May 15 2020

Dave’s Weekly Market Update

Good afternoon to all of you.

I hope you, your family, and friends are all doing well throughout these unprecedented times.

The challenges that we in this industry are facing are constantly changing. First, we were faced with inventories of perishable items and no one to buy them as their shelf life declined.
Now, as the business is slowly returning, the supply chain is behind the eightball. Manufacturers seem unable to keep up with demand.

A few factors are affecting this. COVID 19 has reduced many workforces as sick employees have forced some facilities to shut down. This has hit the protein sector hard. Many beef, pork, and chicken plants were forced to close. Then, the prices skyrocketed to unprecedented levels.

We are currently encountering shortages in the dairy supply for these same reasons. In some cases, production was so backed up that manufacturers stopped producing so they could move out older inventories. Then, with dairy markets being so low, some people started trying to build their inventory and the suppliers were caught shorthanded.
We are seeing huge cutbacks and delays from suppliers such as Land O Lakes and Cabot. These are major partners and we are having a very hard time keeping inventories in stock.

Every sector of the foodservice channel is experiencing this. These shortages are unbelievable! I am hearing that it is happening everywhere, but it is still frustrating.
We pride ourselves on our service levels, but it has been tough lately. Thank you for being so understanding and working with us during this tough time. I certainly hope the supply chain is in better shape when all the areas start reopening!
We are all in this together, we will get through this and see find the new normal.

Eggs:
The supply of eggs has caught up with demand and the larger eggs dropped a little this week. This is one commodity lagging behind all the others.

Butter:
Butter and cheese markets are on fire this week. I am hearing that a big driving force is the government’s Food Box program. The government has purchased an estimated $100 million dollars worth of food to distribute to needy families. Part of this program was designed to help farmers, and create some demand for Dairy products. Butter went up .37 in the past week. Part of this was due to the extremely low prices caused by the pandemic.

Cheese:
Both the Block and Barrel markets went nuts this week. Block went up over 40, and Barrel about 35. We haven’t passed these increases on because we were unable to reduce our prices at the beginning as we could not purchase the new lower-priced inventory. Due to this and we wanted to be fair to our loyal customer base!
If nothing changes, there will be large increases next week due to lagging behind the market.

Inventories are getting replenished little by little and with fresh products. We hope our fill rate gets back to normal, and what you have come to expect from Honor Foods.
Stay Safe! Stay Strong!
We will get through this by all working together.