Jun 04 2020

Dave’s Weekly Market Update

Good afternoon,

Eggs:  The egg market has been slowly trending downwards as the breakfast business has not yet returned. There are plenty of eggs around the country.

Butter: Butter made a dramatic increase this week as cream supplies “dried up” around the country. With the high demand for butterfat in ice cream and sour cream products, the market jumped .29 today alone after going up .14 between last Friday and yesterday.

Cream is sold based on multipliers over or under the butter market.
A few weeks ago they were well below the market and now they are so high that manufacturers can not make butter profitably.
I am seeing shortages in the marketplace. We are getting calls from people we normally do not sell butter to and due to the situation we have had to turn away some business. Our loyal butter customers will be supplied to the best of our ability.

Here e is some info I got from one of the major butter manufacturers we deal with:
“Butter was a little surprising today – lots of bulk in storage but the cream is extraordinarily tight right now. Foodservice has picked up along with the government contracts and retail is absolutely through the roof. I don’t think we’ll reach record highs, but I wouldn’t be surprised if it stayed up here for a while or climbed a little more.”

Cheese:

The block market reached record highs this week and closed today at $2.525. For comparison, it closed at $1.00 on April 15th. The Barrel closed at $2.37 today and also $1.00 on April 16th. Here is some info from the same individual on cheese.

“Cheese is unbelievably tight. Almost to the point where you can’t find enough bulk cheese to fill orders. It’s starting to get hot here as well, so not sure what the heat will do to milk volumes, but I’m sure it will decrease some. My hope is that cheese stays high so people will back off of orders, but demand is just through the roof and its tough to find products. We have nothing in inventory and basically the cheese that comes into the plant this morning is getting processed today and going out on trucks tonight. We are also short massive amounts of employees – multiple factors but not limited to sickness, people scared of getting sick, the government paying people to do nothing, and the bars opening up in Wisconsin. I would expect some extra lead times will be needed for everyone to fill orders. And the plant has started limiting orders for those trying to take advantage of markets”

Many suppliers have made the same comments about the extra lead time due to lack of workers, raw material, and people staying home. It has added to some of the shortages we are seeing. Saputo Cheese is very hard hit by these factors and has been cutting products. Land O Lakes is allocating products and also causing shortages and disruptions in the supply chain for us and our customers.

In the past 40 years since I have been doing this, I have never seen such a dramatic rise in the markets in such a short period of time. At some point, things have to level out but it may be a while with the demand exceeding supply.

We are in unprecedented times with COVID 19 and the civil unrest that took place this week. Certain areas are trying to reopen the restaurants and business was driven away by all the riots throughout the country. Hopefully, that is behind us and the foodservice trade can start to rebuild itself. People have been very supportive in supporting local businesses by utilizing the takeaway option. Time shall tell on how the public will start going back out and dining. I feel it will be a slow process.

We are rebuilding our inventories as best we can so we can support our loyal customer base as your business tries to return to some sort of normalcy.

We thank you for everything and wish you and your families a safe and relaxing weekend.