DELCO FOODS
JULY 2020
VOL. 25, NO. 07
IS HELP
COMING? By Peter Thor, President, Bellissimo Foods The list of problems facing restaurateurs and food distributors is long and seems to grow every day. In March, the restaurant industry and much of the nation was put “on-pause” and months later the “opening” is proving to be a monumental challenge. Consumer health and safety concerns affect demand, while government health regulators prohibit full dine-in opening and require a multitude of operational changes. The re-engagement of product supply has been similarly restrained by labor force illness, new regulatory requirements and ingredient shortages. The result has been unprecedented volatility and skyrocketing costs. Is help coming? The product supply issues have recently become critical as most states attempted to “re-open” at the same time, causing a sudden demand wave for fresh dairy and protein products. Plants ramping up production have had workforce virus infection related closures and capacity restrictions to those operating. Many of the largest and most respected producers have been affected, including more than 50 poultry and pork plants and at least 26 beef plants. Resultant shortages and rapid increases in wholesale prices have resulted. As an example, Pork 72’s and Beef 50’s are typical prime ingredients to make pepperoni and other dry sausage products. Pork ingredient costs rose 70% in less than 8 weeks, and beef more than doubled during the same period. Poultry increases were less severe. Help is coming for all proteins as the initial surge in demand is moderating and production is building. Both pork and beef wholesale costs are off their highs, with both pork 72’s and beef 50’s lower by 1/3. Importantly, supply shortages are being filled and another month should be fulfilling demand. As virus related closures became widespread, demand for cheese first cratered, then exploded. While cheese plants operate with far fewer employees, the short shelf life of fresh cheese created logistical nightmares. For a brief period, CME block prices fell to $1.00 per pound, then rocketed past annual average pricing to the record $2.58 per pound in early June, a record of sorts. continued on page 2
A PROUD DISTRIBUTOR OF BELLISSIMO
RE-OPENING PRACTICES By Daniel Thor, Bellissimo Foods
We continue to see daily changes and updates regarding the COVID-19 pandemic as it relates to the food service industry. As various parts of the country are at different stages of reopening, please make sure to consult your local health officials on the current stage re-opening guidelines, policies and procedures. The health and well-being of our customers and staff are the top priority considering the exposure risk.
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MARKET UPDATE Dairy Mozzarella
PRICE
LAST MONTH
DIFFERENCE
$2.697
$1.765
$0.932
The CME cheese block and barrel markets remain historically inflated. The butter markets have been softening. Butter stocks at the end of May were up 21.2% (y/y). Anticipate cheese prices to correct lower due in part to lessening exports and solid production.
Beef 50% Trimmings
PRICE
LAST MONTH
DIFFERENCE
$0.675
$1.550
($ 0.875)
Beef output jumped sharply going into this holiday, with the week’s 562.3 million pounds coming in as the sixth largest weekly production total on record. The beef 50s remain under pressure as big kills and fat cattle remain the industry theme.
Poultry
Wings(Jumbo)
PRICE
$1.830
LAST MONTH
$1.768
DIFFERENCE
$0.062
The chicken wing and breast meat complexes have found some support while the dark meat sector continues to struggle. Take note that the prospective July start to both basketball and baseball may underpin chicken wing prices.
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