Gordon Food Service Market Updates for August 13, 2021 - Dairy | Eggs

Gordon Food Service Market
Updates for August 13, 2021

Dairy | Eggs

Large -Up

Medium -Up

Small - No change

Retail demand mixed. Supplies of extra large and large well balanced and held
confidently. Market steady to full steady.

Dairy | Butter

Butter- Up

Cream inventories are continuing to tighten as ice cream production starts to
compete for raw material and hits it's production stride. Retail sales show signs of
decline, but overall are still healthy. With restaurants reopening food service
distributors are still coming back to the buying table, but orders are still below
expectations.

Dairy | Cheese

Barrel -Up

Block -Up

The CME Block market responded to the governments release of another billion
dollars in the USDA Box program. Speculators feel this will have an effect on the
markets for the short term but will not be sustainable for the long term.

Grocery & Bakery | Frying Oil

Futures markets have been choppy driven by weather, demand for renewable diesel
production and a Brazilian drought. But despite the volatility soybean oil prices are
only slightly below where they peaked during the mid-summer. It is typical to see
some pricing relief near the U.S. harvest. Farmers need to create space for the new
crop and will provide old crop availability at a discount to entice movement. Coming
off historically high pricing that peaked mid-summer, the real question is 'how low
can the market move from here'? There are two forces which pulled the markets
higher in 2021; record exports to China and new, large demand from a growing
renewable diesel industry in the U.S. Neither of these two demand avenues look
poised to back off in 2022. China will continue to buy agricultural goods to meet the
requirements of the new trade agreement with the U.S. and more renewable diesel
plants are scheduled to come online next year. This will, undoubtedly, create a
higher floor for soybean oil. The food industry will have to continue paying up to
compete with the export and automobile industries.

Grocery & Bakery | Flour

Northern spring wheat is turning in a terrible crop rating, with only 10% of it rated
good-excellent, compared to 73% in 2020. With most the damage already done,
high protein flour prices are expected to remain strong into 2022. Lower protein
flour seems to be in much better shape, offering an opportunity for end-users to
trade down where able at a considerable discount.

Grocery & Bakery | Sugar

Larger than expected production from India is helping offset the lower output from
Brazil, tempering the recent rise in world sugar prices. Global supplies are smaller
and should keep a firmer undertone to the market in the near-term. Domestic
supplies are still tight in the spot market. The next round of fresh news will come in
the fall when beet sugar harvest begins. Expect flat pricing until then, with
occasional cost variances in freight.

Meat | Pork

This week's harvest is forecast to be 2.33million head, comparable to last week.
Kills have averaged 9% fewer hogs that 2020 as hogs where pushed to the market
withCovid uncertainties a loss mitigation strategy used by growers. Factors such as
respiratory disease, high feed costs and breeding decisions have held the harvest at
these levels. 9% seems like a large reduction, however 2020 harvest levels where
inflated due to Covid uncertainty.

Bone in butt and boneless butt prices are lower this week , prices will increase from
here into Labor Day as demand for the holiday increases. Boneless loin prices are
higher this week and will continue to increase into the holiday.

Spare ribs are higher this week, with St Louis prices steady to higher as buying for
Labor Day get underway. Back ribs prices are stable to higher.

Belly prices are slightly higherthis week, price could level offin the next 1-2 weeks
as record prices will likely slow down demand. Shortages are possible due tolabor
issues and increased demand.

Meat | Beef

Harvest numbers are slightly higher than previous year's numbers as smaller cattle
have dropped the production pounders per head slightly. Choice grading is starting
to slip and currently running a bit below previous years percentage. Prime has
continued to drop percentage-wise making it even more difficult to come by. Expect
to see the choice/select spread to increase as we move closer to September.
Logistical issues with both container ships and port warehouses have slowed the
processing of imports and exports. Late August and into September should show
good numbers of exports as ports and warehouses work on catching up on the
backlog of orders.

The choice cutout has started to move higher, up $0.50 bouncing off the dip we had
in mid-July. Demand is picking up again as prices became more realistic. Most
middle meat items have started to trend higher as retail took interest and took
positions in late July. Ribeyes are higher, expect to see these prices for the next few
weeks with retailers booking for deep chill programs to support the holidays.
Striploin and short loins have captured some retail attention and should keep
support under these cuts through most of September. Briskets have been booked
up by retail on forward bookings to help cover Labor Day ads with a cheap BBQ beef
option, prices have shot back up. End cuts are steady to higher, holding well above
historical prices for this time of year. Thinmeats and labor-intensive items are
steady to slightly higher across the category as labor is an issue across all beef
packers and specialty cutters. Grinds have started moving already, retail has
already stepped in on ground beef packages for the upcoming holiday.

Poultry | Chicken

The markets have remained relativelystable with a slight uptick on Jumbo breast
meat. The medium and select breast meat markets have all remained flat for a

couple ofweeks now. The production levels have come off a little over the last
couple weeks and there were 165million head processed which is down about 5
million head from two weeks ago and the same as last week.The placements are
remaining at a pretty consistent level, but I have heard that we may see around a
2% increase as we enter into the 4th quarter of the year.We are stay with over 50%
of the birds come in the heavier weight ranges, so the total supply of meat in
pounds produced is up some. Thewingmarket has also remainedflat for the Jumbo,
medium and small wings for the last two weeks. I am hearing some availability of
small whole fresh wings, but any IQF or frozen product is difficult to find. If you do
find it the overage is pretty significant. The tenders continue to find strength and
have continue to set newrecord level highs. The demand for tenders is expected to
remain strong even at the record high prices.

Breast and Tenders:

The Jumbo Breast Meat market picked up some additional strength and is now
trading at $1.89/lb. This seemed kind of surprising that we saw this go up as there
was talk and offers in back of the market.The medium and select markets have had
another week of no changes and areat $2.08/lb on the mediumand $2.84/lb on the
select. Line run Breast Tenders continue to set new record highs of $2.89/lb for line
run tenders and$2.97/lb for select tenders.

Wings:

The wing markets on all sizes once again remained unchanged forthe week. Jumbo
wings remained at therecord high of$3.22/lb. The medium whole wings held
at$2.84/lb andsmall wings also held to end the week at$2.94/lb. There was some
availability of small wings late in the week, but not any discounting at this time.