Canada Cost Outlook: Winter/Spring 2025

Cost outlook WINTER/SPRING 2025

1

CONTENTS A message from our CEO

3

Introduction

4

Understanding inflation indices

5

Executive summary

6

High-level inflation overview by category

10

Soft commodities

26

Produce outlook

30

Service, equipment and supplies outlook

37

Solutions from Entegra

41

The contents of this publication are provided by AES (unless otherwise noted). AES provides market data analysis across agricultural commodities (focusing on proteins and grains; including historical views and future projections), macroeconomic highlights, packaging information and freight and transportation at weekly and monthly intervals to review the market. On a quarterly basis we also review a specialty commodity price update which includes information on an additional 50 items including fruits, vegetables, nuts and major spices.

2

MESSAGE FROM OUR CEO Getting sound economic guidance is not a one-time event.

It requires access to the latest data and a dependable source of insight to drive the best financial decisions — both in life and in business.

At Entegra, we are proud to be your partner in business performance improvement. We provide the insights, tools and expertise to help you navigate the economic landscape with confidence. Our Entegra Cost Outlook is central to this mission.

Delivered quarterly, it’s a commodity forecast designed to give you a clear view of the factors influencing what you pay for essential goods and services.

The Entegra Cost Outlook doesn’t just inform—it empowers you to prepare for what’s next. With intelligence from supply chain and economic experts, it’s a valuable resource that allows you to anticipate future trends, plan strategically and manage expenses effectively.

From fluctuating prices in dairy, meats, vegetables and grains to fuel, we understand the critical importance of tracking these changes and how they impact your bottom line. Our goal is to provide actionable insights that help you make informed decisions and set the right prices for your customers.

Explore all that Entegra offers to meet your business goals.

Beyond the Entegra Cost Outlook, our suite of resources is built to empower your success: • Advisory Services: Entegra provides personalized support through programs in corporate social responsibility, culinary consulting and energy management — tools to help you unlock limitless performance potential.

Thank you for placing your trust in Entegra to deliver cost-saving programs, expert advisory services and timely market guidance.

We value your partnership and are always here to provide personalized solutions tailored to your unique needs. Please don’t hesitate to reach out to your Entegra advisor for support.

Damien Calderini President and Global CEO Entegra 3

INTRODUCTION Dear trusted partners, Welcome to the fourth edition of the Entegra Cost Outlook.

Since our spring/summer 2024 issue, we’ve seen more positive shifts in the marketplace, including stabilizing pork indices and a strong labor market. However, we continue to operate in an inflationary environment, with meat and eggs presenting ongoing challenges.

The start of our new fiscal year presented some major, unexpected challenges. As always, our team mobilized, working closely with our vendors and distributors, implementing strategies and protocols to mitigate the potential impact of these obstacles, ensuring minimal disruption to Entegra’s operations wherever possible. However, these events may have longer-term implications on food costs over the next several months.

The data provided within Entegra Cost Outlook is a valuable resource you should be mining regularly to proactively boost your bottom line.

We closely research and implement all data sources available to us for forecasting, planning, etc. Please keep in mind that while the content provided within this resource is thoroughly analyzed, we cannot make guarantees as market fluctuations are unpredictable.

Thank you for your continued trust in the Supply Management team. Together, we truly make a difference.

David Kourie Chief Purchasing Officer and Senior Vice President Supply Management 4

UNDERSTANDING INFLATION INDICES There are multiple indices used to measure and report on inflation.

CPI – Consumer Price Index Consumer Price Index for Urban Consumers The Consumer Price Index for All Urban Consumers (CPI-U) measures changes in consumer prices based on a representative basket of goods and services.

• CPI-U only measures inflation as experienced by consumers, not producers.

• This basket of goods and services is compiled by the Bureau of Labor Statistics, which tracks 94,000 prices monthly to assess inflation for more than 200 categories of products and services.

• Broad consumer spending categories like food, energy, apparel and services include subcategories tracking inflation for everything from apples and premium unleaded gasoline to men’s underwear and funerals.

Food at Home / Food Away from Home The Consumer Price Index (CPI) can be further broken down into Food at Home (FAH) and Food Away from Home (FAFH).

• The CPI for Food at Home (FAH) includes categories such as cereals and bakery products, meats, poultry, fish, eggs, dairy, fruits and vegetables, and beverages that are designed for home consumption.

It also includes products that are obtained through traditional food shopping outlets such as grocery stores, convenience stores and supercenters.

• This index covers the “sale of food meant for home or off-site consumption” — food at home.

PPI – Producer Price Index This index resembles a CPI and reflects changes over time. However, instead of retail prices, the PPI provides a measure of the average prices paid to domestic producers for their output.

• Think “industry,” “farm” and “wholesale” instead of individual consumer.

• PPIs are reported for nearly every industry in the goods-producing sector of the economy.

• PPI is typically more volatile than CPI, as price volatility decreases as products move from farm to wholesale to retail.

• CPI typically lags movements in the PPI.

• The CPI Food Away from Home (FAFH) covers full-service restaurants, limited-service restaurants, drinking places, hotels, motels, retail stores, vending machines, recreational places, schools and colleges.

• This index covers the “sale of food meant for immediate consumption” — generally onsite and away from home.

When reporting on inflation, Entegra uses a blended approach from all indices designed to cover all various Entegra contract types and segment-specific requirements.

5

EXECUTIVE SUMMARY

Macroeconomics Inflation continues to moderate from highs reached in June 2022.

• In September 2024, the CPI rose by 2.4% vs. a year ago — continuing to ease toward the Fed’s stated target of 2%.

• Wholesale food prices (PPI-Food) are also slowing, now rising at a 1.9% annual rate.

• We are expecting both the CPI-Food and PPIFood to continue to rise at a rate near 2% vs. a year ago through 2025.

• Consumer food prices have also moderated, now rising at a 2.3% annual rate.

Top factors currently impacting inflation

CPI (Food): Home vs away from home vs. limited service away CPI (Food): (Food): Home Home vs. vs. Away Away from from Home Home vs. vs. Limited Limited Service Service Away Away CPI 14.0 14.0 13.0 13.0

LABOR MARKET

11.0 11.0 10.0 10.0 9.0 9.0 8.0 8.0 7.0 7.0 6.0 6.0 5.0 5.0

5.00% 4.17%

4.0 4.0 3.0 3.0 2.0 2.0

1.17%

1.0 1.0 0.0 0.0 -1.0 -1.0 -2.0 -2.0 -3.0 -3.0

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AAp 1177 prr. .11 JJuu 77 l.l.

OOc 1177 ctt. .

JJaa 1177 nn. .11 AAp 88 prr. .11 JJuu 88 l.l.1 OOc 188 ctt. .

JJaa 1188 nn. .11 AAp 99 prr. .11 JJuu 99 l.l.1 OOc 199 ctt. .

JJaa 1199 nn. .22 AAp 00 prr. .22 JJuu 00 l.l.2 OOc 200 ctt. .

JJaa 2200 nn. .22 AAp 11 prr. .22 JJuu 11 l.l.2 OOc 211 ctt. .

JJaa 2211 nn. .22 AAp 22 prr. .22 JJuu 22 l.l.2 OOc 222 ctt. .

JJaa 2222 nn. .22 AAp 33 prr. .22 JJuu 33 l.l.2 OOc 233 ctt. .

JJaa 2233 nn. .22 AAp 44 prr. .22 JJuu 44 l.l.2 OOc 244 ctt. .2 JJaa 244 nn.

2.25 5

U.S. DOLLAR

% % change change vs. vs. YA YA

ENERGY

Percent change vs. year ago

12.0 12.0

At home

Series1 Series1

Away

Series2 Series2

Limited service away

6

ENERGY

1/4

Concerns about further escalation in the Middle East loom as a key risk — from current levels of near $75/bb, even a short-term supply disruption could drive crude oil futures to $90 or higher for a short period of time.

The world crude market is, almost by nature, extremely volatile — the price of crude typically varies by more than $25/barrel in any given year.

Changes in energy costs have a dramatic impact on commodity markets.

Weekly crude oil futures 130.00 • Crude oil prices remain volatile but are trending lower.

• Geopolitical concerns (Russia/Ukraine, Middle East tensions) have supported the market and led to wider swings in the price of crude oil over the past three years.

• However, beyond geopolitical concerns, the market has more favorable supply/demand fundamentals for the next year. · Continued weak economic growth in China has reduced crude oil demand.

· The U.S. and Canada had record crude oil output in 2023 and again in 2024.

· OPEC+ continues to be compelled to limit their output to avoid having excess supplies drive crude oil prices sharply lower.

120.00 110.00 100.00 90.00 80.00

75.16

70.00 60.00 APR JUL

OCT 2022 MAY AUG

2023 MAY AUG

· Crude oil futures are expected to remain volatile,

2024 MAY AUG

but trend to sub-$70/barrel.

• Retail gasoline prices have declined from $3.80/gallon in April 2024 to $3.20/gallon in recent months.

CL ~ Weekly Fri Oct 11 2024 T:75.16 D +0.78 +1.05%

• On-road diesel fuel prices have declined to a three-year low of $3.60.

7

U.S. DOLLAR US DOLLAR

2/4

• Frequently, changes in the value of the U.S. dollar over a period of time are cited as a key driver of commodity prices. Since the beginning of 2021, the value of the U.S. dollar (relative to other currencies) has gained roughly 10% in value — a trend that should generally lead to downward pressure (or less upward pressure) on most commodity prices.

• There are several reasons why the value of the U.S. dollar can affect commodity prices:

U.S. dollar index (DXY)

· When the value of the U.S. dollar strengthens,

it can make commodities more expensive for buyers using other currencies; this can reduce demand for commodities and put downward pressure on prices.

· Conversely, when the value of the U.S. dollar

weakens, it can make commodities relatively cheaper for foreign buyers, which can increase demand and put upward pressure on prices.

· The value of the U.S. dollar can also affect the

cost of production for commodity producers. If the U.S. dollar strengthens, it can make it more expensive for producers to purchase inputs like labor and raw materials, which can reduce supply and put upward pressure on prices.

· Additionally, changes in the value of the U.S.

dollar can impact global trade and economic activity, which can also affect the demand and supply of commodities and their prices.

• Overall, the value of the U.S. dollar is an important factor to consider when analyzing and predicting commodity prices, and many investors and traders monitor changes in the U.S. dollar exchange rate closely to help forecast future movements in commodity prices.

110.000 105.000

102.848

100.000 95.000 90.000 2019

2020

2021

2022

DXY ~ Weekly Fri Oct 11 2024

2023

2024 AUG

T:102.848 D +0.361 +0.35%

8

LABOR ENERGY MARKET

1/4

Due primarily to demographic trends, the availability of labor is going to be a challenge that will persist for the foreseeable future.

Despite rising wages, the ability to track and retain employees will be a key challenge confronting businesses in the years ahead.

• Job growth has been mixed to strong through September 2024 — over the past 12 months, the U.S. economy has added a relatively strong 200K jobs per month.

• In the third quarter of 2024, Canada added 66,000 jobs, a slowdown compared to the 115,700 jobs gained in the second quarter. The unemployment rate increased from an average of 6.2% in Q2 to 6.5% in Q3, marking a full percentage point rise since Q3 2023.

Long-term civilian unemployment rate

• The U.S. unemployment rate has remained low, currently at 4.1%.

16.0 14.0 12.0 Percent

• Canada's population growth, driven by significant immigration, has outpaced employment growth, contributing to a rising unemployment rate. As of November 2024, Canada's unemployment rate increased to 6.8%, up from 6.5% in October. This marks the highest rate since January 2017, excluding the COVID-19 pandemic years.

10.0 8.0 6.0

4.1

4.0 2.0 0.0

80 n.

Ja

Source: U.S. Bureau of Labor Statistics/FRED

84 n.

Ja

88 n.

Ja

n.

Ja

92

n.

Ja

96

Unemployment Rate (%) as of: Sep. 24

0 n.

Ja

4.1

0

4

.0

n Ja

8

.0

n Ja

12 n.

Ja

n.

Ja

16

n.

Ja

20

n.

Ja

24

9

HIGH-LEVEL INFLATION OVERVIEW BY CATEGORY

10

Dairy market overview The Canadian dairy industry operates under a supply-managed system in which production quotas based on domestic consumption, and milk pricing is established using farm cost of production, with milk pricing to dairy processors fragmented according to end use.

Milk Production: Raw milk production in September 2024 increased by 2.58% compared to August, with notable growth in milk, cream, cheese, and butter processing activities.

Dairy Consumption: During the past 12 months ending September 2024 consumption increased in most categories: Milk: +1.5%, Cream: +2.2%, Yogurt: +1.5%, Ice Cream: +0.7%, Cheese: +2.1%, and Butter: -1.2%.

Imports: In Canada, dairy product imports are a key component of the quota system.

To prevent surplus situations, imports are subtracted from the total requirements which reduces the national quota.

Over the 12 months ending in September 2024, imports reached 24.5 million kg of butterfat, a 3.11% increase from last year due to free trade agreements like CUSMA expanding market access until 2025.

Other Market Influences: Avian Influenza — unlike the poultry industry, the Canadian dairy sector has not reported any cases of avian influenza in cattle. Authorities confirm that the H5N1 strain affecting poultry poses no risk to dairy cattle or milk production. Dairy product supplies and prices remain stable.

Content provided by Agri-food Economic Systems

11

*

Cheese

There is no support price for cheese to influence wholesale cheese pricing. Rather, cheese pricing is driven by the pricing of milk used to make cheese, processor costs, and general supply and demand including imports, which are increasingly significant in the Canadian market.

Stocks: Cold storage cheddar cheese stocks at the end of October 2024 were 41,271 tonnes, only .7% higher than the same month in 2023.

Cold storage stocks of variety cheese, which includes mozzarella, were 35,681 tonnes, 1.1% higher than the same month in 2023.

Production: Cheddar cheese production in Sept 2024 was just over 12,500 tonnes, 7.6% higher than Sept 2023. Production for the 12-month period ending Sept 2024 was just over 163K tonnes, about 2.1% higher than the previous period.

Imports: As of Sept 2024, imports of cheddar cheese were 11% higher that the same period in 2023 at 6.4 million kilograms.

Content provided by Agri-food Economic Systems

Block cheese | Spot: Quarterly prices and forecasts Cheddar Cheese

US $ per Kilogram

$10.50

$10.00

$9.62

$9.67

$9.50 $9.37 $9.25

$8.93

$8.95 $8.78

$8.77

$8.78

$8.72

$8.66

$8.74

$8.71 $8.60

$8.56

$8.50

$8.43

$8.34

$9.00

$8.65 $8.39

$9.01

$8.97

$9.27

% ∆ YA

Year

Average Price

$8.91

2022

$8.64

$8.65

2023

$8.55

-1.0%

2024

$8.56

0.1%

$9.02

$8.74 $8.62

$8.29

$8.13

$8.09

$8.00

$8.38

$8.29

$8.28

$8.04

Typical seasonality (5 yr) Seasonality - Cheese(3 Yrs)

$7.50 8.90 8.80

8.77

8.70

US $ per Kilogram

$7.00

$6.50 20 Q

4

26

26

20 3 Q

20 Q

2

26

26

20 1 Q

20

4 Q

20

3

25

25

20

2 Q

Q

20

1 Q

20 Q

4

25

25

24

24

20 3 Q

20 Q

2

24

24

20 1 Q

20

Q

4

23

23

20

3 Q

20

2 Q

20

1 Q

20 4 Q

20 3

8.10

20

Q

8.22

8.20

2

23

23

8.30

7.90

Q

8.59

8.40

8.00 Q1

*Indicates anticipated price direction for 2024

Low

High

Most Likely

8.77

8.50

20

22

22

8.60

1

22

22

Q1-2022 Q2-2022 Q3-2022 Q4-2022 Q1-2023 Q2-2023 Q3-2023 Q4-2023 Q1-2024 Q2-2024 Q3-2024 Q4-2024 Q1-2025 Q2-2025 Q3-2025 Q4-2025 Q1-2026 Q2-2026 Q3-2026 Q4-2026 Q

$ per kilogram

$9.00

$9.30

Q2

Q3

Q4

12

*

Butter Stocks: Total butter stocks in Sept 2024 were 33,532 tonnes, 6,229 tonnes higher than a year ago but down by 2,338 tonnes from August 2024.

Wholesale butter prices in Canada are heavily influenced by the support price for butter maintained by the Canadian Dairy Commission (CDC). To maintain price support, the CDC trades butter in the domestic and international markets.

Butter

Other Market Influences: The growing use of fats and oils in renewable diesel and sustainable aviation fuel production has increased demand for commodities like yellow grease, tallow, and vegetable oils (soybean, canola, palm). This trend indirectly affects butter prices due to the interconnectedness of the fats and oils market and can lead to price volatility in wholesale butter prices due to fluctuations in the support price, lower storage levels. The increasing demand for fats and oils in renewable energy sectors could exert upward pressure on butter prices.

Butter Price: The CDC will decrease the support price for butter slightly from $10.3505 to $10.3489 per kilogram on February 1, 2025.

Butter Production: As of Sept 2024, Canadian butter production was 4.6% lower than 2023 at 81.7 thousand tonnes.

Content provided by Agri-food Economic Systems

Butter

US $ per Kilogram $9.00

Butter: Quarterly prices and forecasts $8.50 $8.26 $8.05

$8.02

$8.00

$7.85 $7.76

$7.50

$7.69

$7.53

$7.50

$7.44

$7.66

$7.50

$7.46

Average Price

2022

$7.57

2023

$7.51

-0.8%

2024

$7.49

-0.3%

$7.48

$7.39

$7.34

$7.30

$7.22

$7.30

Seasonality - Butter Typical seasonality (5 yr) 2022-2023

$7.13 8.00

$7.00

7.90

7.87

US $ per Kilogram

7.80

20 Q

4

26

26 20 3 Q

20 Q

2

26

26 20 1 Q

20 4 Q

20 3

25

25

20 2 Q

Q

20 1 Q

20 Q

4

25

25

24

24 20 3 Q

20 2 Q

20 1 Q

20 4 Q

20 3 Q

20 2 Q

20 1 Q

20 4 Q

20 Q

7.00 Q1

*Indicates anticipated price direction for 2024 $6.00

Low

High

Most Likely

Q1-2022Q2-2022Q3-2022Q4-2022Q1-2023 Q2-2023Q3-2023Q4-2023Q1-2024Q2-2024Q3-2024Q4-2024Q1-2025 Q2-2025Q3-2025Q4-2025Q1-2026Q2-2026Q3-2026Q4-2026

7.46

7.34

7.20

3

24

24

7.30 7.10

Q

7.43

7.40

20

23

23

7.50

2

23

23

7.60

20

22

22

7.70

1

22

22

$6.50

Q

perkilogram Kilogram $ $per

$7.84

% ∆ YA

Year

Q2

Q3

Q4

13

*

• After three years of tight stocks and corn prices trading mostly in the $6 to $8 range, the extreme tightness in the corn market (and other crops) has reversed itself.

Corn

• Corn prices are important due to the size of the U.S. crop (relative to other crops), as well as the large-scale use of corn to feed livestock.

• Nearby corn futures have declined toward $4 (near the pre-2020 levels) as inventories are set to rebound substantially over the next 18 months.

Corn: Quarterly prices and forecasts Year

Average price Average price

% ∆ YA

2022

$689.18

20.6%

2023

$562.69

-18.4%

2024

$424.20

-24.6%

2025

$415.42

-2.1%

25 20 4 Q

3

20

25

25 Q

20 2 Q

1

20

25

24

High

Q

20 4 Q

3

20

24

24

Low

Q

Q

2

20

20

24

23 1 Q

20 4 Q

3

20

23

23 Q

20

23 2 Q

22

20 1 Q

20 4 Q

20

22

22

Advanced Economic Solutions, Inc.| AdvancedEconomicSolutions.com | 402.496.6015

3

20 2 Q

*Indicates anticipated price direction for 2024

Q

22

21

20 1 Q

20 4 Q

3

20

21

21 Q

20 2 Q

20

21

20

Q

1

20 4 Q

20

20

20 3 Q

20 2 Q

1

20

20

19 Q

20

19 4 Q

20 3 Q

20 2 Q

Q

1

20

19

19

Typical seasonality (5 yr)

Most likely

14

*

• Soyoil demand remains strong but the availability of adequate feedstocks for biofuels has allowed soyoil prices to relax from elevated levels.

Soy oil

• The dramatic increase in alternative feedstocks (used cooking oil, tallow, etc.) has reduced the market’s dependence upon soyoil, but action by Congress or the President could limit imports and drive soyoil prices higher.

• Growth in renewable diesel capacity, driven by California’s Low Carbon Fuel Standard (LCFS), continues despite narrowing margins.

• After trading in a 75-cent to 80-cent range, soyoil futures have declined into a 45-cent to 50-cent range, which appears to be the likely range over the next year.

Soy oil: Quarterly prices and forecasts Year

Average price Average price

% ∆ YA

2022

$70.19

22.7%

2023

$57.59

-18.0%

2024

$44.10

-23.4%

2025

$44.33

0.5%

25 20 4 Q

20

25

25 3 Q

20 2 Q

20

20

25

24 1 Q

4 Q

3

20

24

24 Q

2 Q

1

20

20

24

23 Q

20 4 Q

20

23

23 3 Q

20

20

22

23 2 Q

1 Q

20 4 Q

3

20

22

22 Q

20 2 Q

20

22

21 1 Q

20 4 Q

20

20

21

21 3 Q

2

1 Q

Q

20

21

20 20 4 Q

20

20

20 3 Q

20 2 Q

20

20

19 1 Q

20

20

20

19 4 Q

3 Q

2 Q

Q

1

20

19

19

Typical seasonality (5 yr)

*Indicates anticipated price direction for 2024 Advanced Economic Solutions, Inc.| AdvancedEconomicSolutions.com | 402.496.6015

Low

High

Most likely

15

*

• Wheat prices (KC futures) have declined to below $6 per bushel and are expected to trade mostly in the $5.50 to $6 range.

• Wheat prices peaked during May 2022 as supply concerns (Russia/Ukraine war) drove futures (KC) to over $13 per bushel.

*

Wheat

• With the worst fears not being realized, prices have fallen by 50% over the past 24 months.

• Favorable weather has resulted in 2024 wheat output rising by 9% to a seven-year high.

KC wheat (HRW): Quarterly prices and forecasts Year

Average price Average price

% ∆ YA

2022

$971.70

42.4%

2023

$777.98

-19.9%

2024

$596.38

-23.3%

2025

$571.67

-4.1%

25 20 4 Q

3

20

25

25 Q

20 2 Q

1

20

25

24

High

Q

20 4 Q

3

20

24

24

Low

Q

Q

2

20

20

24

23 1 Q

20 4 Q

3

20

23

23 Q

20

23 2 Q

22

20 1 Q

20 4 Q

20

22

22

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3

20 2 Q

*Indicates anticipated price direction for 2024

Q

22

21

20 1 Q

20 4 Q

3

20

21

21 Q

20 2 Q

20

21

20

Q

1

20 4 Q

20

20

20 3 Q

20 2 Q

1

20

20

19 Q

20

19 4 Q

20 3 Q

20 2 Q

Q

1

20

19

19

Typical seasonality (5 yr)

Most likely

16

*

• Rice futures have declined sharply as larger U.S. supplies, as well as declining corn/wheat prices, have helped relax markets.

Rice

• A modest increase in global exportable supplies is expected to increase world prices.

• Rice prices have declined into a $14-to-$16 range, and barring any major foreign supply disruptions, should remain in this price range.

• The United States remains Canada's primary trading partner for rice, both as the largest supplier and the top export destination.

• In Canada, the market is projected to grow by 16.43% between 2024 and 2029, with an anticipated market volume of approximately $47.88 million by 2029.

• An increase in U.S. rice supply is expected to lead stocks to climb to a four-year high.

Rough rice futures | Quarterly prices and forecasts Year

Average price Average price

% ∆ YA

2022

$16.59

24.1%

2023

$16.92

2.0%

2024

$16.94

0.1%

2025

$15.91

-6.1%

25 20 4 Q

3

20

25

25 Q

20 2 Q

1

20

25

24 Q

20 4 Q

20

24

24 3 Q

Q

2

20

20

24

23 1 Q

20 4 Q

3

20

23

23 Q

20

23 2 Q

22

20 1 Q

20 4 Q

20

22

22 3

20 2 Q

Q

22

21

20 1 Q

20 4 Q

3

20

21

21 Q

20 2 Q

20

21

20

Q

1

20 4 Q

20

20

20 3 Q

20 2 Q

1

20

20

19 Q

20

19 4 Q

20 3 Q

20 2 Q

Q

1

20

19

19

Typical seasonality (5 yr)

*Indicates anticipated price direction for 2024 Advanced Economic Solutions, Inc.| AdvancedEconomicSolutions.com | 402.496.6015

Low

High

Most likely

17

*

• Beef prices will remain high while the industry remains at these historical low inventory levels.

Beef

· The threat of a continuing and redeveloping

drought — we have seen drought in the cattle inventory areas increase from 14%to 35% in the last 2.5 months.

• Heifer retention — when producers (cow/calf operations) hold back heifers to breed to expand — has not appeared to happen.

· Hay/forage prices remain higher than in the previous rebuilding cycle.

· Cattle on feed numbers are still showing that

· Beef prices remain at record highs, and while

38% to 39% of the animals on feed are heifers.

• There remain no signs of expansion in the cattle herd, and cattle inventories remain historically low (down 1.9%).

· This means that cow/calf producers are sending

feed costs have softened the higher beef prices, they appear to be pushing operators to sell for cash flow today.

• We expect the rebuild to be slow — very unlike the rebuild in 2014 to 2016.

• Once expansion for the cattle industry does begin, supplies will tighten up further as producers hold back animals for breeding. It takes approximately more than two years for cattle to be ready for harvesting, including while the cow is pregnant.

unbred female cattle to feed out for harvest instead of holding them back to breed to ultimately expand the cattle herd.

· The beef cow herd is down 2.5% and expected to be lower next year.

· Beef replacement heifer numbers are the lowest since 1950 at 1.4%; this number may very likely be lower in 2025.

• There are several factors that could impact the rebuild.

Beef | Domestic 90s: Quarterly prices and forecasts Year

Average price Average price

% ∆ YA

2022

$2.69

3.5%

2023

$2.79

3.7%

2024

$3.44

23.3%

2025

$3.65

6.1%

25 20 4 Q

3

20

25

25 Q

20 2 Q

1

20

25

24 Q

20 4 Q

20

24

24 3 Q

Q

2

20

20

24

23 1 Q

20 4 Q

3

20

23

23 Q

20

23 2 Q

22

20 1 Q

20 4 Q

20

22

22 3

20 2 Q

Q

22

21

20 1 Q

20 4 Q

3

20

21

21 Q

20 2 Q

20

21

20

Q

1

20 4 Q

20

20

20 3 Q

20 2 Q

1

20

20

19 Q

20

19 4 Q

20 3 Q

20 2 Q

Q

1

20

19

19

Typical seasonality (5 yr)

*Indicates anticipated price direction for 2024 Advanced Economic Solutions, Inc.| AdvancedEconomicSolutions.com | 402.496.6015

Low

High

Most likely

18

*

Beef Beef | Domestic 50s: Quarterly prices and forecasts

CONTINUED

Year

Average price Average price

% ∆ YA

2022

$1.02

7.4%

2023

$1.29

26.5%

2024

$0.93

-27.9%

2025

$1.09

17.2%

25

25

25

4

20

20 3

Q

Q

Q

2

20

20

25

24 Q

Q

4

1

20

24

24 20 Q

Q

3

2

20

24

23 Q

Q

1

4

20

20

23

23 3 Q

20

23

20 2 Q

22

20

20

1

4 Q

Q

22

22 20 Q

3

2 Q

1 Q

20

22

21 20 4 Q

20

21

21 Q

Q

3

20

21

20 2

20

20 Q

4 Q

3 Q

1

20

20

20 20 2 Q

20

19

20

20

1

4 Q

Q

3 Q

20

19 20

19

20

20

2

1 Q

Q

• Beef 90s prices for 2025 will remain historically high as cow slaughter remains constrained.

19

Typical seasonality (5 yr)

· It was down about 15% in 2024, and

we expect something similar or even lower in 2025.

Beef | Cutout: Quarterly prices and forecasts

· While imports have increased to help

supplement supply, it likely won’t be enough to offset the lack of domestic supply.

Year

• Beef 50s are a bright spot compared to the rest of the beef complex. · Overall weights remain well above last year’s levels, and that is adding fatty beef to the ground beef supply and keeping beef 50s from surging like we saw in 2023.

Average price Average price

% ∆ YA

2022

$2.64

-5.4%

2023

$2.99

13.3%

2024

$3.05

2.0%

2025

$3.15

3.3%

Typical seasonality (5 yr)

*Indicates anticipated price direction for 2024

High

25 20 4 Q

Q

3

20

25

25 20 2 Q

1

20

25

24 20 4

Q

Q

3

20

24

24 20 2

Q

Q

Q

1

20

24

23 20 4 Q

3 Q

20

23

23 2 Q

20

23 20 1

22 20 4

Q

Q

Q

3

20

22

22 20 2 Q

1 Q

20

4 Q

20

22

21

21

21 20 3 Q

Q

2

20

21 20 1 Q

20 20 4 Q

20

20

20 20 2

3 Q

1 Q

Low

Q

4 Q

20

20

19 20

19 20 3 Q

2

20

19 20 1 Q

financially with expensive ground beef prices for a primal-like round to be used in grinding for ground beef. That has kept the round primal elevated and has contributed to the cutout staying firm.

Q

· In some cases, it even makes sense

19

• The beef cutout has remained elevated, and there has been some trade from middle meats into end meats and ground beef.

Most likely

Advanced Economic Solutions, Inc.| AdvancedEconomicSolutions.com | 402.496.6015

19

*

• Moving into 2024, pork demand has been higher, and production for 2024 will be positive.

Pork

· Low sow slaughter could also impact trim availability, so that should be watched.

• Margins were very poor for the better part of two years until spring 2024.

• Production is remaining above last year’s levels, but freezer stocks are lower. Much of that is due to the increase in demand both globally and domestically and keeping pricing a little higher into Q4 than anticipated.

· The improvement was marginally due to higher prices and lower feed costs.

· If margins remain high, we will continue to see slow breeding herd reductions and will keep production positive in 2025.

• Sow slaughter has slowed. · This will stabilize the breeding herd moving forward.

Pork | Bellies, primal: Quarterly prices and forecasts Year

Average price Average price

% ∆ YA

2022

$1.57

-7.1%

2023

$1.12

-28.7%

2024

$1.23

9.8%

2025

$1.23

0.0%

25 20 4 Q

3

20

25

25 Q

20 2 Q

1

20

25

24 Q

20 4 Q

3

20

24

24 Q

Q

2

20

20

24

23 1 Q

20 4 Q

3

20

23

23 Q

20

23 2 Q

22

20 1 Q

20 4 Q

20

22

22 3

20 2 Q

Q

22

21

20 1 Q

20 4 Q

3

20

21

21 Q

20

21 2 Q

20

20 1 Q

20 4 Q

20

20

20 3 Q

20 2 Q

1

20

20

19 Q

20

19 4 Q

20 3 Q

20 2 Q

Q

1

20

19

19

Typical seasonality (5 yr)

*Indicates anticipated price direction for 2024 Advanced Economic Solutions, Inc.| AdvancedEconomicSolutions.com | 402.496.6015

Low

High

Most likely

20

Canadian poultry market overview The Canadian poultry industry operates under a supply management system, which controls production, and allows predictable imports to meet domestic demand. It encompasses chicken, turkey, and egg production. Farm prices are established using a cost of production formula.

• Chicken Consumption: In 2023, chicken remained Canada’s most consumed meat, with a per capita consumption of 35.2 kilograms, a slight decrease from 36.1 kilograms in 2022. This decline may be attributed to factors such as inflation and supply chain disruptions, which have influenced consumer purchasing behaviors.

• Turkey Consumption: Turkey consumption is highly seasonal. In 2023, 37% of the total whole turkeys were purchased at Thanksgiving and 46% of the annual total at Christmas.

In 2023 Canadians consumed 134.2 million kilograms of turkey, with a per capita consumption of 3.3 kilograms.

• Egg Consumption: In 2023, egg consumption rose by 2% to 883 thousand dozen.

Other Market Influences: Avian Influenza • Outbreaks of avian influenza (H5N1) in Canada has led to disruptions in poultry production.

High mortality rates and mandatory culling of infected flocks have reduced supply, particularly in regions like British Columbia.

• Reduced poultry supplies have resulted in price increases for wholesale buyers. Companies should anticipate the potential for short-term price volatility in poultry products.

Content provided by Agri-food Economic Systems

21

*

Canadian chicken production generated $4.1 billion in 2023, contributing 4.1% of cash receipts from agricultural operations. In total, 1.4 billion kilograms of chicken were produced by 2,853 regulated producers.

• Stocks: As of November 2024, total chicken stocks stood at 61.7 million kilograms, 14% lower than January 2024 levels. Boneless chicken breast stocks, however, increased slightly to 6.3 million kilograms, 1% higher than January.

• Slaughter: Chicken slaughter was 113 thousand tonnes in Nov 2024, down 4.7% compared with Nov 2023, but slightly ahead of the same 12-month period at 1.38 million tonnes.

• Imports: Imports of boneless chicken breasts as of Nov 2024 is 13.3 million kilograms. If Dec imports are the same as 2023, then 2024 imports would come in at 14.6 million kilograms, which would be just under 5% less than 2023.

Chicken

Content provided by Agri-food Economic Systems

Breast Chicken | Breast, jumbo, B/S:Chicken Quarterly prices and forecasts (Boneless Skinless) US $ per Kilogram

$6.00

$5.51 $5.50

$5.49

$4.91

$4.87

$4.82

$4.50

$4.78

$4.52

$4.46

$4.54

$4.50

$4.38

$4.32

$4.40

$4.50 $4.13

$4.00

$4.43

$4.40

$4.39

$4.31 $4.30

$3.66

$3.78

$3.79

$3.72

$3.66

$4.13

2020

$3.87

-6.3%

2021

$4.60

18.8%

2022

$5.07

10.4%

2023

$4.41

-13.1%

Typical seasonality (5 yr)

$3.71

Seasonality - Chicken Breasts (5 Yrs)

$3.77

$3.50

2019

$3.92

$3.93 $3.75

Average Price

$4.09

$3.98

$4.80 $4.64

26 20

Q

4

20

26

26 3 Q

26

20 2 Q

1 Q

20 4 Q

20

25

25

25

20 3 Q

Q

2

20

25

24

20 1 Q

Q

4

20

24

24

20 3 Q

Q

2

20

24

23

20 1 Q

Q

4

20

23

23

20 3 Q

23 20

20 2 Q

22

1 Q

Q

4

20

22

22

20 3 Q

2 Q

1 Q

20

22

21 4

Q

20

20

21

21

20 3 Q

21

20 2 Q

20

Q

1

20

20

20 4 Q

20

20 3 Q

20 2 Q

1 Q

20

20

19

19

20 4 Q

19

20 3 Q

20 2

1 Q

Q

20

19

$3.00

$4.40 $4.20

$4.21

$4.00

$3.99

$3.80

Q1

20 19 220 19 Q 320 19 Q 420 19 Q 120 20 Q 220 20 Q 320 20 Q 420 20 Q 120 21 Q 220 21 Q 320 21 Q 420 21 Q 120 22 Q 220 22 Q 320 22 Q 420 22 Q 120 23 Q 220 23 Q 320 23 Q 420 23 Q 120 24 Q 220 24 Q 320 24 Q 420 24 Q 120 25 Q 220 25 Q 320 25 Q 420 25 Q 120 26 Q 220 26 Q 320 26 Q 420 26

1-

Q

$4.66

$3.60

$2.50 *Indicates anticipated price direction for 2024

Content provided by Agri-food Economic Systems

US $ per Kilogram

$4.60

Q

$ per kilogram

$ per kilogram

$5.00

% ∆ YA

Year

Low

High

Most Likely

Q2

Q3

Q4

22

*

• Stocks: cold storage stocks of turkey are notoriously seasonal, with inventories building from a low in January up to a peak in September, and then falling sharply through the fall. The swings in inventory are overwhelmingly driven by smaller whole birds served as whole turkey, especially at Thanksgiving and Christmas, with further processed products steady.

In 2023, Canadian turkey producers generated 159 million kilograms of turkey meat, valued at $487 million in farm cash receipts.

Turkey

Unlike chicken, trade in turkey is primarily in frozen product. Also, unlike other supply managed products, Canada tends to be a net exporter- largely comprised of exports of dark meat cuts that are less preferred in the Canadian markets, and with significant imports of white/breast meat products.

As of November 2024, total turkey stocks were 29 million kilograms, 65% higher than January 2024 levels due to seasonal demand.

• Slaughter: turkey slaughter was 12 thousand tonnes in Nov 2024, down 12% compared with Nov 2023, but slightly ahead of the same 12-month period at 159 thousand tonnes.

• Imports: in 2024 declined significantly, totaling approximately 5 million kilograms—20% lower than in 2023.

Content provided by Agri-food Economic Systems

Turkey | Breast meat: Quarterly prices and forecasts Turkey Breast (Boneless Skinless)US $ per Kilogram

$8.00

$7.19

$7.16

$6.85

$6.83

$6.60

$6.50

$6.44

$6.43

$6.27

$6.84

$6.35

2020

$6.45

1.6%

2021

$6.69

3.6%

2022

$6.33

-5.3%

2023

$6.73

6.2%

$6.57

$6.55

$6.48

$6.44

$6.41

$6.47

Typical seasonality (5 yr)

Seasonality - Turkey Breast(5 Yrs)

$6.25

$6.13

2019

$6.75

$6.73

$6.71

$6.66

$6.52

$6.52

$6.41

$7.01

$6.96

$6.87

$6.82

Average Price

$7.12

$7.00

$6.19

7.00 6.90

$6.00 $5.86

$5.81

26

6.60

6.52

$5.00

6.40 6.20

6.20

6.00 5.80 Q1

Content provided by Agri-food Economic Systems $4.50

6.60

20 Q

4

20

26

26 3 Q

26

20 2 Q

1 Q

20 4 Q

20

25

25

25

20 3 Q

Q

2

20

25

24

20 1 Q

Q

4

20

24

24

20 3 Q

Q

2

20

24

23

20 1 Q

Q

4

20

23

23

20 3 Q

23 20

20 2 Q

22

1 Q

Q

4

20

22

22

20 3 Q

Q

2

20

22

21 1 Q

20

20 4 Q

21

21

20 Q

3

21

20 2 Q

20

Q

1

20

20

20 4 Q

20

20 3 Q

20 2

1 Q

Q

20 4 Q

20

20 3

20

19

19

20 2

Q

20

Q

1

19

19

$5.50

US $ per Kilogram

6.80

Q

$ per kilogram

$ per kilogram

$7.50

% ∆ YA

Year

Low

High

Most Likely

Q2

Q3

Q4

23

*

Eggs

The egg market in Canada is divided into two categories, table eggs and processed eggs.

The table egg market, mostly supplying the retail and food service market, accounts for approximately 66% of the Canadian egg production. Meanwhile, the egg processing sector, supplying the industrial, food service and retail sectors, accounts for the balance (approximately 33%).

• Production: Egg production in Canada is stable, with shell egg production in 2023 of just under 800 million dozen.

• Stocks: Frozen whole egg stocks are ending 2024 at close to 5-year lows at 250,000 kilograms, down 22% from Nov 2023.

• Processing Eggs: In 2023, a total of 44.8 million dozen of shell eggs, mostly for breaking, and 2.5 million kilograms of processed eggs in the form of liquid, frozen and dried were imported into Canada.

• Liquid and Frozen Whole Egg Imports: liquid and frozen egg imports fluctuated significantly between 2023 and Nov 2024. Liquid eggs declined by 80% while frozen whole eggs increased. Combined imports declined 27% to 236 thousand kilograms from 2023.

• Liquid Processing Eggs: As of week 48, 2024, year to date declarations of eggs for breaking were 213 million dozen, ahead of 2023 by 11.2% (195 million dozen). At the end of Nov 2024 liquid egg processing was just over 110 thousand tonnes for the year, which is 9% behind the same period in 2023.

• Shell Egg Imports: to date in 2024 shell egg imports are 20% higher than 2023 at just over 48 million dozen.

Whole Liquid Eggs

Content provided by Agri-food Economic Systems

US $ per Dozen

$3.50

Eggs | Liquid whole, unpasteurized, stardard: Quarterly prices and forecasts

$3.00

$2.26

$2.35 $2.50

$2.45

$2.20

$2.13

$2.04

$1.96 $1.68 $1.62

$1.77

$1.83

$1.77

$1.84

$2.11 $2.21

$2.49

$2.44

$2.35

$2.30

$2.34

$2.33

$2.28 $2.11

$2.03 $2.25

$2.18

$2.24

$2.10 $2.19

$1.69

Average Price

2019

$0.80

2020

$0.78

-2.1%

2021

$0.98

26.1%

2022

$1.56

59.0%

2023

$2.13

36.3%

2024

$1.91

-10.1%

$1.50 $1.13

Typical seasonality (5 yr) Seasonality - Whole Liquid Eggs (5

$1.17 $1.05

$1.00 $0.75 $0.67

$0.50

$0.81

$0.74

1.48 1.45

$0.80 $0.71

02

1.40 1.35

1.35

1.33 1.30

1.28

1.25 1.20 1.15

*Indicates anticipated price direction for 2024

Content provided by Agri-food Economic Systems

US $ per Dozen

$0.85

Yrs)

1.50

$0.95

$0.86

6

$0.91

Q 12 Q 0 Q 1 20 19 2- 1 9 2 Q 0 Q 2 20 19 3- 19 2 Q 0 Q 3 20 19 4- 1 9 2 Q 0 Q 4 20 19 1- 19 2 Q 0 Q 1 2 0 20 2- 2 2 0 Q 0 Q 2 20 20 3- 2 2 0 Q 0 Q 3 2 0 20 4- 2 2 0 Q 0 Q 4 20 20 1- 20 2 Q 0 Q 1 2 0 21 2- 2 2 1 Q 0 Q 2 20 21 3- 2 2 1 Q 0 Q 3 2 0 21 4- 2 2 1 Q 0 Q 4 20 21 1- 2 2 1 Q 0 Q 1 2 22 2- 0 2 2 2 Q 0 Q 2 2 22 3- 02 2 2 Q 0 Q 3 2 22 4- 0 2 2 2 Q 0 Q 4 20 22 1- 2 2 2 Q 0 Q 1 2 23 2- 0 2 2 3 Q 0 Q 2 2 23 3- 02 2 3 Q 0 Q 3 2 23 4- 0 2 2 3 Q 0 Q 4 2 23 1- 02 20 3 Q Q 1 2 24 2- 0 2 2 4 Q 0 Q 2 2 24 3- 02 20 4 Q Q 3 2 24 4- 0 2 2 4 Q 0 Q 4 2 24 1- 02 20 4 Q Q 1 2 25 2- 0 2 20 5 QQ2 2 25 3- 02 20 5 Q Q 3 2 25 4- 0 2 2 5 Q 0 Q 4 2 25 1- 02 20 5 Q Q 1 2 26 2- 0 2026 QQ2 2 26 3- 02 20 6 Q Q 3 2 26 4- 0 2 26 Q 02 4 2 6

$ per Dozen

$ per Dozen

$2.36 $2.28

$2.00

$2.51

$2.28 $2.46

% ∆ YA

Year

Q1

Low

High

Most Likely

Q2

Q3

Q4

24

*

• Total seafood supply increased approximately 10% from January to June 2024 compared to the same time period last year despite lower imports of shrimp, salmon and groundfish.

Seafood

• Seafood market cost will increase moderately as most species categories find a new balance in supply and demand after the dramatic ups and downs during and through the pandemic. New tariffs will raise prices on shrimp, the most popular seafood.

• Tariffs on shrimp have slowed shrimp imports, while salmon imports showed an 8% decline in Chilean salmon production.

• As the most internationally traded protein, seafood remains vulnerable to geopolitical risks.

The increasing impact of climate change from global warming is a new variable in seafood production and can add additional uncertainty on supply.

• Overall seafood supply and demand are expected to increase in 2025, but the growth may be uneven across species categories. · Lobster and crab may be constrained by declining landings or quota, and salmon is expected to rebound.

Source: Slade Gorton

Price per pound

Seafood cost trend Year

Average price Average price

% ∆ YA

2020

$3.37

-3%

2021

$3.90

16%

2022

$4.65

19%

2023

$3.89

-16%

2024E

$3.76

-3%

2025P

$3.99

6%

25

102 102 101 101 100 100 99 99 98 98 97

20 3 Q

20

25

24 1 Q

20 3 Q

20

24

23 1 Q

3

20

23 Q

20 1 Q

22 20

22 3 Q

20 1 Q

20

21

21 3 Q

20 1

20 20 3 Q

Q

20 1 Q

20

3

20

19

19 Q

1 Q

20 3 Q

20

18

18 20 1 Q

3

20

17

17 Q

20 1 Q

3

20

16

16 Q

1

20

15 Q

20 3 Q

Q

1

20

15

Typical seasonality (5 yr)

Q1

Q2

Q3

Q4

*Indicates anticipated price direction for 2024 Advanced Economic Solutions, Inc.| AdvancedEconomicSolutions.com | 402.496.6015

Low

High

Most likely

25

SOFT COMMODITIES

26

*

• After increasing sharply from $3,000/tonne to over $10,000/tonne earlier this year, cocoa prices have declined slightly to the $6,500/ tonne to $8,000/tonne range.

Cocoa

• It will take multiple years for world cocoa production to recover, and thus prices may remain near current elevated levels for an extended period.

• Driven by disease and drought, a reduction in supplies in key growing regions (primarily Ivory Coast) has been the key driver of market tightness. More favorable weather in West Africa has provided some slightly improved production outlooks.

Cocoa futures: Quarterly prices and forecasts Year

Average price Average price

% ∆ YA

2022

$2,466.46

-0.8%

2023

$3,289.26

33.4%

2024

$7,554.42

129.7%

2025

$7,358.40

-2.6%

20

25 20 4 Q

20

25

25 3 Q

2 Q

1

20

25

24 Q

20 4 Q

20

24

24 3 Q

Q

2

20

20

24

23 1 Q

20 4 Q

3 Q

20

23

23 2

20

23 Q

22

20 1 Q

20 4 Q

20

22

22 3 Q

20 2 Q

20

22

21 1 Q

20 4 Q

3

20

21

21 Q

20 2

1 Q

Q

20

21

20 20 4 Q

20

20

20 3 Q

20 2 Q

1 Q

20

20

19 4

20

19 Q

20 3 Q

20 2 Q

Q

1

20

19

19

Typical seasonality (5 yr)

*Indicates anticipated price direction for 2024 Advanced Economic Solutions, Inc.| AdvancedEconomicSolutions.com | 402.496.6015

Low

High

Most likely

27

*

• The coffee market has been volatile — the December contract reached a record high of 2.73 at the end of September and has since been on a downward trend towards 2.45.

Coffee

• The EU Deforestation Regulation was set to go into effect at the end of the year, but the EU Commission recently proposed to delay implementation to December 2025. EU importers had strong demand earlier this year to increase stocks before this was expected to go into effect.

• Drought conditions in Vietnam and Brazil have led to ongoing production concerns — particularly for Vietnam’s Robusta crop.

• These have all been known, ongoing concerns, but the market has remained volatile. Coffee prices will likely remain high and volatile through 2025.

Coffee ICO prices: Quarterly prices and forecasts Year

Average price Average price

% ∆ YA

2022

$190.62

26.1%

2023

$165.23

-13.3%

2024

$223.06

35.0%

2025

$235.76

5.7%

20

25 20 4 Q

20

25

25 3 Q

2 Q

1

20

25

24 Q

20 4 Q

20

24

24 3 Q

Q

2

20

20

24

23 1 Q

20 4 Q

3 Q

20

23

23 2

20

23 Q

22

20 1 Q

20 4 Q

20

22

22 3 Q

20 2 Q

20

22

21 1 Q

20 4 Q

3

20

21

21 Q

20 2

1 Q

Q

20

21

20 20 4 Q

20

20

20 3 Q

20 2 Q

1 Q

20

20

19 4

20

19 Q

20 3 Q

20 2 Q

Q

1

20

19

19

Typical seasonality (5 yr)

*Indicates anticipated price direction for 2024 Advanced Economic Solutions, Inc.| AdvancedEconomicSolutions.com | 402.496.6015

Low

High

Most likely

28

*

Sugar

• Beet sugar spot prices were steady in July and August at 55 cents/lb., and bulk refined beet sugar prices were steady at 45 cents/lb. to 49 cents/lb.

• Higher ending stocks from 2023 to 2024, a record large sugar crop for 2024 to 2025, and an adequate sugar crop from Mexico all indicate ample supplies.

• The No. 11 world sugar prices reached a low of $17.57 in late August before spiking to almost $20 after fires damaged sugar cane in Brazil.

Concerns about drought in Brazil have led to some volatility and spikes in the world sugar market.

• Prices are expected to decrease significantly in 2024 to 2025.

Beet sugar: Quarterly prices and forecasts Year

Average price Average price

% ∆ YA

2022

$50.87

31.5%

2023

$61.30

20.5%

2024

$51.21

-16.5%

2025

$36.28

-29.2%

20

25 20 4 Q

20

25

25 3 Q

2 Q

1

20

25

24 Q

20 4 Q

20

24

24 3 Q

Q

2

20

20

24

23 1 Q

20 4 Q

3 Q

20

23

23 2

20

23 Q

22

20 1 Q

20 4 Q

20

22

22 3 Q

20 2 Q

20

22

21 1 Q

20 4 Q

3

20

21

21 Q

20 2

1 Q

Q

20

21

20 20 4 Q

20

20

20 3 Q

20 2 Q

1 Q

20

20

19 4

20

19 Q

20 3 Q

20 2 Q

Q

1

20

19

19

Typical seasonality (5 yr)

*Indicates anticipated price direction for 2024 Advanced Economic Solutions, Inc.| AdvancedEconomicSolutions.com | 402.496.6015

Low

High

Most likely

29

PRODUCE OUTLOOK Source: Fresh Concepts

30

*

As Mexico’s growing region is moving fully into the new flora loca crop, overall volumes are strong, and growers are not expecting any major interruptions with supply. Due to inclement weather, sizing is trending slightly towards larger fruit.

Avocados

Going into Q1, there is historically a significant uptick in demand due to the Super Bowl, which does cause pricing to increase around that timeframe. In the spring, there is typically a slight gap in harvests during Mexico’s Holy Week, which will occur in mid-April 2025. This harvest gap can also have a brief impact on pricing.

During the fall and winter seasons, the avocado market relies almost exclusively on Mexico for production, so any weather or harvest issues that Mexican growers run into would inevitably have a major impact on the overall avocado market.

Avocados: Quarterly prices and forecasts Year

AveragePrice price % Change YOY Average

$80.00

2021

$42.58

22.02%

$70.00

2022

$49.43

16.08%

$60.00

2023

$39.48

-20.14%

2024

$38.14

-3.38%

2025

$33.10

-13.23%

$50.00 $40.00 $30.00

Typical seasonality (5 yr)

$20.00

$60.00

$10.00

$40.00

$50.00

$30.00

2019

2020

2021

2022

2023

2024

Qtr. 2

Qtr. 1

Qtr. 4

Qtr. 3

Qtr. 2

Qtr. 1

Qtr. 4

Qtr. 3

Qtr. 2

Qtr. 1

Qtr. 4

Qtr. 3

Qtr. 2

Qtr. 1

Qtr. 4

Qtr. 3

Qtr. 2

Qtr. 1

Qtr. 4

Qtr. 3

Qtr. 2

Qtr. 1

Qtr. 4

Qtr. 3

Qtr. 2

Qtr. 1

$0.00

2025

$20.00 $10.00 $0.00

JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC

*Indicates anticipated price direction for 2024 Advanced Economic Solutions, Inc.| AdvancedEconomicSolutions.com | 402.496.6015

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*

Red bell peppers are in limited supply, and these conditions are expected to remain through late December. Thereafter, growers will transition to the winter growing region, at which point supplies are expected to remain stable through May of 2025.

Bell peppers

It is still unknown whether Tropical Storm Francine’s heavy rains will have an impact on fields or harvests. However, any negative impacts from the storm would be reflected during the winter months.

Green bell peppers are seeing better supply, which is expected to remain for the duration of September.

Bell pepper: Quarterly prices and forecasts

Year

$30.00 $25.00 $20.00

Average AveragePrice price % Change YOY

2021

$14.06

-10.44%

2022

$20.35

44.76%

2023

$17.68

-13.13%

2024

$20.23

15.32%

2025

$16.67

-18.26%

$15.00 Typical seasonality (5 yr)

$10.00 $25.00 $20.00

$5.00

$15.00

2019

2020

2021

2022

2023

2024

Qtr. 4

Qtr. 3

Qtr. 2

Qtr. 1

Qtr. 4

Qtr. 3

Qtr. 2

Qtr. 1

Qtr. 4

Qtr. 3

Qtr. 2

Qtr. 1

Qtr. 4

Qtr. 3

Qtr. 2

Qtr. 1

Qtr. 4

Qtr. 3

Qtr. 2

Qtr. 1

Qtr. 4

Qtr. 3

Qtr. 2

Qtr. 1

Qtr. 4

Qtr. 3

Qtr. 2

$10.00

Qtr. 1

$0.00

2025

$5.00 $0.00

JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC

*Indicates anticipated price direction for 2024 Advanced Economic Solutions, Inc.| AdvancedEconomicSolutions.com | 402.496.6015

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*

The iceberg market is seeing a strong finish to Q3 with both very good supply and quality.

The transition from the Salinas growing region to Yuma growing region in November will likely come with typical supply gaps for good quality product, and growers are expecting typical seasonal quality issues leading up to that point.

Lettuce

The markets will be completely dependent on weather going into the Yuma season. Any severe inclement weather or early-season freezes would have a significant impact on both quality and available supply.

Even if iceberg supplies remain strong through the transition, the iceberg market can still be significantly impacted if there are any issues with romaine or leaf lettuce, as demand typically pivots to iceberg when romaine and leaf lettuce are in short supply.

Iceberg lettuce: Quarterly prices and forecasts Iceberg Lettuce: Quarterly Prices and Forecasts

Year

AveragePrice price % Change YOY Average

$80.00

2021

$14.12

-10.25%

$70.00

2022

$32.35

129.11%

$60.00

2023

$18.91

-41.52%

2024

$21.87

15.63%

2025

$22.00

0.59%

$50.00 $40.00 $30.00

Typical seasonality (5 yr)

$20.00

$50.00 $40.00

$10.00

$30.00

$0.00

2019

2022

2023

2024

Qtr. 3

2025

Qtr. 4

Qtr. 1

Qtr. 2

Qtr. 3

Qtr. 4

Qtr. 1

Qtr. 2

Qtr. 4

Qtr. 3

Qtr. 2

Qtr. 1

Qtr. 4

Qtr. 3

Qtr. 2

Qtr. 1

Qtr. 3

Qtr. 4

Qtr. 1

2021

Qtr. 2

Qtr. 3

Qtr. 4

Qtr. 1

2020

Qtr. 2

Qtr. 4

Qtr. 3

Qtr. 2

Qtr. 1

Qtr. 4

Qtr. 3

Qtr. 2

Qtr. 1

$20.00 $10.00 $0.00

JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC

*Indicates anticipated price direction for 2024 Advanced Economic Solutions, Inc.| AdvancedEconomicSolutions.com | 402.496.6015

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*

Supplies for both red and yellow onions have begun to stabilize as the transition to the Northwest crops is now complete. The Northwest growing region saw much higher temperatures than normal, which will limit supplies for colossal and super colossal sizes.

Onions

This size trend may cause demand for the other sizes to increase, which in turn would lead to higher pricing.

Onions: Quarterly prices and forecasts Onions: Quarterly Prices and Forecasts

Year

AveragePrice price % Change YOY Average

$20.00

2021

$9.68

28.89%

$18.00

2022

$16.25

67.89%

$16.00

2023

$11.16

-31.32%

$14.00

2024

$13.63

22.12%

2025

$16.42

20.43%

$12.00 $10.00 $8.00

Typical seasonality (5 yr)

$6.00 $4.00

2019

2020

2022

2023

2024

Qtr. 4

Qtr. 3

Qtr. 2

Qtr. 1

Qtr. 4

Qtr. 3

Qtr. 2

Qtr. 1

Qtr. 4

Qtr. 3

Qtr. 1

Qtr. 2

Qtr. 3

Qtr. 4

Qtr. 1

Qtr. 2

Qtr. 3

Qtr. 4

Qtr. 1

2021

Qtr. 2

Qtr. 4

Qtr. 3

Qtr. 2

Qtr. 1

Qtr. 4

Qtr. 3

Qtr. 2

Qtr. 1

Qtr. 4

Qtr. 3

Qtr. 1

$0.00

Qtr. 2

$2.00

2025

$16.00 $14.00 $12.00 $10.00 $8.00 $6.00 $4.00 $2.00 $0.00

JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC

*Indicates anticipated price direction for 2024 Advanced Economic Solutions, Inc.| AdvancedEconomicSolutions.com | 402.496.6015

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*

Red and Yukon potatoes have been in steady supply out of their growing regions in the Midwest. As production picks up in Florida during the winter, supplies will be heavily dependent on favorable weather.

In Canada, Alberta remains the largest potatoproducing province, accounting for 23.7% of Canada's total production in 2024. Manitoba and Prince Edward Island follow, contributing 21.6% and 20.4% respectively. Notably, New Brunswick and Quebec experienced significant production increases of 14.3% and 17.5%, respectively, recovering from wet growing conditions in 2023.

Idaho has fully transitioned to the new storage crop. With that, growers are seeing a size trend on the larger side, 40s-70s primarily. As potato growers have one shot at harvests, this size trend is expected to last for the duration of the season.

Potatoes

The size gap may cause pricing to increase towards the end of Q1 and into Q2, first for smaller potatoes, and potentially for larger sizes as demand picks up.

Potatoes: Quarterly prices and forecasts Potatoes: Quarterly Prices and Forecasts

Year

$30.00 $25.00 $20.00

Average AveragePrice price % Change YOY

2021

$9.14

-7.48%

2022

$16.77

83.57%

2023

$16.09

-4.06%

2024

$11.63

-30.82%

2025

$16.50

48.21%

$15.00 $10.00

Typical seasonality (5 yr) $20.00

$5.00

$15.00

2020

2021

2022

2023

2024

Qtr. 3

Qtr. 4

Qtr. 2

Qtr. 1

Qtr. 4

Qtr. 3

Qtr. 2

Qtr. 1

Qtr. 4

Qtr. 3

Qtr. 2

Qtr. 1

Qtr. 4

Qtr. 3

Qtr. 2

Qtr. 1

Qtr. 4

Qtr. 3

Qtr. 2

Qtr. 1

Qtr. 3

Qtr. 2

Qtr. 1

Qtr. 4

Qtr. 3

Qtr. 2

Qtr. 1

Qtr. 3

Qtr. 4

Qtr. 1

Qtr. 2

2019

Qtr. 4

$10.00

$0.00

2025

$5.00 $0.00

JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC

*Indicates anticipated price direction for 2024 Advanced Economic Solutions, Inc.| AdvancedEconomicSolutions.com | 402.496.6015

35

*

Historically, the tomato market sees a very high degree of volatility from October to December, and this year it is well on track for this same pattern. In both the East and West Coast growing regions, volumes are already light, and these conditions are expected to persist through December.

Tomatoes

2024’s winter season saw an incredibly volatile Q1 caused by inclement weather.

However, typically the tomato market returns to stable levels by the end of January, and growers are hoping for the same going into 2025.

In September 2024, Canada's tomato exports totaled approximately C$57 million, a 2.12% decrease from the same period in 2023.

Conversely, imports increased by 39.4% during the same period, reaching C$35.9 million.

Tomatoes: Quarterly prices and forecasts Tomatoes: Quarterly Prices and Forecasts

Year

$30.00 $25.00 $20.00

Average AveragePrice price % Change YOY

2021

$13.79

-29.64%

2022

$17.19

24.65%

2023

$15.02

-12.64%

2024

$20.13

34.03%

2025

$12.75

-36.67%

$15.00 Typical seasonality (5 yr)

$10.00 $25.00 $20.00

$5.00

$15.00

2019

2020

2022

2024

Qtr. 3

Qtr. 4

Qtr. 1

Qtr. 2

Qtr. 3

Qtr. 4

Qtr. 1

Qtr. 2

Qtr. 3

2023

Qtr. 4

Qtr. 1

Qtr. 2

Qtr. 3

Qtr. 4

Qtr. 1

Qtr. 2

Qtr. 3

Qtr. 4

Qtr. 1

2021

Qtr. 2

Qtr. 3

Qtr. 4

Qtr. 1

Qtr. 2

Qtr. 3

Qtr. 4

Qtr. 1

Qtr. 2

Qtr. 3

Qtr. 4

Qtr. 1

$10.00

Qtr. 2

$0.00

2025

$5.00 $0.00

JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC

*Indicates anticipated price direction for 2024 Advanced Economic Solutions, Inc.| AdvancedEconomicSolutions.com | 402.496.6015

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SERVICE, EQUIPMENT AND SUPPLIES OUTLOOK

37 37

*

• Linerboard increased in June and has held firm since.

Packaging

· Natural gas and crude along with demand will drive the resin market this year.

· There is expectation that there could be

• We expect 2025 to be a somewhat unpredictable year in the packaging commodity space.

increases in early 2025.

· Global mergers force further consolidation: ‧ $7.2 billion International Paper acquires DS Smith

· The wars in Russia/Ukraine and the Middle East

‧ $11 billion acquisition of WestRock

by Smurfit Kappa

· There are looming recession risks in pockets

‧ Distribution — Veritiv acquires Orora

· The health of the economy in China

continue with moderate likelihood of escalation. of Asia and Europe.

· Folding carton demand is down as food volumes slow and beverages had a rough summer.

• Tropical weather this year has impacted resin plants in the Gulf and has made resin pricing a bit volatile.

is also a factor.

· These known risks are incremental to the

standard risks associated with a “normal” planning year: contagion, weather, natural disaster, etc.

Source: AES, Pactiv

Resins

Polystyrene

Polypropylene

PET

PE

25 vs 24 market

25 vs 24 market

25 vs 24 market

25 vs 24 market

A muted supply/demand market with flat input costs

Lower monomer costs assumed with better PDH uptime in 2025

Higher freight costs assumed particularly on the West Coast

Forecasting a robust demand picture

Molded Fiber

Aluminum

Demand could surprise to the upside

Paper & Metal

SBS Cupstock

Linerboard

25 vs 24 market

25 vs 24 market

25 vs 24 market

25 vs 24 market

Upward risk in market consolidation/ concentration

Anniversary the June 2024 increase and possibility for another movement in 2025

Assuming a standard inflation rate: Risk in higher ocean freight rates

Structural global undersupply, higher price needed to spur capacity investment.

38

*

Aluminum and steel

Secondary aluminum 360 340

Index 1982 = 100

320 300 280 260 240 220 200

Many cost pressures are impacting the previous downward trend of aluminum and stainless steel.

180

1

02

L. 2

JU

2

02

.2

N JA

2

02

.2

L JU

02

.2

N JA

3

02

.2

L JU

3

4

02

.2

N JA

4

02

.2

L JU

• Pricing is still significantly above prerun-up levels.

• Aluminum tracking is causing some concern and is hard to obtain.

Steel pipe and tube, stainless steel

• The dock workers’ strike caused pricing pressure.

170 160

Index Dec. 2010 = 100

• Labor and freight costs continue to increase upwards of 40%.

150 140 130 120 110 100

Source: Cambro, Vollrath, US Dept. of Labor and Statistics

1

02

.2

L JU

2

02

.2

N JA

2

02

.2

L JU

02

.2

N JA

3

02

.2

L JU

3

4

02

.2

N JA

4

02

.2

L JU

39

*

Linens and textiles

*

Cotton

*

MRO

Key factors impacting pricing include:

2025 outlook:

• Import transportation costs are impacted by hostilities in and around the Red Sea. Global freight indices are up 90% in the last six months as attacks in the Red Sea have created longer transit times and container imbalances.

• Cotton and polyester prices are expected to remain stable.

• Global transportation rates are expected to cool slightly as global demand shows signs of weakening.

• Markups for OEM parts, rising energy costs and labor expenses have stalled.

• As of July 2024, the overall TAC Baltic Airfreight Index had increased 13.4% year over year, reflecting high demand in air cargo due to ocean freight disruptions.

• Consumer countries are introducing trade barriers to protect their own industries

• Fluctuations in demand and delays in delivery have become predictable.

• Domestic transportation and labor costs continue to increase.

• After a short-term increase in Q1 of 2024, cotton is down 8% to 10% from its stable range in 2023. We expect to see somewhat stable cotton price conditions for the foreseeable future.

We expect pricing to remain the same into 2025.

• The inflation of steel, aluminum and PVC is holding.

• Sourcing and operating costs continue to increase for retailers and apparel brands as new regulations are rapidly introduced in global markets. These new regulations cover environmental protection, fair labor, ethical sourcing, consumer safety and greenwashing.

• Polyester in China is down slightly, around 4% in the last few months.

40

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Labor Solutions

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Entegra’s advisors will work with you on solutions to improve employee upskilling, secure temporary labor, drive operational efficiency and more.

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Other resources from Entegra CLIENT EXCLUSIVE CONTENT • Commodity Reports • Inflation Reports • Program and Pricing Updates

• The Guide to Greater Savings • Bringing Hospitality to Life • 9 Questions To Ask When Choosing A GPO

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