Restaurant Food Cost Price Forecast for August 2003

This food price trends forecast helps restaurant and food service management control food cost, plan restaurant menus and manage inventory with projections of food costs and trends in food prices.

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Beef, Veal & Lamb 
July 1st cattle stocks were 5.4% less than last year with June placements into feedlots 2.3% bigger. The total US July cattle inventory was 1.1% lesser than 2002. Japan and the US have come to an agreement in a beef trade identification process but the US ban on Canadian beef is likely to continue into September, so the live cattle market prices are trending higher. When the embargo ends US beef prices are expected to react by going much lower. For now beef demand is strong as buyers acquire product for the Labor Day holiday. Ground beef prices will remain inflated through the end of August and overall US cattle supplies are anticipated to stay restricted into the fall, which should keep most beef prices higher than 2002 levels. 

This years high Veal prices should se slight increases this month due to the tight supply of calves and above average demand. The general lack of demand for the boxed lamb cuts should lower prices on must cuts in the coming weeks. 

Pork 
Pork production is projected to seasonally turn higher during the rest of August; sluggish retail demand is moving pork prices lower. The belly (bacon) market may become unstable but should drop by late August. Last year the belly market fell 31% in the last two weeks of August. July 1st pork cold storage stocks were 8% lower than in 2002 with picnic (45%), butt (23%), loin (20%), belly (15%) and ham (14%) stocks down from last year, with rib (6%) supplies larger. History indicates that the high baby back rib prices should come down by the end of August.

Seafood 
Whole salmon supplies have become inadequate. Seasonal charts imply that the restricted whole salmon stocks and elevated price levels are likely to continue into September. Snow crab leg inventories are low and the price is increasing. May US shrimp imports were 14.6% above 2002 with year-to-date imports 17.5% larger. Ample shrimp stocks are expected to persist through the summer keeping prices at attractive levels. Though most fin fish supplies are way up this year, so is demand, so pricing is expected to stay steady. Maine Lobster prices will remain high but there are some decreases in imported lobsters bringing attractive prices. 

Poultry 
Through the first half of 2003, chicken production has trended below 2002 levels but June chicken production was 5% above last year. Chicken output is forecast above last year's levels through the rest of the summer due to heavier birds. US May chicken exports to Russia were 24% above last year with leg quarter exports up 69%. The leg quarter market price is up 32% since May and additional price increases might be coming. The boneless skinless chicken breast market has risen 8% the past month and chicken breast supplies are limited, so expect prices to continue moving up. 

Eggs
Jumbo egg prices are steady but supplies are limited, large and extra large eggs may move up a few cents but are in good supply. Brown eggs continue to be overpriced compared to last year. 

Dairy 
June milk output was .3% less than last year because dairy farmers are liquidating their dairy cows due to the low milk prices so milk output should stay below 2002 levels through the summer. June 30th butter inventories were 20% above last year but June butter production fell sharply from May and was 6.2% below 2002. Higher butter prices are expected over the next few weeks. June cheese output was .8% better than last year, but cheddar (3.9%) and American (1.5%) production were below a year ago levels and mozzarella (4%) above. The cheese markets are trending higher and historical charts suggest that the butter and cheese markets could move to their highest price levels of the year by the end of August.

Produce 
The potato markets may stay unstable over the next few weeks because stocks are limited and it will be late August or September before substantial "new crop" supplies from Idaho become available. Temperatures and an output gap in California along with inclement weather in the East are reducing tomato volumes well below a year ago. Expect unpredictable tomato supplies and inflated prices throughout this month. The avocado prices continue at inflated levels with seasonal shipments 16% below a year ago. US Avocado imports from Chile are expected to increase over the next few weeks, which could bring lower avocado prices by months end. The lettuce market prices are trending at very low price levels so production might be reduced in the approaching weeks as suppliers try to increase profits which may well pressure the lettuce markets higher. 

Processed Fruits and Vegetables 
July apple holdings for processing were 12.3% greater than last year and indications are for a large US apple crop this year. Canned apple market prices should drop by late September. The green bean and corn harvests continue but green bean acreage is expected to fall 10% this year while corn acreage is equal with last year and green pea acreage is 5.8% above last year. The French fry market prices are steady but should come down soon with demand dropping as US June stocks rose 7%. 2003 US contracted tomato output for canning is forecast at 11 million tons a 2.7% reduction from last year. California tomato production is behind schedule due to earlier cool wet weather, and Midwest crops are behind last year. Tomato supplies remain restricted and the markets firm, but some price increases can be expected soon. 

Cooking Oils
The high price of cooking oils will continue but should begin to decrease in the fall due to the projections of good corn and soybean harvests.

Sugar 
On May 27, 2003, the USDA said that 2003-2004 world sugar production would total 138 million tons, down 4.6 million tons from 2002-2003. Total use is estimated at 143 million tons, bringing the ending stocks estimate down to 27 million tons. This should help to support this market and we may even see the highest sugar prices of the past two years by the end of 2003.

Coffee 
The recent jump in coffee prices is due to fear of bad weather in brazil, which will affect prices for the next few months based on rumor and not on supply and demand. We do believe that over the next year prices will increase due to these factors. On June 13, 2003, the USDA estimated that world 2003-2004 ending coffee stocks will drop by 20 million 60-kg. bags, or 18% of annual use. This matches the lowest ending stocks-to-use ratios of the past 20 years. They expect world production to total 107 million 60-kg. bags, down from 122 million bags in the previous year. The crop that Brazil is now harvesting is expected to come in at 33 million bags, down from 51 million bags a year ago.