Gordon Food Service Market Updates for July 6, 2018 Grocery & Bakery Wheat We are halfway through winter wheat (bread flour) harvest with farmers indicating good quality and higher protein levels. The spring wheat crop (pizza and pasta flour) is off to one of the best starts ever which has pressured costs below where they were last year. Grocery & Bakery Soybean Oil Record animal numbers have created huge demand demand for soybean meal for animalfeed. Soybean processing is running flat out to keep up with soybean meal demandcreating surplus supplies of soybean oil. Soybean oil prices are at two-year lows. Grocery & Bakery Sugar This years sugar crop is mostly in good shapewith timely rains helping Louisiana's cane. Forward bookings continue at 10% discount to current beet sugar prices. Meat Beef Cattle supplies should be large enough to meet consumer needs into fall. This should enable packers to manage margin by adjusting weekly supply. Beef prices could drift a little lower
during traditionally slow summer demand. Ground Beef: It probably isn't a coincidence that boneless pork loin, jumbo chicken breast and ground beef prices are all at 5-year lows. Ample supplies of all three has fostered sharp price competition forretail features. Ribs: Ribs are now into their summer-long decline. Prices have been adjusting lower every day, but last weeks forward sales were still at a significant discount to today's spot prices. Briskets: Brisket prices have declined from May peaks, but forward sales at a 10% discount suggest we have more downside. Rounds: Round prices appear to have made their lowswith flats exhibiting some price strength. Big forward bookings in previous weeks suggest we may see more retail feature activity soon. Processors have also been using rounds in ground beef formulations. Strips: Strips appear to be on their usual summer/fall downtrend. Packers forward sold strips for midsummer delivery at a steep discount to the current market. Tenders: Tenderprices are down so far this month and appear to be on their way to summer lows. Thin Meats: Slower demand should begin to pressuresirloin prices, including ball-tips. Skirtandflank steak prices are steady so far. Meat Pork Hog supplies are typically at their lowest level for the year right now. Pork prices could stay strong for a few more weeks until output starts to expand again. Butts: Butt prices often firm up beforejuly 4th holiday, adjusting lower as production increases later in July.
Hams: Seasonal peaks for hams typically come this time of year when output is lowest. Export slowdowns causedby Chinese and Mexican tariffs seems to be limiting price increases. Bacon/Bellies: Belly prices are on the same uptrend as usual for this time of year. Prices peaked between mid- July and early August in each of the last three years. Ribs: Sparerib and backribprices are on track to hit the same July 4th peaks we made last year. Loins: Bone-in and boneless loin prices have increased, but remain below previous years. There is more product available domestically and it has to compete with low-priced chicken breast and ground beef. Poultry Chicken Whole bird/cut-up chicken supplies (from smaller chickens) are increasing as hot weather retards weight gains. Prices are easing off record levels. Breast and Tenders: As hot weather slows chicken growth ratessupplies of jumbo breast and tenders have tightened up. Prices for all breast meat is trending higher, with small-bird breast touching record levels. Tender prices recently set a new high for 2018. Wings: Jumbo wings are well-cleared due to weather-related supply reductions. Prices are basically at parity with medium wings. Wing-theme restaurant features are keeping supply/demand seems to be fairly balanced. Dark Meat: Jumbo leg quarters have leveled out after a banner month of exports to Mexico. Leg and thigh meat supplies continue to be limited by labor shortages; prices could adjust higher in the next few weeks. Poultry Turkey
Whole turkey prices have inched higher as processors dial production back. Buyers are starting to come back to the market. Seafood Finfish Cod, Alaskan 1x: Alaskan A season opened in January but supply remains tight and costs have firmed, this is partly due to decreased quota in other regions of the world. Costs have remained elevated and are expected to remain this way through the end of the year. Cod, Atlantic 1x: The 1x frozen cod loins are firming on costs withthe announcement of a 25% reduction on quota compared to2017 out of the Newfoundland and Labradorregions in Canada. As the season resumed in Junethe first shipments are arriving biweekly.note the start ofthe season has yieldedmore of the largersizedloins, but withadded shipmentswill rampup supply to cover all needs as the seasonprogresses, especially theprime 4 oz loin. Cod, Atlantic 2x: Fishing in Northern Europe has concluded. Total catch this season ispoor and raw material is in short supply for2018 until early 2019 when fishing resumes. Cod, Pacific 2x: Heavy restrictions on total allowable catch in certain Alaskan fishing grounds. Raw material is now more expensive than Atlantic cod and expected to firm continuously for all of 2018. Pollock, Atlantic 1x: Costs have softened slightly on some sizesof the 1x fz Pollock but most remain steady as we are now in the summer season. Many anticipated with the rising cost of cod that Pollock would be the next lower cost option. For the most part that "switch" has not materialized to the degree first thought. Pollock, Pacific 2x: Slight firming of pricing. Starting to see substitution demand from cod users. Haddock: Raw material prices firming due to the cheapest ground fish compared to Pacific and Atlantic cod. Continued substitutions from cod consumers driving up demand and cost. Available raw material is in short supply. Domestic Lake Fish:
The Lake Erie commercial fishery is well underway and costs have softened as supply is readily available. Expectprices to levelout over the next few weeks for the rest of the summer. Euro Lake Fish & Zander: Supply is good and costs have been stable with only minoradjustments to market. This is a more cost effective substitute for the higher priced domestic lake fish items where applicable. Mahi Mahi: The S American Mahi Mahi season began last fall and costs have softened compared to the same time last year.prices have adjusteddownward and are expected tostabilize for most of the summer grilling season where current supply is plentiful. Typically the springseasonbrings added containersfromtaiwan, but reportsnow indicate that they are having a poor start with reduced catches, yieldingless overall supply available to enter the market. Frozen Tuna, Swordfish : Frozen tuna harvests out of Vietnamare considered stable for this year with supply listed as normal. Productout of Indonesia has been slow to materialize and therefore has put added pressure on the product out of Vietnam. The Thailandseason has ended. Expect prices to continueto be stable for the summer grilling season with only a uptick expected on the smaller 4 oz sizeof tuna with supply being tighter on thissize. Swordfish has also started to firm on the 6 and 8 oz portions, supply has been tight. Swai: Cost fingerlings increased after Chinese New Year instead when market expected a drop. US trade commission assesses preliminary higher duty rates in Swai. Prices firm with short supply until end of 2018/early 2019. Tilapia: Low production during this time of the year. Prices recently firmed. Seafood Shrimp Imported Black Tiger: Black Tiger shrimp prices are stable and supply is improving on smaller sizes. There are shortages of large sizes due to limited production (2-4 through 13-15). Imported White: White shrimp prices are at a great value due to their recent declines as we head into summer. Demand has been good and replacement offers overseas are being limited.
Latin White: Latin White shrimp are mostly stable in pricing however buying interest has been high on shrimp smaller than 41/50 HLSO which could lead to markets firming. Domestic White & Brown: Domestic Brown shrimp continue to move upward due to limited availability and good demand. There is a lack of inventory to carry from last season to next, which puts pressure on prices to move up in an attempt to stretch inventory. Boats are currently working White shrimp and have had most landings in smaller sizes for peeling. Larger White headless reliefis in sight once landings increase. Domestic PUD: Domestic PUD shrimp prices have weakened to match new season production. Landings are good on mostly small sizes (90 count/lb and smaller). We will see landings of larger shrimp as the season progresses and shrimp grow. Domestic Rock & Pink: Rock & Pink shrimp are both in good supply. Pink shrimp, in particular, have had very good catch rates in the late winter months. Seafood Lobster North Atlantic: The season for N Atl. Lobsters formally began May 1st outof Canada. Initially the expectationwas for costs to soften as supply became more readilyavailable but the harvest to date hasyielded the predominately smaller sizesof 3/4 and 4/5 with limited offeringsof the 5/6 tailsand larger. This in addition to less thanfavorable weather and the recent announcement of 10 fishing zones being closed to preserve the right whale, hasnow put pressure on supply as the Canadian fishing seasonwraps up on June 30.As a result of the closures impacting fishermen for both crab and lobster, the CanadianDept of Fisheries has offeredlobstermen in New Brunswick and Quebec a fall fishing season to make up for the right whale closures. For now costs are firmwith adequate supply. Note... it is still unclear what the ramificationof PresidentTrump's 25% tariff on US seafood sold to China will entailfor the Maine lobster fishermen, and the overall market, as they typically ramp up harvests in late July into August. As these go intoeffect this month, no one can be certain of the impact it will have on the volume ofproductbeing shipped to China. Only time will tell. Warm Water:
Costs have adjusted slightly as the new season out of Brazil has resumed. First indications are that costs will befirm.due to the N Atl high prices this season, many switched to the lower cost WW tails. As a result they are keeping costs elevated to capture their market share. If this can sustain itself long term, will remain to be seen. Seafood Crab Snow Crab: The global shortage of snow crab will continue in 2018 forthe Canadian season. Prices recently have startedto see someleveling off.costsare still very firm and it does not look like there will be any relief in sight at least for the larger 8 up and 10 up sizes. It is hard to predict this year if there will be any settlingdown or concessionson cost later in the year. Some feel there could be a correction on the smaller 5/8 but that is uncertainas well. King Crab: Smaller king crab sizes remain very tight, especially on 14/17 ct, 16/20 ct and 20/+ ct. Thesethree sizes haveseen the biggest issue with availability and as a result costs are firming. They are still fishing for Russian crab but most is movingto the Asian market. We do not expect any relief on supply or cost at least for the next 4-6weeks. Seafood Scallops The scallop season has begun one month later in April for the 2018 season and boats have made a mad dash to get started. With the announcement of newly opened restricted areas and an overall increase in quota,costs are continuing to adjustlower. Supply is currently adequate on all sizes. Seafood Finfish Cod, Alaskan 1x: Alaskan A season opened in January but supply remains tight and costs have firmed, this is partly due to decreased quota in other regions of the world. Costs have remained elevated even after Lent and are expected to remain this way through the end of the year. Cod, Atlantic 1x: The 1x frozen cod loins are firming on costs withthe recent announcement of a 25% reduction on quota compared to2017 out of the Newfoundland and Labradorregions in Canada. As the
season just resumed the first shipment is en route. Note the start ofthe season has yieldedmore of the largersizedloins, but withadded shipmentswill rampup supply to cover all needs as the seasonprogresses in all sizes. Cod, Atlantic 2x: Fishing in Northern Europe has concluded. Total catch this season ispoor and raw material is in short supply for2018 until early 2019 when fishing resumes. Cod, Pacific 2x: Heavy restrictions on total allowable catch in certain Alaskan fishing grounds. Raw material is now more expensive than Atlantic cod and expected to firm continuously for all of 2018. Pollock, Atlantic 1x: Costs have softened slightly on some sizesof the 1x fz Pollock but most remain steady as we are now in the summer season. Many anticipated with the rising cost of cod that Pollock would be the next lower cost option. For the most part that "switch" has not materialized to the degree first thought. Pollock, Pacific 2x: Slight firming of pricing. Starting to see substitution demand from cod users. Haddock: Raw material prices firming due to the cheapest ground fish compared to Pacific and Atlantic cod. Continued substitutions from cod consumers driving up demand and cost. Available raw material is in short supply. Domestic Lake Fish: The Lake Erie commercial fishery is well underway and costs have softened as supply is readily available. Expectprices to levelout over the next few weeks as the lake shorebusiness ramps up for the summer. Euro Lake Fish & Zander: Supply is good and costs have been stable with only minoradjustments to market. This is a more cost effective substitute for the higher priced domestic lake fish items where applicable. Mahi Mahi: The S American Mahi Mahi season began last fall and costs have softened compared to the same time last year.prices have adjusteddownward and are expected tostabilize for most of the summer grilling season where current supply is plentiful. Typically the springseasonbrings added containersfromtaiwan, but reportsnow indicate that they are having a poor start with reduced catchesyieldingless overall supply available to enter the market.
Frozen Tuna, Swordfish : Frozen tuna harvests out of Vietnamare considered stable for this year with supply listed as normal. Productout of Indonesia has been slow to materialize and therefore has put added pressure on the product out of Vietnam. The Thailandseason has ended. Expect prices to continueto be stable for the summer grilling season with only a uptick expected on the smaller 4 oz sizeof tuna. Supply is currently tighty. Swordfish has also started to firm on the 6 and 8 oz portions, supply has been tight. Swai: Cost fingerlings increased after Chinese New Year instead when market expected a drop. US trade commission assesses preliminary higher duty rates in Swai. Prices firm with short supply until end of 2018/early 2019. Tilapia: Low production during this time of the year. Prices recently firmed. Seafood Shrimp Imported Black Tiger: Black Tiger shrimp prices are stable and supply is improving on smaller sizes. There are shortages of large sizes due to limited production (2-4 through 13-15). Imported White: White shrimp prices are at a great value due to their recent declines as we head into summer. Demand has been good and replacement offers overseas are being limited. Latin White: Latin White shrimp are mostly stable in pricing however buying interest has been high on shrimp smaller than 41/50 HLSO which could lead to markets firming. Domestic White & Brown: Domestic Brown shrimp continue to move upward due to limited availability and good demand. There is a lack of inventory to carry from last season to next, which puts pressure on prices to move up in an attempt to stretch inventory. Boats are currently working White shrimp and have had most landings in smaller sizes for peeling. Larger White headless reliefis in sight once landings increase. Domestic PUD: Domestic PUD shrimp prices have weakened to match new season production. Landings are good on mostly small sizes (90 count/lb and smaller). We will see landings of larger shrimp as
the season progresses and shrimp grow. Domestic Rock & Pink: Rock & Pink shrimp are both in good supply. Pink shrimp, in particular, have had very good catch rates in the late winter months. Seafood Lobster North Atlantic: The season for N Atl. Lobsters formally began May 1st outof Canada. Initially the expectationwas for costs to soften as supply became more readilyavailable but the harvest to date hasyielded the predominately smaller sizesof 3/4 and 4/5 with limited offeringsof the 5/6 tailsand larger. This in addition to less thanfavorable weather and the recent announcement of 10 fishing zones being closed to preserve the right whale, hasnow put pressure on supply as the Canadian fishing seasonwraps up on June 30.As a result of the closures impacting fishermen for both crab and lobster, the CanadianDept of Fisheries has offeredlobstermen in New Brunswick and Quebec a fall fishing season to make up for the right whale closures. For now costs are firming with adequate supply Warm Water: Costs have adjusted slightly as the new season out of Brazil resumes this month. First indications are that costs will befirm.due to the N Atl high prices this season, many switched to the lower cost WW tails. As a result they are keeping costs elevated to capture their market share. If this can sustain itself long term, will remain to be seen. Seafood Crab Snow Crab: The global shortage of snow crab will continue in 2018 forthe Canadian season. Prices have been rising weekly but as of this week have started to see some leveling off. Costsare still very firm and it does not look like there will be any relief in sight at least for the larger 8 up and 10 up sizes. It is hard to predict this year if there will be any settlingdown or concessionson cost. Some feel there could be a correction on the smaller 5/8 but that is uncertainas well. King Crab: Smaller king crab sizes remain very tight, especially on 14/17 ct, 16/20 ct and 20/+ ct. Thesethree sizes haveseen the biggest issue with availability and as a result costs are firming. They are still fishing for Russian crab but most is movingto the Asian market. We do not expect any relief on supply or cost at least for the next 5-7weeks.
Seafood Scallops The scallop season has begun one month later in April for the 2018 season and boats have made a mad dash to get started. With the announcement of newly opened restricted areas and an overall increase in quota,costs are continuing to adjustlower. Supply is currently adequate on all sizes.