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Commodities Report: Coronavirus Affects Chinese Economy



The commodity markets were under significant downward pressure during the mid-winter due to the coronavirus bringing parts of the Chinese economy to a standstill. Numerous businesses, including restaurants, remained closed in China as of early February and many that were open were experiencing significant sales declines. Chinese importers have been declaring force majeure on some contracts with, in some cases, product on route being redirected. This has caused significant volatility in the agricultural commodity markets including pork and beef with some of the pork markets falling near the lowest levels for this time of the year in the last decade. Eventually, the Chinese economy is expected to recover and will likely be short agricultural goods. And there is a big risk that this will happen sooner rather than later. Thus, exports are anticipated to climb sharply as early as this spring which could bring upward pressure to the markets. And if December is an indication, it could be substantial for pork. During the month, the U.S. exported 40.2 percent more pork than the previous year with all of that, and then some, going to China. The increase in trade with China accounted for roughly 7 percent of U.S. pork production.  Assuming Chinese imports rebound when U.S. production expansion is tempered it could be especially supportive of the pork markets.  China has also had trouble with avian flu with their poultry flocks and this could bring a boost U.S. poultry exports later this year.  And if that’s not enough, U.S. beef trade could expand as well as the general Asian economy recovers. Thus, we encourage buyers to view market weakness as an opportunity. 


David Maloni is commodity consultant for American Restaurant Association Inc., a food commodity research, forecasting, consulting, and contract risk management organization founded in 1996 specifically advising the US restaurant and hotel industry and supply chain.


BEEF-Prices are by the pound and based on f.o.b. Omaha carlot.
2/6/20 1/9/20 Difference 2/1/19
Ground Beef 81/19 1.94 1.96 <0.02> 1.94
168 Inside Round (ch.) 2.24 2.11 0.13 2.18
180 0x1 Strp (choice) 5.58 4.96 0.62 5.50
112a Ribeye (choice) 7.38 7.01 0.37 7.63
189a Tender (select) 10.52 9.98 0.54 10.29
189a Tender (choice) 10.43 9.90 0.53 10.32

 

OIL AND RICE-Prices per pound based on USDA Reports.
2/6/20 1/9/20 Difference 2/1/19
Crude Soybean Oil .309 .346 <0.037> .295
Crude Corn Oil .360 .315 0.045 .257
Rice, Long Grain .258 .251 0.007 .240

 

DAIRY-Prices are by the pound and based on USDA reports.
Cheese 2/6/20 1/9/20 Difference 2/1/19
American 1.64 1.74 <0.10> 1.26
Cheddar (40#) 2.02 1.99 0.03 1.47
Mozzarella 2.09 2.06 0.03 1.55
Butter(AA)
One pound solids 1.88 1.88 - 2.29
Class II Cream
Cream 2.05 2.13 <0.08> 2.57

 

PORK-Prices are by the pound and based on f.o.b. Omaha carlot.
2/6/20 1/9/20 Difference 2/1/19
Belly (bacon) 0.90 0.82 0.08 1.17
Spare Rib (3.5& down) 1.61 1.53 0.08 1.42
Ham (23-27#) 0.54 0.70 <0.16> 0.48
Bbybck Rib (2-1.75#) 2.30 2.27 0.03 2.24
Tenderloin (1.25#) 1.71 1.77 <0.06> 1.79

 

POULTRY-Prices are by the pound except for eggs (dozen) and based on USDA reports.
Chicken 2/6/20 1/9/20 Difference 2/1/19
Wings 1.87 1.76 0.11 1.88
Bnless Skinless Breast 0.88 1.01 <0.13> 1.05
Eggs
Large 1.15 0.82 0.23 1.27
Medium 0.81 0.64 0.17 0.90
Miscellaneous
Whole Turkeys (8-16#) 0.96 0.95 0.01 0.83

 

PRODUCE-Prices are by the case and are based on USDA reports.
2/6/20 1/9/20 Difference 2/1/19
Limes (150 ct.) 9.00 20.00 <11.00> 11.00
Lemons (200 ct.) 21.19 20.19 1.00 22.97
Cantaloupe (18 ct.) 10.45 10.45 - 12.95
Strawberries (12 pts) 17.00 12.98 4.02 20.63
Avocds (Hass 48ct.) 37.25 37.75 <0.50> 22.25
Idaho Potato (70 ct.) 19.88 18.63 1.25 12.25
Yellow Onions (50 lb.) 6.88 7.06 <0.18> 8.92
Red Onions (25 lb.) 11.76 10.94 0.82 12.44
White Onions (50 lb.) 24.09 21.27 2.82 36.94
Tomatoes (5X6-25lb.) 16.95 37.95 <21.00> 12.95
Roma Tomatoes 11.75 20.65 <8.90> 8.73
Green Peppers 10.08 23.08 <13.00> 20.75
Iceberg Lettuce 7.59 27.22 <19.63> 7.79
Leaf Lettuce 7.61 16.50 <8.89> 10.81
Romaine Lettuce 7.34 11.84 <4.50> 7.58
Broccoli (14 ct.) 7.71 22.49 <14.78> 7.53


Market information provided by David Maloni of ArrowStream.  ArrowStream is a foodservice supply chain technology company that helps clients capitalize on data to improve their business.  Learn more at ArrowStream.com

*Covered party (as defined below) shall not be liable for any direct, indirect, incidental, special or consequential damages of any kind whatsoever (including attorney’s fees and lost profits or savings) in any way due to, resulting from, or arising in connection with the Monthly Commodity Report, including its content, regardless of any negligence of the covered party including but not limited to technical inaccuracies and typographical errors.  “Covered Party” means the American Restaurant Association Inc. and the employees of.  © 2019 ArrowStream

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