February 8, 2010

US wholesale beef prices dip; pork see-saws, ends flat

US wholesale choice-beef prices declined each day last week and select was down in four of the five days, but the overall changes were modest.

Pork-carcass composite prices were volatile from day to day as they fell and rose in see-saw fashion.

For the week, the USDA's choice-beef composite price slipped US$2.83 per hundred pounds, or 2.1%. Select beef dipped US$2.30 for the week. The pork cut-out saw daily changes during the week of as much as US$1.88, yet for the week it was essentially unchanged at down just US$0.04.

Market analysts and meat brokers said February is typically a soft demand period for meats at the retail level due to paying off credit cards from holiday shopping in December and higher heating costs during the winter. Some people also try to cut back on the amount of food they eat overall early in the New Year after putting on a few extra pounds over the holidays, so they do not purchase as much.

In addition, February has few holidays or occasions that generate large sales of either beef or pork. Valentine's Day is mainly a dine-out holiday, but the weak economy may cause more couples to stay home and prepare a meal to save money.

With the start of the grilling season still several weeks away, for most of the country at least, and high unemployment rates weighing on the minds of many shoppers, beef processors may find it difficult to get much more for their products in the near term, analysts said. Some cuts may increase in value, but that could be offset by lower prices in others.

The volatility in prices in the pork complex may be the result of variable inventory levels of products being carried by the individual packers or due to some grocers or other end-users of pork that may have been short-bought at times.

Disruptions in slaughter schedules due to wintry weather have been the norm in more weeks than not so far this year. The uncertainty of weekly slaughter and pork availability has also contributed to the market's big swings.

Last week's cattle slaughter was estimated at 642,000 head, compared with 629,000 a week ago and 625,000 a year ago. Year-to-date cattle slaughter is unchanged from a year ago.
 

The week's hog slaughter estimate was 2.149 million head, compared with 2.142 million a week ago and 2.216 million a year ago. For the year, hog slaughter is off 8.9%.

The USDA estimated total beef, pork and lamb production for the week at 939.4 million pounds.