March 2022 Market Update

March 18, 2022

Your monthly update on the state of the pork, poultry, beef, and seafood industries, direct from the category experts at Y. Hata. 

Please contact your Account Manager for questions.

Poultry

Market Update Chicken

The Poultry industry like all other domestic proteins, is challenged on all fronts and of most concern is their input costs which continues to increase. Although this was not unexpected, the level of increase surpassed estimates as the cost of fuel, energy, transportation, labor, feed (corn, wheat), and supplies continues to rise and is more unpredictable than ever. At the same time the cold storage inventory levels are down, hatchability rates have decreased which translates to less chickens to harvest, and combined with solid demand = a full steady to firm market on most parts.

It certainly looks like we’ve reached the bottom on prices for most if not all parts and as we’ve shared previously there is a “New Bottom” on literally all proteins. Two examples of this are:

  • BL SL Thighs
    • pre-covid low – $1.20/lbs.
    • current low – $1.82/lbs.
  • BL SL Breast Meat
    • pre-covid low – $1.20/lbs.
    • current low – $2.77/lbs.

As discussed last month several cases of Highly Pathogenic Avian Influenza (HPAI) were detected in four states and as of this week there are now 12 states where the virus has been confirmed and this is bringing more uncertainty to the future in terms of availability and prices.

HPAI is also influencing Turkey growers as most have pulled back contract offers until they can assess what impact, if any, it could have on their future production. Bottom line, Whole Turkeys for the Holidays will be limited and prices higher.

Unlike years past where we provided Turkey sizes and prices in early summer to our customers and asked them to pre-order for the Holidays, we took a different route this year and pre-ordered various sizes and quantities of Whole Turkeys through our regular Turkey vendors. Large Tom Turkeys will be very limited this year and fortunately we were able to participate in the IMA Holiday Turkey Booking and secure product. This is another example of the benefits of being an IMA member.

Pork

Market Update Pork

Our Pork friends are facing the same challenges as their feathered friends including disease complications from APP, PEDv and PRRS which has limited harvest ready Hogs and is expected to reduce future production numbers. While most pork items have traded at elevated levels recently, and demand has been steady at both the retail and Foodservice level, it is likely prices will continue to move upward.

For both the Poultry and Pork industries, the labor situation remains a challenge but most of the attention is now focused on quickly rising input costs. Eventually, suppliers will need to start passing on all the extra costs to foodservice and retail customers. Add to that the potential for less harvesting/processing due to disease or reduced output and we could possibly see much higher prices soon.

Beef

Market Update Beef

Labor shortages and the quality of workers continue to be the preeminent challenge facing almost all packers. More recently, the ongoing Russian invasion of Ukraine has added further turmoil to the already challenged supply chain. Beef prices have not been affected yet, but we are expecting supply issues with animal feed and feed additives to eventually have an impact.

Largely due to reduced slaughter and extended periods on feed, we continue to see heavier cattle weights and increased levels of choice & prime grading. For certain cuts we are even seeing lower pricing for choice grade in comparison to select grade.  

  • Ribeye pricing continues to be soft as inflation has pushed consumers away from beef and towards seafood, pork, and poultry. However, these lower prices have attracted retailers who are looking to feature ribs again for future ads as we approach the summer grilling months.
  • Chuck flat pricing will be decreasing by another $1.13/lbs. for April as international demand has softened considerably primarily due to high prices and rising COVID-19 case counts in Asia.  

Despite the capacity constraints at the plant and lower slaughter levels, the beef industry has been able to support both domestic and global demand. What remains to be seen is how inflation shapes consumer spending and affects future pricing.

Seafood

Market Update Seafood

There seems to be a slight change for the worst in port congestion. Vessels are being pushed back from berthing again. Even when ships are offloaded, there are other issues that are encountered. The terminals are running out of chassis to put the containers on. When they are available, the truckers are booked 4-7 days out. Suppliers are accruing fees at the port ($400/day) because of the delays in picking up the containers. Cold Storage facilities are also backed up with an average of 3-5 day waiting period to offload incoming containers.

Add to that, the Russia/Ukraine War, Oil prices are at an all-time high. Fuel surcharges are on the rise, which trucking companies will ultimately pass on to cover their overhead. There could also be Ocean Freight rate increases in the future, as shipping lines try to offset rising fuel cost.

We are looking at rising cost for transportation across the board. Whether it be products coming over water or by trucks from the East Coast. All shipping companies will eventually start to increase their fees very soon.

  • Snow Crab – This year’s Alaskan Snow Crab Season quota has been reduced by 88%, add to that the Ban on Russian Snow Crab which makes up 30% of the snow crab market (41 million pounds of clusters). 

With the recent events that are happening in Ukraine, the seafood market has drastically changed in the past couple of weeks. Our supplier has helped us move some of our excess inventory and brought us to manageable levels on both sizes. We are now having to reassess our plans for Snow Crab. We will keep you posted on what transpires.

  • Poke Cubes – Based on current sales for poke cubes we are in a good position. Please make sure to check with me for any new sales or increased demand. On Mini Diced, we can take on some additional business.