SYSCO Food Services of Columbia, LLC

Market Updates
These Market Reports are filled with information about market fluctuations that could effect your food cost. Each report is available to arm you with the knowledge you need to make menu adjustments if necessary.

Beef, Veal and Lamb

Beef output last week fell 3.1% and was 6.7% less than a year ago. Recent USDA cattle inventory data suggests that cattle supplies could be tight for the balance of '12. The Jan 1st cattle (2%), heifer (1%), beef cow (3%) and calf (1%) herd sizes were all less than the prior year and historically small. The beef markets are mixed. Record high retail beef prices may be taking their toll on domestic beef demand. Forward beef sales in Jan were 27% less than the 5 year average for the month. The upside risk in many beef markets may be limited even though the seasonal trend is higher during this time of year.

Pork

Pork output last week fell 2.1% and was .2% less than the prior year. Pork production tends to seasonally fade this time of year and it's not unusual for the pork markets to firm. The pork belly market has risen 13% this year and ham prices have begun to rise as well. Pork may soon get some retail featuring attention due in part to elevated beef prices. This could support pork prices in the coming weeks. Pork output is projected to be up 1.9% through Q2 versus '11.

Poultry

US chicken output continues to be reduced compared to prior years. Broiler-type egg set reductions have intensified and are now trending 5.2% lower than last year. Pullet placements (the future chicken breeding flock) have been curtailed in recent months. These factors may be signs of further chicken production cutbacks which could bring more support to the chicken markets. Chicken wing prices remain near record levels but history suggests that some price relief for wings could take place later this month. Chicken breast market gains have stalled as of late but expect the breast markets to firm in the coming months. Chicken may become a retail and food service featuring favorite due in large part to record high beef prices.

Seafood

The US International Trade Commission recently removed a US salmon import tariff against Norway. This may equate to better US salmon supplies from Norway who is the largest salmon exporting country in the world. However, transportation costs for Norwegian salmon to the US may mitigate the market impact on salmon prices. Since 2009, the average price move for salmon in Feb is 27% higher.

Oils and Grains

The decline of the Brazilin Real versus the US dollar has contributed to lower US coffee prices. This may temper any near term upside move for the coffee market.

Canned Tomato

Tomato processors intend to contract the 2nd largest tomato tonnage on record in '12. Canned tomato prices are steady to firm.

Fruits and Vegetables

Processors are negotiating acreage and raw product costs for the '12 harvest season. Processed vegetable prices could be modestly higher next fall.

Produce

Tomato supplies from Mexico are in good shape due in part to favorable weather enhancing their tomato crops. Yet, tomato supplies from Florida are reported to be down from prior weeks' levels which is typical in late Jan. Still, US demand for tomatoes is weak and may be one reason why tomato shipments in the US were down 23% last week. Produce prices are historically low with yellow onions (32%), potatoes (21%), lettuce (47%) and tomatoes (67%) all below their 3 year averages. The downside risk for these produce vegetables is probably minimal from current price levels.

Dairy

The Jan 1st US milk replacement heifer (future milk cow) inventory was down 1% compared to the prior year. Still, the US milk replacement cow herd remains historically high which is bullish for US milk output this year. The CME spot butter market has fallen 5.6% in Jan and is trading at price levels not seen since Apr '10. This could be a bearish sign for butter and for the dairy complex as well. Butter has acted as a leading price indicator for both cheese and milk this past year. The US cheese markets are soft but a bottom is still likely to occur soon.