last year, down 2.1 percent.

U.S. farmers have been in expansion mode since dairy futures reached record territory last September and expectations for low feed prices have increased. Based on April data, the total 2015 forecast for milk production has been raised by 0.1 billion pounds from last month’s projection, as the forecast for yield per cow has been increased by 10 pounds for the year. Even in the face of those supply increases that should pressure costs, though, both dairy product prices and milk prices continue to hold up better than expected. Based on recent price data and strong expected cheese demand, the 2015 forecast for the cheese price has been raised to $1.635 to $1.675 per pound. With recent price changes and abundant supplies, USDA predicts, price forecasts for butter, NDM, and dry whey have been lowered, respectively, to $1.8 to $1.870, $1.005 to $1.045, and 46.5 to 48.5 cents per pound, respectively. Prices have been supported by good butter and cheese sales thus far this year along with dairy product production and stock levels favorable to prices. Butter production has been below a year ago with April down 1.7 percent and year‐to‐date down 2.8 percent. Nevertheless, April butter stocks increased 25 percent over March and were 23 percent higher than April 2014.

Looking ahead to next year, USDA says, the yield per cow forecast for 2016 has been raised from last month’s forecast by 30 pounds, raising the milk production forecast by 0.3 billion pounds to 213.9 billion pounds.

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The farm and ranch families represented by Nebraska Farm Bureau are proud sponsors of the Farmer Goes to Market program. We take great pride in supporting Nebraska's agricultural foundation. A key part of that effort is to make sure we produce safe and affordable food. This newsletter is an important part of our effort to connect the two most important parts of the food chain -- the farmer and the grocer -- with the goal of increasing consumer awareness and information about how their food is raised in Nebraska.


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The Nebraska Corn Board, on behalf of 23,000 corn farmers in Nebraska, invests in market development, research, promotion and education of corn and value-added products. The board aims to work closely with the farmer-to-consumer food chain, to educate everyone about the role corn has in our everyday healthy lives. The Nebraska Corn Board is proud to sponsor the Farmer Goes to Market program to help bring its mission of expanding demand and value of Nebraska corn to the consumer, through the strongest touch point in that chain: the Nebraska retail grocer.


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