Market Update Report

Perishables & Non-Perishables

DATE: March 12, 2008

Dairy

CHEESE: Barrels closed at $1.8675 and 40# blocks at $1.8650. The weekly average for barrels is $1.9250 (-.0835) and blocks, $1.8995 (-.1645). The cheese market is weak with prices on the Chicago Mercantile Exchange falling into the $1.80s. Orders have slowed, as buyers watch the widening spread between the previous week’s higher prices and current prices. Exports continue to remove cheese volumes, aided by the weak U.S. Dollar against most other currencies. Current cheese prices, including premiums, continue to limit demand for cheese to be placed into aging programs. Some plants are again using NDM or condensed skim to boost yields. Cheese production remains seasonally active though most manufacturers continue to avoid making uncommitted loads.

BUTTER: The butter market closed for the week at $1.3225. The weekly average for Grade AA is $1.3145 (+.0965). The butter market is firm. At the CME, the butter price

increased for nine straight sessions, increasing 14.25 cents over the two week span, before closing unchanged at $1.3225 on March 7. The firmness is attributed to increased demand for upcoming Easter/Passover holidays and tightness created by the new crop butter rule at the CME. Butter movement is good for prints moving into the marketing channels ahead of the spring holidays. Retail features are being set and expected to move additional product.

Bulk sales are fair to domestic accounts and mainly on program schedules. Export demand is still fair to good and helping to clear excess butter products. The weak U.S. Dollar and current pricing levels make the U.S. a good source for world needs. Current butter production remains strong to process the heavy cream supplies. Cream is moving long distances to find processing homes. There are increased cream needs from higher class, cream based product manufacturers who are preparing for upcoming holiday orders. January butter production in the U.S. totaled 170.2 million pounds, 12.7% higher that a year

earlier.

MILK: Milk production continues to follow most seasonal patterns. Milk receipts in Arizona are thought to be near, if not at, the annual peak. Florida is perhaps a few weeks away from the peak. In California, milk volumes remain well above year ago levels and manufacturing plants continue to struggle to handle milk receipts. Exports of milk and components to other

states continue. Cattle are getting an early start to the grazing season on the west side of the Pacific Northwest due to expensive and limited hay supplies. Fresh grass tends to lead to increased milk volumes though often accompanied with lower solids. Class I interest is occasionally stimulated by retail features in March, taking advantage of the sharp price decline in Class I prices from February.

EGGS: Retail demand remains mixed throughout the nation. Consumers have yet to alter their purchasing behaviors two weeks in advance of the pending Easter holiday. Wholesale trading activities are limited in number. When completed, they are transacted at economic levels supportive of existing quotations and, at times, at slight premiums to them. Breaking stock is actively sought, and the few exchanges engendered are at premiums to stated values. Supplies are well-balanced. Brown eggs are under pressure. The market is steady to, at times, full steady.

Commodity Meat: Beef, Poultry, Pork,

Veal and Lamb

Boxed Beef Overview:

Commodity Boxed Beef

Chuck Meat: Weak

The Chuck complex is still overvalued and needs to adjust lower. Increased harvest levels should speed the process.

Rib Meat: Steady to slightly higher

Seasonal price increases will be delayed until consumer demand for beef increases. This is a short term phenomenon. Look for better marketing conditions after Easter.

Loin Meat: Steady to slightly higher

Seasonal price increases will be delayed until consumer demand for beef increases. This is a short term phenomenon. Look for better marketing conditions after Easter. We need warmer weather nationally to improve demand.

Round Meats: Weak

The Round complex is still overvalued and needs to adjust lower. Increased harvest levels should speed the process.

Ground Beef: Steady to slightly higher

Expect higher Ground Beef prices

PORK:

Market Update

Weekly hog slaughter and pork production held about steady, but appeared smaller in comparison to an increase in output one year ago at this time. Packers were able to pressure base markets down to $52, pulling the national lean hog price towards $55. Pork values are still holding steady, with demand showing typical late winter softness. Markets are expected to retain their lethargic tone over the next several weeks. So far in 2008, US hog slaughter has been 12% above the year-ago pace, while pork production has been up 13%. This past week, slaughter did not change much, despite some advance billing that packers would be scaling back kills. The national lean hog price broke lower, as earlier declines in the base markets began to work their way into actual packer plant deliveries. Base markets remained under pressure, with packers adopting a “take what comes” approach to procurement, in a largely successful bid to restore margins. Combined with record or near-record byproduct valuations, packers are back in the black and the situation will improve further in the coming week. This will act to stabilize base markets, which are not expected to dip much below their current level of $52 nationally, unless there is unexpected pressure on pork values. The national lean hog price should level off in the mid-$50 area, and then gradually work higher in late March or April.

Hams: Light hams averaged steady to slightly lower, while the more plentiful heavy hams dropped $1 on average. Although the hams are acting like they want to find a bottom near $50, don’t rule out a dip into the upper $40s for the 23-27# hams in the next few weeks. With plenty of production, huge freezer stocks, and seasonally weak domestic demand, exports are the only possibility to trigger a rally. Expect prices to struggle in the next month or so, bottoming out in late March or early April and then advancing towards a $60 summer market. Futures at sky high values act as a strong deterrent to anyone considering forward booking late summer or fall ham requirements.

Pork Bellies: 14-16# bellies dipped to $73.40 last week, the lowest level since early January. Ample freezer stocks helped buyers talk down the market, but interest renewed at the lower levels, triggering a small increase to $75. Everyone knows pork bellies below $80 are good value and anything close to $70 is downright cheap, large freezer stocks or not. These prices will fire up the promotions again and the product will move. Forecasts call for steady markets short term, ahead of significant gains in April, particularly if there is a further tightening of supplies. Use the current pricing or any additional weakness to round out coverage for late spring and early summer.

Pork Loins, Butts, Ribs: There is really nothing to say about the pork loins, bone-in or boneless. The market is devoid of any trend or pattern of interest. The odds do not favor any spikes occurring here in March, or even early April for that matter. A 100-200,000 head decline in weekly slaughter rate would revitalize the market, but that event is probably still quite a ways in the future. Butts are in the same low priced boat, now languishing in the mid-$60s and showing no inclination to move higher so far. Once the market does budge, some time after

Easter, the butts do have considerable upside potential. Currently averaging $125, the spareribs are expected to trade steady to $2 higher in the next few weeks, well below last year, as with all the fresh pork items.

Pork Trimmings: Pork 42s have begun to turn lower, with recent trade at $36, similar to the level of last year at this time. Now that prices have broken, expect further declines, with a likely test of support near $30. 72s have been heading lower for some time now. Working from current levels in the mid-$40s, expect prices to level off near $40 by late March.

POUTLRY:

Chicken

White meat held steady last week as all in the market waits for Easter and the activity that will ensue. First of month retail action did not add any life to the market and most players are hand to mouth. The market for dark meat continues to be strong and steady on export activity. Wings continue steady. There may be some concern regarding future prices as input costs continue to increase. This brings into question how much and how long exports of dark meat can support current egg sets and white meat prices.

Turkey

Whole turkeys increased for the week. A gradually increasing upward trend in whole turkey prices should be expected up to the weeks before Thanksgiving.

Veal and Lamb:

Domestic Veal

The late January downward trends previously predicted are not materializing at this time. Livestock prices have dropped a few cents, but have not fallen enough as anticipated and overall remains high. No Change

Imported Bob Veal

Markets are stable. No Change

Domestic Lamb

The market remains steady overall. Loins & Chucks are a weak going into Easter while Racks, Legs and Shanks remain firm. No Change

Australian Lamb

Overall the market is stable. There is an over supply on racks, but current prices aren’t reflecting this as they are very inconsistent. Loins, Foreshanks, Chucks and Legs remain stable. No Change

New Zealand Lamb

Overall the market is stable for the near term. No Change

Seafood

Shrimp

PUDs

Demand is reported to be fair and inventories are about adequate. Higher fuel costs are causing raw material prices to be up on new landings. Pricing is steady to firm.

Domestic Green Headless

Landings have improved in the last couple of weeks, but most of the product is in larger sizes (21/25 ct and bigger). Demand is said to be fair, but has picked up on some smaller sizes while the inventory is not increasing significantly. Pricing is steady to firm depending on size and packer inventory.

Mexican

The season is virtually complete and nearly all product has crossed the border. The season was lower than last year which was one of the highest in recent history. We are still awaiting final number for this current season, but it is still said to be lower than an average year as well. All this means is that inventories are likely to run out sooner and pricing is going to be high and firma for any available product.

Latin American

Supplies are adequate and demand is reported to be good overall. Europe continues to be a strong influence due to exchange rates and demand for head on product. Production is said to be fair and pricing is steady to firm due to the current conditions.

Tigers

Demand is rated as fair while inventories continue to dwindle. The market is awaiting the infusion of new season production which should arrive to the US in the coming weeks. The market is about steady at the current high prices.

Lobster

Canadian Meat & Tails

The Canadian Spring season got off to a late start and there was little carry over inventory. Production has improved recently and there are only about 2 weeks left until the season is closed. Prime and large size tails (5 oz and up) are virtually non-existent and overall pricing is firm. Lobster meat is steady to firm as inventories are lighter than current demand due to the tourist season which is in full swing.

Cold Water Tails

South African – The high season will be coming to an end in the next couple of weeks. Currently shipments are arriving regularly to the US. Prime sizes are about the only ones available at this time and pricing is firm for available product due to tightness in the other Lobster markets.

West Australian – Demand is reported to be good. Inventories are rated as adequate although larger sizes are tighter than the rest. This season is coming to an end and shipments to the US will probably end in August. Pricing is steady to full steady depending on size.

Warm Water Tails

Fishing of Brazilian product was postponed for conservation reasons, but is expected to begin soon. Honduras should be starting in the coming weeks as well. Demand is “pent up” and ready to take any product that is available. Pricing is firm. Caribbean tails are reported to be in fair supply and pricing is steady to firm.

Miscellaneous Shellfish

Alaskan Brown King Crab

Demand has improved especially with the Retail sector buying product for features. Inventories are adequate with larger sizes being tighter. Pricing is firm.

Alaskan Red King Crab

Demand is good, but inventories are said to be barely adequate. Retail has entered this market and helped to tighten supplies especially on larger sizes. Pricing is full steady to firm.

Russian Red King Crab

The Barents Sea fishery saw increased landings through the winter which helped to replenish inventories. Larger product (6/9 & 9/12 count) is the tightest now, but pricing still remains attractive compared to historical levels. Overall the market is full steady.

Alaskan Snow Crab

The market is reported to firm as product is starting to be fished and is not up to full steam as yet. Pricing is not likely to fall much as Canadian product is hard to source and pricing in that market is steady to firm.

Canadian Snow Crab

Fishing is done until next season. There is reported to be low inventories in the market and with Alaskan prices up, the market is remaining steady to firm for anything that is available.

Dungeness Crab

The season is just getting underway and is not looking very strong at this point. There has been little carryover from the other seasons this year and pricing is steady to firm anything that is available.

Pasteurized Crab Meat

Inventories of product from Indonesia are reported to be lower and a strong exchange rate is also helping to keep prices steady to firm. Production from Thailand has not improved much over the last few weeks and inventories are said to be adequate. Pricing is full steady to firm for most products.

Scallops

The March 1st 2008 / Feb 28th 2009 scallop season is upon us now. There are some boats finishing up a few open area days before March 1st when they are allowed to start the new season.

Open Days

Starting March 1, all of the full time scallop boats have 35 days to fish. This is down 30% from last year's 51 open days. The reason is that scientific data and observer trips are showing not many scallops in the open area fishing grounds. By reducing the number of days in open areas, the government and scientific community are expecting more regeneration of smaller scallops in these areas. They have projected 42 open area days for the following year.

Closed Area Access Trips

There will be 5 trips of 18,000lbs each for all full time scallop vessels. This is the same amount as last season. There will be 4 trips in the Elephant Trunk Access Area (ETAA) and 1 trip in the Nantucket Lightship Access Area (NLAA). The ETAA area will open March 1st and the NL on June 15th. The ETAA area will yield a 10/15 count scallop meat, averaging 13/14 count. Expected lbs harvested will be approx. 22 million lbs. NLAA will yield all U/10 count. Estimated lbs. harvested will be 6 million lbs.

Each boat will harvest 90,000 lbs from closed areas. Using 1500 lbs per day as an open area average daily catch, each boat will harvest approx 53,000 lbs. Sizes will be mostly in the 15/25 count range with some 10/15 count. With fewer days at sea this year, the boats will harvest at least 8 million lbs less than last year from the open areas.

There are formal requests from the scallop industry and lobbying groups to expand closed area boundaries, allowing all vessels to expand their areas of catch and increase closed area fishing efforts (more trips) with the expanded boundaries. National Marine Fisheries Service will probably shoot down these proposals this year due to pressure from environmental groups. But the fact remains 25% of the entire scallop resource bio-mass is located in areas where the scallop boats are not allowed to fish. These areas are loaded with scallops that will die if not harvested soon. We will continue to press for expansion of these areas through all our resources.

Finfish

Pangasius Hypophthalmus (Striped Pangasius, Swai) / Pangasius Bocourti (Basa)

Last year export of Tra (Striped Pangasius) and Basa grew in almost all markets, especially the EU, Jordan, Costa Rica and Algeria. Volatile prices, which could rise to VND 18,000 per kilo or decline to less than VDN per kilo of Tra, also presented difficulties for processors and exporters.

Catfish

Expect to see higher prices as farmers try to recoup higher feed costs. Domestic production and prices were up slightly in January for Channel Catfish. Imports from China are still below the levels attained in 2006 but are recovering slowly. Delays due to FDA testing of all imported Channel Catfish are the main constraint to import growth.

Cod

The new season for Cod has opened. Look for prices to stay strong and most likely to rise as the grounds price has increased and Cod is in huge demand worldwide.

Flounder / Sole

Supplies of Yellowfin Sole from Alaska are adequate as new raw material becomes available from the 2008 fishery. An increase in supply will mean lower raw material costs for Chinese factories but the lower fish costs are being largely offset by price inflation in China and the drop in currency values between the dollar and Chinese RMB.

Grouper

Inventories of Domestic Grouper are about in balance with the current demand. China’s Grouper season just began in August with boats expected to return in September. Prices should remain high until such time.

Haddock

Canadian production is running small and catch is nearing the quota. Iceland is beginning to catch but they are on the smaller size as well. Look for firm prices on 8-16 oz. fillets and 16-32. On top of this Europe continues to be aggressive in sourcing Cod alternatives.

Halibut

New quota announcement for 2008 is 60,400,000 pounds versus the 2007 quota of 65,170,000 pounds approximately a 7.4% reduction. The new season will begin March 8th.

Hoki

New Zealand cuts Hoki quota 10%. Fisheries Minister Jim Anderton on Tuesday announced catch limits for the coming fishing season of 90,000 tones. He commented that although it was a difficult decision due to the social and economic implications for New Zealanders it was necessary to the ongoing sustainability of New Zealand’s fisheries.

Mahi Mahi

Season in South America is coming to a close. Overall production was approximately the same as last year, but demand was very strong and all production of prime sizes seems to have been committed. There was a fairly high percentage of small fish and some of that is still unsold.

Orange Roughy

Supplies are becoming short as existing inventories continue to deplete. Importers have reported higher replacement costs and fewer supplies due to lower capture quotas. The undertone is full steady.

Ocean Perch

Inventories are good and prices should remain stable. Next fishery in Alaska will be in June or July.

Pollock

The Alaskan Pollock market has remained tight even as the new domestic "A" season has gotten underway. More "A" season product has been going to supplying European and Asian countries than from "B" season material. Additionally, this export is a majority H&G, which is less labor-intensive and thus yields better profit for the processors. Added up, these market conditions point towards price increases as soon as new 2008 material is processed and packed for shipment. My packers are telling me they will raise prices to north of 2.10/# FOB Seattle (that price DOES NOT include accruals) as soon as new production hits to help to convince them that domestic business still merits the supply to match margins abroad.

Salmon

Farmed Salmon: The Northeast wholefish market continues unchanged. Supplies range adequate to fully adequate for a quiet demand. A few higher and lower offerings were collected on mid-size fish. The European wholefish market is also unchanged. Weather issues in Scotland and smaller sized fish, which are predominantly sold in Europe, are reported to be causing limited availability for the U.S. market. The Chilean fillet market is barely steady on 2-3s and a few lower off rings were collected on this size. The balance of the market is about steady. Supplies remain adequate to fully adequate. Demand is lackluster and a general lack of buying interest continues. The Chilean steelhead market is steady. Supplies are adequate for a quiet demand. A few slightly lower offerings are noted. The West Coast wholefish market ranges barely steady to about steady. The bottom end of the 6-8 and 8-10 pound quotation adjusted lower. The balance of the market is unchanged. Supplies are adequate to fully adequate for a quiet demand.

Sea Bass

Supplies were barely adequate to meet a moderate demand. Market prices for boxed fish trended higher. Toted fish was full steady to firm as most fish under 15 kilo were offered at higher levels.

Swordfish / Marlin

Landings remain light in what should be the peak production season. That, together with very strong demand from Europe is driving markets up. Look for tight supply and higher prices for the first quarter of 2008. Weak US dollar is affecting swordfish as it is an almost all import species.

Tilapia

Tilapia Frozen Fillets: Prices advanced on all sizes. Higher, yet isolated offerings continue to be noted. Supplies are closely held and the undertone is full steady to firm.

Tilapia Fresh Fillets: Pricing remains unchanged. Supplies continue to be short of full needs and the market holds a full steady to firm undertone.

Trout

Sea Trout: the market trended lower on 4-6s and 6-8s. Supplies are fully adequate for a dull demand.

Domestic: Market prices are steady and production is meeting demand. This is a small volume item when compared to other white fish but that should not deter one from offering this fish as a center of the plate alternative to high priced Halibut and Cod. Our market information is that the 8 oz. natural boneless fillets are being well received and are the most likely to compete with other higher priced white fish.

Tuna

Similar to swordfish in that this should be a peak production time in Asia, but landings have been lower than usual. Overall tuna prices, including those for canning and fresh markets, are at all-time highs, and no relief is expected in the short-term.

Whiting

Both the skin-on and skinless market are firm. Replacement costs and short supplies are the main drivers. The undertone is full steady going into next week.

Miscellaneous Seafood

Oysters

The Louisiana oyster season begins and will contribute approximately 33 % of the nation’s production. Estimates call for a harvest of about 250 million pounds. This will be a significant increase since Katrina hit the Gulf Coast two years ago.

Calamari

Calamari landings have come to a halt over the past two weeks. Landings have been almost zero - the reasons are a combination of poor weather and higher fuel costs. Both have been keeping the boats relatively close to home port looking for fish species nearby that are worth enough to pay the fuel bill and the crew. The squid have been far away and hard to find recently. Because of the fuel costs the boats can not afford to spend a lot of time looking for the squid.

Overseas, the weakening dollar will begin to have an impact on all seafood imports, though there may be a lag in this. In addition to this, landings of Loligo squid overseas are reportedly poor – this goes for Asia, India and South America with relatively few exceptions.

Perishables

ICEBERG LETTUCE:

The lettuce market looks to be steady for the week as most shippers have kept prices in line. The supplies this week will still fall short of the shipper’s estimates, but demand has been less than expected also which has resulted in the steady market. The lettuce size will be heavier to the 30 count in most fields. Current lettuce defects include cap discoloration, growth cracks, burst and light epidermal peel. Shippers are trimming defected leaves down, and that is making the color very pale. The weights of palletized lettuce are in the 42 to 47 pound range on 24 count packs in Yuma and the Imperial Valley. . Florida is experiencing poor supplies due to rain. Weights reported in the 34 – 40 lbs per case range. It is possible that the market may increase next week. Mexican supplies of iceberg are steady.

ROMAINE & LEAF:

The leaf markets once again continue to have wide price ranges from all shippers. Supplies vary on each of the different leaf packs. Romaine, green leaf, red leaf and butter are in better supplies now. The weather is a bit warmer which is helping growth rates. The quality on Romaine out of Yuma is fair with a touch of blister/peel still showing up and weights in the 35 to 38 pound range. The defects on the other leaf packs can include small head size, fringe burn and dehydration. Florida romaine market has been called good, and supplies are improving next week. Weights are in the 36 – 40 lbs range. Very light supplies out of Mexico.

BROCCOLI:

The broccoli market is still steady this week with low prices being found in all loading areas. Shippers are once again experiencing increased volume this week mainly due to warmer weather that has helped its growth. Slow demand together with increased volume is keeping the market at lower levels. The Demand continues to lag behind supplies, making good opportunities for below market deals to keep movement going. Demand for processed broccoli continues to be good. The few lots with quality issues are showing some purple cast. Florida is past the gap and once again has product available. Good supplies available from Mexico right now.

CAULIFLOWER:

The cauliflower market has lost steam, and does not have the strength to raise prices, and the market has fallen. The demand for cauliflower is steady at best. Warmer weather has improved growth rates and most shippers are ahead of their fields for harvesting product. There should be opportunities here for deals to help increase movement. Prices still vary from shipper to shipper as their volumes change. The overall quality of cauliflower is good with some yellow cast and soft shoulders showing up. Weights range between 28 to 32 pounds.

CARROTS:

Carrots supplies have tightened up with the cold weather in California. Demand continues to be strong, spurring the market on. Quality and color of carrots are excellent. Georgia is still going strong. Quality and supplies are good and the market remains steady.

CELERY:

The celery market is steady. The supplies of celery look to be good from all growing areas. Demand is steady on celery and looks to remain so for the rest of the week. Celery is shipping out of Oxnard, Yuma, and Coachella. Texas and Florida are harvesting celery and still is not adversely affecting the market on California and Arizona product. The California and Arizona markets continue to have wide price ranges. The quality of celery is nice with color ranging from medium to dark green, while weights on celery are lighter ranging between 50 and 60 pounds out of California. Some defects include bow and twist. Very light amounts of pith have been reported in some lots.

BERRIES

Strawberries: Supplies are still light coming out of California the start of this week. Most shippers are sold out coming into each day. Market is slightly firmer. Quality is good. Weather looks to be nice for the next week. This should slowly help bring the volume on week by week. With the Easter pull starting next week look for a demand exceeds supplies thru the balance of the month of March. The Central Florida strawberry growers are slowly winding down with supplies. Market is firm. Quality is fair. Most Florida strawberry shippers will finish harvesting the last week of March.

Raspberries/Blackberries: Raspberry supplies are limited but are increasing. Demand is very good and the market is steady at high levels. Quality is good. Blackberry supplies are starting to get better. Market is steady to slightly weaker at high levels. Quality is good with a few fair lots.

Blueberries: Market is slightly firmer with better demand. Quality is great out of both L.A. and Miami.

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POTATOES:

A lack of size in Idaho continues to propel the 70ct and larger markets upwards. Orders are being covered but finding anyone with extra product is very rare. We could see some improvement with later lots but not enough to negatively affect the market prices. Keeping ahead on 70ct and larger, maybe a good idea. The remaining sizes are mostly unchanged this week compared to last. New crop California colored potatoes are going strong with excellent quality and supplies. Mount Vernon, WA product is still available with very good quality and supplies. There are still good supplies coming out of North Dakota on all colors as well.

ONIONS:

Idaho, Washington, Colorado, and Texas all compete for fresh market sales now, pushing the market on yellows lower. Supplies and excellent quality continue for the storage crop. Very little export demand continues to keep this market down in the cellar. There are deals to be made on load volume jumbo and larger sizing. Red onions inventories are starting to tighten just a bit, but good quality. Washington has good supplies of all colors. White onions are continuing to see some activity with light supplies but light demand as well.

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APPLES & PEARS:

There are no significant changes to either the Apple or Pear markets this week.

Expect demand to increase above its already-high levels due to some retailers focusing on Apples & Pears as an alternative to the tight Banana situation. Weather in the northwest is much better than it has been and should not be causing any trucking issues.

BANANAS:

Supplies are in crisis mode and getting even tighter. Growers out of Ecuador are breaking contracts and demanding more money; acreage has been lost due to flooding. Open market fruit is virtually non-existent. Quality remains good.

SPECIALTIES:

Stone Fruit demand remains on the weak side, especially for Nectarines and Peaches. Plums are skewing on larger sizes. Quality continues to range from very good to excellent.

Pineapple supplies should start to ease up next week as fruit is no longer being channeled to Europe for the Easter holiday and is now being redirected to the U.S. Size availability and quality are both good. Holiday demand is already beginning to escalate.

AVOCADOS:

Aggregate markets are mostly steady. We should see pricing begin to trend down as CA production ramps up. Much more smaller-sized CA fruit is now being harvested and we may see these sizes ease down as early as this weekend. Some Chilean fruit will be available next week in sizes 32, 36, and 40 but this deal is effectively over. Mexico is pumping a little more volume into the U.S. in response to the end of the Chilean deal. Overall quality is good; continue to expect improving oil content on CA fruit for the short term.

ASPARAGUS:

CA is still in the early stages of its deal as cooler weather has prevented it from lifting off the ground and CA supplies for the Easter holiday will not be in the best of shape as was anticipated earlier. There is good availability on Mexican product and markets are currently stable but expected to firm as holiday demand strengthens. FOB’s may strengthen as early as this weekend. Quality is good.

CITRUS:

EAST

Grapefruit pricing has strengthened as supplies have tightened due to exports. Flavor and overall quality are both at peak levels.

Valencia FOB’s have firmed. Juice content and overall interior/exterior quality are very good. Sizes are peaking on 80’s and 100’s and 125’s are extremely limited.

Honey Tangerine supplies are plentiful and markets are steady; quality is good.

WEST

Navel markets are stable on 72’s and larger and slightly softer on 88’s and smaller. Overall quality is ranging from fair to good; warmer temps may cause some puffiness, softness, and clear rot. A very few Valencias have become available for the export side of the deal.

Lemon markets are active on all sizes. Smaller-sized volumes are improving while larger-sized FOB’s are firming. Overall juice content and quality are very good. District 1 harvesting continues and District 2 production is increasing but expect markets to remain generally strong for the short term.

Lime markets are active but overall pricing is fairly steady compared to last week. Quality and smaller-sized availability are both improving as new crop production increases.

GRAPES:

Red and Green Seedless markets are mostly stable. Smaller-sized Flames are beginning to clean up. Markets will strengthen as we transition into storage volumes of Crimsons and Thompsons. Overall quality is very good.

MELONS:

Cantaloupe demand has been on the weak side but should improve as Easter approaches. Smaller sizes are tighter than 9’s and 12’s. Markets are active and a bit firmer on the west coast. Overall quality is good.

Honeydew markets are also active and stronger as demand remains good. Supplies are a little tighter but should improve within the next couple of weeks. Overall quality is good.

Watermelon markets are steady on both Seeded and Seedless. Supplies are a little tighter and pricing may very well increase as Easter approaches. Exterior quality is good, but there are some internal issues.

CUCUMBERS:

Eastern

Markets are softening due to improved supplies and weak demand; anticipate generally weaker markets over the next week. Off-shore supplies are good and new crop FL volume is gradually improving. Quality, both domestic and import, is good.

Western

Pricing has eased down due to improved Mexican volumes and softer demand. More volume will also be crossing into Chula Vista from Baja over the next two weeks. Quality is very good to excellent.

GREEN BELL PEPPERS:

Eastern

Pricing is stronger; volume from FL’s spring crops have yet to materialize. There is not a lot of harvesting currently taking place but Boca Raton, Del Rey, Immokalee, and Plant City will all have started or have improved production within the next 2-3 weeks. Quality is good.

Western

Mainland Mexican acreage is playing out with the small exception of some new fields breaking shortly. The California Desert deal won’t start up until mid to late April. Expect generally lighter supplies next week. Quality is running fair to very good. Larges and XL’s are especially tight.

RED BELL PEPPERS:

Western

Supplies remain limited with no relief expected over the next two weeks. Expect demand to exceed available supplies through the Easter holiday and for pricing to remain at elevated levels. Choice are especially tight. Quality is fair to very good.

SQUASH:

Eastern

Yellow markets are a bit stronger and Zuke markets are steady at lower levels. Once supplies improve out of Plant City within the next 7-10 days, we will see pricing ease down. Pollination issues out of Homestead have contributed to currently tighter supplies. Quality is generally good.

Western

New fields are beginning to break for both Yellow and Zukes and production volume should steadily increase into next week, aided by cooperative weather. Pricing is expected to ease with improved supplies. Quality is ranging from good to excellent.

TOMATOES:

By the end of last week, Large Mature Green FOB’s had shot up almost 33% over the week prior. However, FL’s spring crop is looking good and may start up a little earlier than anticipated (possibly by the end of this week) causing current FOB’s to stabilize. Towards the end of next week, there should be much more volume available out of FL.

Cherry and Grape pricing is also fairly steady, but Romas have dropped due to much improved volume available out of Nogales. However, Romas here are having quality issues such as puffiness and lots have to be looked at carefully. Also out of the west, Rounds are skewing towards larger sizes and pricing on these sizes may become cheaper than smaller-sized fruit.

With the exception of Romas in the west and some minimal scarring in the east, overall quality remains good. Anticipate markets to deflate within the next two weeks as the overall supply situation improves.

Frozen Fruit & Vegetables

Frozen Fruit

Apples

The Washington state apple production potential was slightly higher than the 2006 pack but shortages of harvest labor, fresh market demand and a higher percentage of fresh market quality fruit has reduced the frozen volume. Packing house culls and peeler grade volumes are less than demand. The harvest is complete and this tight frozen supply situation is not expected to change. The Michigan crop frozen volume is expected to be similar to 2006 and satisfy the market needs. NO CHANGE

Avocados

Demand and prices for Mexican Hass avocados remains high due to shortfalls in both the California and Chilean crop as well as a 10-15% reduction this year in the overall Mexican crop.

NO CHANGE

Blackberries

Northwest

The marion blackberry 34% production increase resulting from over-planting during the recent years exceeded demand. The later season blackberry harvest which exceeded previous years volumes, has forced pricing down. The total Northwest blackberry pack was 50% greater than the previous year but strong movement during January has reduced surplus stocks from 19% to 8%. Unsold stocks of most pack styles are available and pricing has been similar to the pack time levels. To date, the short European blackberry pack has not increased the Northwest demand or pricing, which is unusual.

Chile

Blackberry production is expected to be similar to the 2007 pack since acreage remains unchanged. The short European cultivated blackberry pack and record setting Chilean wild blackberry have increased European demand and cultivated blackberries will be used on a more widespread basis as a substitute for the wild fruit. Very little of the Chilean pack is expected to be sold to the U.S. because of the Northwest unsold inventories. The market remains quiet.

Mexico

Brazo Blackberry’s primary harvest is complete and the crop was good upon completion. Fresh demand is greater than last year. NO CHANGE

Blueberries

Cultivated

Usage of frozen blueberry has been 29% higher compared to the previous year since the completion of the pack but total inventory is 18 million pounds higher than last year. This inventory includes unsold fruit with higher levels of defects and softness. These volume and quality concerns have softened pricing.

Chile

The fresh and frozen pack has been affected by variable temperatures resulting in uneven ripening and daily harvest volume. The inconsistent daily volume has not matched fresh market needs and fruit harvested during the heavy production weeks has been forced into frozen packs. It is estimated that 20% of the estimated 80 million pound pack could be packed as frozen compared to the normal 5% level. As a result, asking prices have dropped, but there is little interest due to the remaining availability of US stocks.

Wild

There are unsold inventories available of field run and sized fruit even though production was lower than 2007 levels. As a result, pricing has weakened. Weather conditions to date have been favorable in all growing areas which, if it continues, it is expected to produce a normal crop that will be priced closer to historic average levels.

Boysenberries

Remaining unsold fruit inventories in Oregon are available and prices remain at approximately half of 2007 pack levels. Cold storage inventories have leveled off, but the spot market is quiet. Chile’s pack is being sold to European buyers at pricing equal to or less than North American levels due to lack of demand compared to production potential.

Raspberries

Northwest

Warehouse stocks have continued to drop to 60% of 2007 levels. Continued strong monthly movement of IQF and block frozen stocks from the short 2007 pack have resulted in extremely tight availability. Projected market volume requirements, until the 2008 pack is available, exceed remaining supplies if usage continues at this level. Continued decline of producing acreage and aging fields has resulted in less future Northwest raspberry production potential.

Chile

Harvest of the second flower of the Heritage variety is producing less volume than forecasted due to variable daily temperatures and dry conditions. Production has not satisfied the strong demand following the short 2007 European pack and asking prices for IQF has increased since the first half of December. Earlier contract pricing for the current pack is being renegotiated by the Chilean packers at higher levels under protest by North American and European buyers. Chile’s total production is estimated to be at least 10 – 15% lower than last year and some areas may be off 40% due to the persistent unfavorable weather and weak fields. Pricing continues to strengthen each week of the pack.

Strawberries

Northwest

A small percentage of the Northwest 4+1 pack remains unsold and availability of IQF is very limited. Pricing remains firm and unchanged for IQF and 4+1 30 lb packs. The market continues to be quiet. New crop acreage, production and pricing is expected to be similar to 2007 levels.

California

The total pack volume of approximately 440 million pounds is a record frozen pack. The January usage was similar to previous year levels but inventory levels continue to remain higher than 2007 levels in all pack styles due to the record pack. Year to date movement since the completion of pack is 188 million pounds compared to 186 million for the same period the previous year. The higher inventory levels and unchanged demand has slightly weakened pricing, a trend that is expected to continue into the upcoming new crop.

Chile

The harvest began the last week in October and production estimates of 60 million pounds have been downgraded due to poor production from the first half of the crop. It is estimated that the crop will be 20 – 30% short of the projection due to wet and cool weather during the first half of the pack and hot weather during January and February. New pack offerings have been more limited.

China

Reduced acreage compared to previous years, U.S. buyer concerns about traceability and pesticide usage and the weak dollar focused the Chinese sellers to the European markets. Of the approximately 200 million pound pack, 60% was exported to Europe and only 6% was shipped to the US. NO CHANGE

Cranberries

Demand will be very strong this year and it appears that everyone's needs are not going to be fulfilled. NO CHANGE

Cherries

Michigan, the predominate producer, packed a higher percentage than normal of block frozen and lower volumes of IQF because of weather damage and related quality problems. The block frozen 5+1 sugar pack is expected to remain in surplus and unsold inventories of IQF are very limited. Removal of surplus producing acreage in Michigan is expected to continue to balance production and usage. NO CHANGE

Mangos

Mexico is the world’s largest exporter of mango and the US is the largest consumer of mango. The premium variety produced in Mexico, Kent, is harvested for frozen production from June through August. Last years pack is sold out following increased consumption in the US and unchanged supplies in Mexico. The pack was adequate to cover contracts. Pricing for the later Kent variety producing areas of Peru and Ecuador remains firm due to poor production and strong fresh demand. NO CHANGE

Peaches

Domestic

The California peach cold storage stocks are similar to last year and these inventories are expected to satisfy demand. The weather to date has been favorable for the upcoming crop production. Supplies and prices are expected to remain stable.

Import

With US domestic production much improved this year, demand for imports has been significantly reduced in comparison to the previous year. The Euro/Dollar exchange rate has greatly hindered the competitiveness of both Greece and Spain while there has been some activity from China due to their more aggressive pricing structure. (Supply of peach however from China is drying up rapidly) NO CHANGE

Tropical Fruit

Production is on-going in Thailand, and while overall availability is said to be better than last year, it will still be relatively limited. For the most part production will continue through end February then start to drop off considerably as fruit supply (Papaya) will become much less and considerably more expensive. There is already some tightening in raw material supply of yellow papaya. Firm Market Conditions expected.

Frozen Vegetables

Asparagus

China

2008 Spring pack is slated to begin in early April and run through late May/early June. A main factor in pricing for this coming pack with is the RMB/USD exchange rate. The RMB continues to gain strength, thus pricing for new pack 2008 higher than 2007. This is something to keep close eye on and our suppliers will continue to update us on the coming asparagus pack as well as the currency situation.

Chile

2007 Chilean pack runs October-November annually. After a late and slow start to the season, production picked up towards the end of October. By early November, the pack hit a “peak” and most large asparagus packers were processing at capacity. As expected, production met forecast this season out of Chile. NO CHANGE

Peru

This region has year round supply, with peaks and valleys in production. Supplier’s current production campaign will wrap up at end of December. They will begin production again in March. This year, there is tremendous pressure from both the fresh market and canned markets. This has impacted the frozen market negatively. Also, there has been unseasonable cold weather in the main production areas (Ica, Trujillo). Thus, availability of frozen asparagus is limited. Suppliers see the tightness from the last campaign continuing into early spring campaign of 2008. NO CHANGE

Domestic

Asparagus are packed from Mid May to Mid or late June. Pricing will be presented by suppliers in late April.

Beans

Green Beans

Domestic-

Production for the 2007 pack has come to an end in the Midwest. Pack was completed 90% of budget. In the Northwest, the season ended the first week of October. Yields and quality have been average. The cool weather has not affected the yield or the quality; only the length of supplier’s season. Holdings show a 4% increase over prior year for regular cut beans and 1 5% shortfall on French cut. The whole bean pack, while not reported separately, seems to be at budget. This market is firm. NO CHANGE

Import –

In Europe, this item runs from August-December and the production forecast was for 35M lbs. Due to the weather and growing conditions, pack fell approximately 15% short. NO CHANGE

Lima Beans

At current rate of sales carry over will be zero. In fact only minor increase in monthly sales will deplete inventory prior to new pack. This market is strong and likely to increase in the spring. NO CHANGE

Wax Beans

Domestically, pack is complete, 65% of budget was met. NO CHANGE

Broccoli

China

Broccoli production, due to weather and some of the impact of the typhoons, has gotten off to a slow start. The bulk of broccoli production which started in January in the Zhejiang area will wrap up by the beginning of March.

Guatemala

Currently, suppliers are in their historic slow down on broccoli production. Their peak production on broccoli begins mid-November while supplier’s pack plans on other items are solidified and run from July-December. From December onward, suppliers expect sporadic production on broccoli for two main reasons:

1. It is part of their historical plan as they get into other “core” production items.

2. Raw material availability decreases steadily and has to be sourced further and further north (towards Mexico). Thus, consistency and quality are issues. NO CHANGE

Mexico

The situation in Mexico continues to be unstable. In January there were some weeks of decent production in the Bajio region, followed by days of sub-par raw material reception. Suppliers are unsure if this pattern will stay the same thru February and beyond. Thus, the supply situation from this region on broccoli is still uncertain and constricted. Processors of frozen broccoli not only face issues on the raw material side (weather, quality, volume) but are fighting fresh market demand. Suppliers do not envision supply to match demand until end of Summer 2008, at the earliest. Further, there is also overall pressure, due to the above situation in Mexico, to raise prices from this region.

Ecuador

A volcano, Tungurahua, has been “spewing” ash…this started last week. And, this has impacted some raw material to date. In some areas, there is 2.5cm of ash in the fields. Thus far, it has not caused too much damage in broccoli fields. The bigger concern is that she may fully erupt and damage supplier’s production sites. This would have major impact on broccoli production in the region. Suppliers will keep us updated in the coming days as they receive updates from the fields. Some good news has recently been released in that Ecuador will remain on a Duty free status for an additional 10 months.

Domestic

Reports are that US frozen broccoli inventories at the close of 2007 were roughly 61 million pounds (close to 13 million lbs. less than the previous year and a whopping 31 million pounds less than the traditional December average between 2002 and 2006.

Brussels Sprouts

Domestic

Production ran along well and they did not encounter any supply issues. NO CHANGE

Import

(Belgium) Production forecasts remain for a shortfall ranging between 15-25% compared to last year due to poor weather conditions. Production will come to an end the first half of March. Supplier’s foresee tight market conditions and much firmer pricing compared to last year.

Cauliflower

Domestic

Supplier production ran smooth and completed the end of December, meeting our volume needs. Product will be extremely tight this year and into new pack in the Fall. NO CHANGE

China

The snows and extremely cold weather in China over the past several weeks has raised concern for the overall crop which will definitely be shorter.

Mexico

Most factories are running at close to capacity however we need to keep a very watchful eye on the temperatures in the coming few weeks as this is the time of the year when freezes take place and can have a big impact on overall tonnage and production.

Guatemala

Guatemala production has come to a close until June. Guatemala will compensate for Mexico’s current production problems, but this production location will not make up the loss production and inventories required to maintain comfortable inventory levels. Guatemala will only maintain direct shipments for replenishment of inventories on a limited basis. NO CHANGE

Carrots

Domestic

Currently our Northwest suppliers are getting some poor yields out of the field, but they anticipate things should be improving over the next several weeks.

Import

This item runs from July-February in Belgium and suppliers are currently on pace to meet production forecast. Suppliers will be able to provide firmer update (specifically on baby carrots) next month. NO CHANGE

Corn

At the current and historical rate of sales there will be at best only a few weeks in inventory which is carried over. On such a high volume item this is potentially close to zero inventories. The market is strong. NO CHANGE

Greens

Suppliers began packing the second week of October and are scheduled to be completed by the second week of March, 2008. Weather is always a concern this time of the year. Unseasonable cold temperatures and/or extensive periods of rain will cause a reduction in the availability of raw product (spinach and greens). At this time, Greens are extremely tight due to the weather conditions in California. However that should correct itself over the next two weeks.

Mushrooms

Main sources for raw material are located in the Fujian, Shandong, and Shanxi areas of China. Market price is heavily impacted by the canning business in these areas. For frozen processors, they must work within the market on raw material that is set by the canners. Some can make it work; other production sites decide to focus on other items. This season the growing area has increased and canners have been too aggressive on their raw material price targets. Thus, we are optimistic on a solid season on the frozen side. NO CHANGE

Okra

Okra is and will be very tight until after new harvest in May. Heavy rains in

November prevented the crop from being harvested and by the time it could be

it was unusable.

Onions

Import supply is expected to remain very tight this fall and digging and processing is now in full swing with no foreseeable problems. Stocks will be normal; prices will remain firm. NO CHANGE

Peas

Green Peas

Domestic

Inventories are relatively in balance at this point. Raw product prices in the Northwest are up 40% versus last year.

Import

This item has been extremely tight/constricted below is a quick snap shot:

UK= 40% short versus production forecast.

Belgium/mainland Europe= 25% short versus production forecast.

NO CHANGE

Snow Peas

Suppliers are targeting 1M-1.5M lbs of production. This is dependent on fresh market impact. Suppliers are currently facing a slower than expected start.

Sugar Snap Peas

Suppliers had strong production in January and will wrap up season in May. This was good as they did get off to a slower than expected start to the new pack. They are expecting some down time in production from March thru early April. This past season, due to weather and the impact it had on yields in the field, they fell approximately 30% short. Overall, suppliers see large demand for sugar snaps. Our suppliers produce a string-less variety in Guatemala and have production forecast of approx. 5M pounds. At this point in time, the allocation of volume is contracted.

Yellow & Zucchini Squash

Guatemalan suppliers are targeting approximately 1.5M-2M lbs of production, with a season that runs December-April. The volume will be split 50/50 between each item. Suppliers have not contracted all volume forecasted in their pack plan and expect to have some open volume for any requirements. NO CHANGE

Butternut & Hubbard Squash

Everything went well on the supplier’s end and they hit their budgeted pack. They concluded production the end of October 2007. NO CHANGE

Spinach

Domestic

At this time, Spinach is extremely tight due to the weather conditions

in California. However it is forecasted by our suppliers that it should correct itself over the next two weeks.

Import

Suppliers are now packing in Mexico (from Expohort) & progressing to forecast.