Weekly Market Update Report

Perishables & Non-Perishables

DATE: February 18, 2009

Dairy

CHEESE: Barrels closed at $1.2300 and 40# blocks at $1.2400. The weekly average for barrels is $1.1990(+.0660) and blocks, $1.2065 (+.0530). The CME group cash cheese market continues to firm. Bulk cheese supplies have tightened as buyers rebuild inventory and others prepare for planned feature activities. Other buyers are stockpiling supplies for later year use and may not need as much cheese as usual later. Financial limitations are still affecting supplies both held and entering aging programs. Cheese production is fairly steady. 2008 U.S. cheese exports totaled 289.7 million pounds, up 70.3 million pounds (32%) from 2007. 2008 U.S. cheese imports total 375.5 million pounds, down 60.0 million pounds (-14%).
(Source: USDA Dairy Market News, Week of February 9-13, 2009)

BUTTER: The cash butter price at the CME Group has held steady this week and remains 5 1/4 cents above support. Western produced bulk butter continues to clear to CCC with 454,997 pounds moving during the week. Since the first of the year, nearly 4.1 million pounds of butter have been offered to the government. Churning schedules across the country are seasonally quite active. Butter producers remain cautious with their additional cream purchases. In most instances, butter producers are managing their production schedules to be in line with needs. Although butter producers are taking advantage of favorably priced cream offerings and clearing this production to inventory. With the cash price slightly higher than the support price, most producers and handlers indicate that there are minimal down side factors that would jeopardize this decision. In general, sales to retail outlets are in better shape than to food service accounts. The economy is being called the reason for this to be happening.
(Source: USDA Dairy Market News, Week of February 9-13, 2009)

MILK: Heavy Class I demand last week and into the beginning of this week based on lower first-of-the-month prices meant intakes at many balancing plants were lower. Shipments out of Florida fell to 120 loads compared 166 loads the previous week, largely based on an uptick in consumer demand. Additionally, with many school districts scheduling a holiday at the start of next week, fluid milk demand has softened. Eastern milk production is climbing as expected and balancing plants are keeping busy clearing intakes. Milk production in California is steady to marginally lower as producers are making tough decisions by increasing culling and adjusting feed rations to less costly mixes. Arizona and New Mexico milk output is gaining seasonally, as are fat/ protein tests. Throughout the Pacific Northwest, Utah and Idaho, most plants are concentrating on processing intakes from regular sources versus clearing additional intakes from neighboring regions.
(Source: USDA Dairy Market News, Week of February 9-13, 2009)

EGGS: Similar to the occurrences of yesterday, a few more harbingers of improvement in retail demand were reported. Food service demand, on the other hand, lags relatively far behind traditional norms. Completed wholesale trades of certified larger product are reasonably supportive of existing quotations, while that of the lighter weights offer varying degrees of support to them except in the Northeast, where they are mostly discounted. Information tendered on brown eggs this morning was inconclusive. In the aggregate, supplies are ample. Eggs for breaking are not aggressively sought. The market is attempting to test on the larger sizes.
(Source: Urner Barry Market Update – February 13, 2009,)

Commodity Meat: Beef, Poultry, Pork


Boxed Beef Overview:
Market at a Glance
Harvest Last Week – 614,000 This Week – 610,000
Fed Cattle Harvest – 475,000 Cow Harvest – 139,000
Packer Production 36 hours average
Market Tone Weakness building
Packer Inventory Substantial Carryover
Summary: Weekend demand fell far below expectations with Retail and Foodservice both failing to attract customer to the Beef category. Despite significant production cutbacks (Fed Cattle Harvest 475,000 head) packer’s carried inventory from last week into this week with Tyson and Cargill in the worst position.
Expect spot market buys this week on Rib Eyes, Strip Loins and Tenderloins. Packers will use price to attract buyers. Chuck and Round cuts will also be discounted this week but not to the degree as the middle meats.
Chuck Meat: Soft
No Export volume
Rib Meat: Soft
Lack of demand and high packer inventories will force additional price discounting in the Rib category. Market appreciation is unlikely short term.

Loin Meat: Soft
Choice 5/up PSMO Tenderloins are still a problem for the industry. Expect daily trade on Tenderloins. Packers are looking for a volume buyer to step into the market.

While the Rib Eye is getting most of the attention, the Strip Loins is struggling even more then the Rib Eye. Expect trade throughout the week.

Round Meats: Soft
Packer will need to address minor inventories issues throughout the Round complex.
Inside Rounds, Gooseneck, Flats and Eyes should trade lower in the spot market to clear
inventory.

Ground Beef: Soft
The seasonal value of Ground Beef will be under downward price pressured due to the decreasing value of Cow lean meats for grinding and poor consumer demand.

POUTLRY:
Chicken

Boneless breasts continued to decease early in the week. Expectations are that we have a few more weeks of softness before a combination of menu rotation, seasonal demand and production cuts drives demand and prices higher. Tenders and wings look set to weaken in the next few weeks. The demand for wings have past their peak and inventories are nearly replenished. The spread in price between tenders and boneless breast has caused some hesitation among tender buyers. The stories remain essentially the same for dark meat and whole birds. Dark meat, leg quarters and boneless skinless thigh meat, is steady to firm. Export demand is strong for leg quarters but financing remains a hang up. There is a fine three way balance when looking at boneless thigh meat. As with all things chicken, production cuts have made their impact, suppliers moving whole birds into retail also decrease supply. Additionally with boneless thighs there is a labor variable. The training and expertise needed for this item prevents easy line substitution. Whole birds continue to look steady to slightly soft as suppliers move birds into retail channels trying to get the proper balance with more expensive parts processing.

Turkey

Smaller birds increased for the week with larger birds steady. We should be at the bottom of the whole bird market.



PORK:
First quarter production numbers so far have been higher than forecasted, but forecasters still believe sharp production cuts are still to come due in most part to pig crops that were down over 2.5% from September to November 2008.


Hams: Steady to Firm
Short terms forecasts continue to call for a gradual climb to higher prices for both heavy and light hams, but any increases should be minimal. Forecasters do not believe we will see a major Easter run up in prices due in most part to tempered expectations by retailers.

Bacon: Steady
Reduced demand will continue to keep prices well below 5 year averages. Forecasters are calling for steady markets for the near future.

Loins: Firm
Trades on Bone-In loins were very erratic last week trading from the high 80’s into the low 100’s. Forecasters expect the higher level on Bone-In loins to hold for the near future. Historically interest on boneless loins is weak at this time of year, and 2009 is no different. However, forecasters believe that buyers will not be able to stay away from the current value proposition boneless loins represent and are calling for boneless loins to begin working higher.

Butts: Firm
Recent trades are beginning to bring pork butt values up towards 5 year averages. Forecasters believe this run up will continue into the mid 80’s before leveling off around the 80 mark by early March.

Spare Ribs: Firm
As expected sparerib prices have slowly climbed week to week. Look for prices to continue advancing further as we inch closer to the main consumption season.


Trimmings: Firm
Forecasters expect prices to begin to their gradual seasonal increases, but do not expect either the lean or fat trim markets to reach 2008 levels.

Seafood

Value-added Shrimp: 21-25 through 31-40 count cooked white shrimp moved slightly lower while the balance of the cooked white market was steady. Cooked black tiger shrimp are barely steady with discounting noted. Peeled shrimp are steady.

Gulf Domestic Shrimp: The overall climate remains somewhat dull, however pockets of interest have developed. Movement on 21-25 count shrimp is reportedly improved, and possibly the result of some buyers downsizing from 16-20’s. Full steady to some higher sales have been noted on this size. 26-30 and smaller counts continue full steady to firm. However, large counts like 16-20 and larger continue under selling pressure. These sizes comprised the bulk of late-season landings and possibly are the hardest hit by the economy. PUD’s also ranged full steady to firm as a result of ongoing supply concerns.

Mexican White Shrimp 16-20 count Mexican farm-raised white shrimp are barely steady to weak. 21-25 count are steady while 26-30 count from all areas are full steady to firm. The balance of the HLSO market is steady.

White Shrimp 26-30 count HLSO white shrimp are full steady with a firm undertone as some offerings are noted slightly higher. The balance of the market from all areas is steady to full steady.


Black Tiger Shrimp: 21-25 count are full steady to firm while 26-30 count and smaller are strong and short of full needs with premiums noted. The balance of the market is steady.

North American Lobster Meat & Tails
Maine production was reported as nil. Market prices reflect product of Canada only. Although the Canadian
supply has been reported as fully adequate, many sellers reported paying higher prices for replacement product. In addition to the rising costs, an increase in demand was reported. Both contributed to the firm market conditions
West Australian Lobster Tails: West Australian lobster tails are barely steady to weak and under selling pressure as sellers are motivated to move off inventory for a dull demand. 7-8 oz. (B2) tails may be offered higher than listed B’s. New season production is increasingly available to the market.

Warm Water Lobster Tails: The market is about steady at listed levels with some limited discounting noted except for 8 oz. tails which are full steady.

King Crab: The red king crab market adjusted lower on mid-to small sized crab. Supplies are adequate for a dull demand. Larger red crab, 6-9 and 9-12s, are unchanged. The golden crab market trended lower on 12-14s, 16-20s, and 20 and up count crab. Supplies are adequate to fully adequate for a quiet demand.

AK Opilio: The new season Alaskan quota announced 58,550,000 lbs which is down about 7% from last year’s 63,034,000 lbs. Fishing is now going on with 14% of the quota caught through the 24th of January. Prices should be more known and settled within a week.

Dungeness; Inventories are good. Pricing is down a little but seems to have stabilized and may push upward a little in the months to come as fishing pressure on the coast has diminished and most of the current catch is going live.

Pasteurized Crab Meat
A weak market was reported on Fresh Venezuelan meat as well as pasteurized Indonesian meat. The lack of demand was cause for the falling prices. Some sellers of fresh meat reported a loss of sales to pasteurized product. With a slowdown in demand, and the economy in general, some buyers are unwilling to hold fresh product. Burdensome inventories of Indonesian meat caused sellers to offer deeper discounts today. The market for Chinese meat was about steady. Some weakness was noted on super lump.


SCALLOPS: March 1, 2009 will start the NEW 2009/2010 Sea Scallop season. We do not have the official allocation yet, but we are expecting this information in the next 2-3 weeks. National Marine Fisheries Services preferred plan is the following:

5 Closed area trips ( 3 Elephant Trunk , 1 Delmarva , 1 Closed Area 2 )

42 Open Days at Sea ( 7 days increase from 35 in 08/09 ) this is not final.
This season we will see 60% less U/10 volume than we did in the 08/09 season. This is because the Lightship Area is shut down. We will get minimal amounts from the ETA and CA2 area roughly 30% of catch. We may catch some U/10 scallops from the Open Access Areas but only 5% or less of the total catch from the 42 days.

The volume / majority size that we are expecting in the ETA and CA2 and Delmarva are 12 - 18 ct based on the recent catches made over the last month. We are going into the time of year where the scallops will spawn and the meats will get larger over the next 30-90 days based on the water temperature.

In the Open Areas: Channel / Georges Bank / Mid - Atlantic - We are expecting this volume to be 10/20 and 20/30

The New England Fishery Management Council (NEFMC) will meet in February 2009 to make final the scallop fishing regulations for the new season, presenting them to National Marine Fisheries Service. There are many issues on the table: Animal groups want fishing suspended in the waters off NJ during summer months to protect sea turtle activity, even though no turtles have been caught by scallop vessels. Yellowtail Flounder by catch counting procedures in closed areas are being investigated, as the Lightship area abruptly closed with many boats loosing trips. These issues, along with how many open days and closed area trips the vessels will be given for 2009 still need to be finalized into law using amendment 15. The council is also working on a long range fishery plan that has to be in place by 2010.

Pangasius Hypophthalmus (Striped Pangasius, Swai) / Pangasius Bocourti (Basa)
Swai:
There is still a pressure on pricing as worldwide demand has changed due to the economic situation. More product is coming to the U.S. than previously, putting downward pressure on prices.

Catfish
Domestic production for 2008 was only 3% higher than 2007 but the trend for 2009 is for lower production than in 2008. Imports of Channel Catfish are once again increasing, but not enough to replace the domestic production that has been lost. Other catfish species other than Channel Catfish are filling the void. Production of Channel Catfish in China is nearly done for the year. The harvest will resume in August.

Cod
Pacific cod
Cod is available in good quantities. The new season has opened. Prices
have softened. This is a great value fish!!!

Flounder / Sole
The 2009 trawl fishery has recently opened in Alaska and many trawlers will initially target Rock Sole to ship to Japan. These vessels will later switch to Yellowfin Sole. Although the 2009 quota for Yellowfin sole has been reduced 7% from 2008, this will have little impact on the supply of fillets. Typically the trawl fleet cannot catch the entire quota each year (only 62% of the 2008 quota was caught). The fishery usually ends when the trawl fleet exceeds the catch limit of non-targeted species

Halibut
New 2009 Season set for March 21. A little later than the past few
years. Quota is down approximately 10% from 2008. Inventories are
still very strong.

Pollock
• As of January 31st, after two weeks of fishing, the Bering Sea Pollock fleet had caught only 30,000MT of Pollock.
This compares poorly to the 110,000MT caught after two weeks last year.

Salmon
Farmed Salmon: The Chilean fillet market adjusted higher on 3-4 and 4-5 pound fillets. Supplies on larger fillets are tight for a moderate to active demand. 1-2 and 2-3s remain unchanged. Supplies of smaller fish are adequate for a moderate demand. The Chilean Steelhead market remains unsettled; both higher and lower offerings were collected. The West Coast wholefish market also trended higher on larger fish, 12 and up; supplies are barely adequate for an active demand. The remainder of the market is steady to full steady for a moderate demand.

Keta: As no new Chum fisheries will occur until June, the focus is on inventories. Inventories are adequate as demand has declined slightly. Expect price to be relatively stable until the start of the second quarter of 2009. If there are still significant quantities in storage at that time, holders of large inventories will seek to sell off fillets at lower prices.

Coho: The frozen inventories are barely adequate. Look for strong pricing
through the winter, especially on once frozen..

Sockeye: Inventories currently are good. Prices have stabilized. This is an
excellent fish to be promoting through lent and beyond.

Tilapia
Chinese processing factories are now closed for the Chinese New Year holiday. There will be no new frozen fillet supply available for about a month. 2008 ended with a gradual decline in fillet prices as China seeks to send more fillets to the U.S. that previously had gone to other countries. As long as the Global economic malaise continues, then this practice will continue and prices should ease further.

Tuna
The situation is similar to Swordfish. Upcoming peak harvest period and stronger USD could mean softening market.


Calamari
There has been no change in the domestic calamari front - landings continue to be steady, with the squid slightly smaller than we would like, but not too bad. The weather continues to be a challenge, though this week it has been ok - today at the dock we have over 50,000#s.

Overseas, China is very quiet as a result of Chinese new year, so all production there has stopped. India is between seasons, so there is no real news out of there. In Peru, there have been some landings, for the first time in almost a year. To date the sizing has been pretty small, but it appears that things may be heating up there.