March 21, 2008

 

More US beef in retail for early April but pork and chicken give chase

 

 

More beef cuts, especially grilling items and ground beef, are expected to be seen in retail meat features for early April, but pork and chicken will compete for the advertising space as well, according to  a Dow Jones survey.

 

Attractive wholesale prices and record large supplies will keep pork and chicken in the mix. Consumers are looking for some bargains in the meat counter to offset higher energy bills, analysts and meat brokers said.

 

Dow Jones Newswires reported on Wednesday that residential heating oil prices in the Northeast U.S., the world's largest heating oil market, averaged a record US$3.876 a gallon in the latest week, a jump of 54.5 percent from a year ago. The Energy Information Administration said the record price in the last official week of winter caps what's likely to be the costliest heating season on record. Diesel fuel and gasoline prices nationally also hit new highs this month.

 

Grocers are hoping for the arrival of warmer temperatures for the new month.

 

Perhaps improved weather conditions from the extended cool and wet period in March will encourage shoppers to cast aside these concerns, a Midwest-based meat broker said. If so, the supermarkets could benefit from increased sales through their meat counters.

 

In this week's printed advertisements, smoked hams, turkeys and premium beef roasts were the most widely promoted items for the Easter holiday.

 

BEEF

 

Front-page featured items in the beef category varied by region this week. In the southern third of the country, premium steaks and briskets were given a prominent position as the grilling season has already gotten underway for some households. Warmer temperatures there are encouraging consumers to prepare for cookouts.

 

In the central and northern regions, roasts are still being widely promoted. Some grocers are featuring high-end steaks as well as ground beef to attract more customers, regardless of their food budgets.

 

Wholesale prices for choice beef overall have declined in nine of the past 11 days and during that period lost US$10.02 per hundredweight, or 6.6 percent. Most of the decline has been in the primal rib and loin cuts. Beef prices were slightly lower again at midday Thursday.

 

Bruce Longo, analyst with Urner Barry's Yellow Sheet, said pork and chicken have applied sustained pressure on the beef category when it comes to retail sales. He said retail buyers purchased enough beef in early March to cover their features for late March and early April. However, the promotions do not appear to be as beef dominated as they used to be, and grocers are attempting to maintain equilibrium among all the proteins, he said.

 

After a run-up in prices early in the month, wholesale rib and loin prices have struggled in the latest two weeks as sellers had to discount product offered in the spot markets due to slowed movement, Longo said.

 

The average price of the 15 cuts of beef in the Dow Jones Newswires survey was US$3.93 a pound, compared with US$3.78 last week and US$3.89 last year.

 

PORK

 

Hams were actively promoted this week for Easter. Huge hog slaughter rates and low wholesale prices for fresh hams this winter encouraged grocers to feature more smoked ham products for the holiday.

 

In some cities included in the Dow Jones Newswires weekly survey, shoppers will be able to purchase whole or half bone-in smoked hams for under US$1 per pound. Premium brands and specialty bone-in products are priced higher but most are below US$2 a pound.

 

Hog supplies continue to run well above expectations, and processors have been selling the pork at attractive prices in order to get it moving through the distribution channels, brokers and analysts said.

 

Year-to-date hog slaughter as of last week was up 9.7 percent from the same period in 2007, according to USDA data.

 

Wholesale prices for pork loins, butts and spareribs normally begin a seasonal rally in April. While the trend is expected to be continued, the rate at which prices rise could be less than normal due to the large slaughters and supplies that are already in cold storage facilities, a Midwest-based meat broker said.

 

Some market analysts and livestock dealers hold similar views for cash hog prices in the weeks and months ahead. They said as long as the supply of animals remains very large, price advances could be slower than normal.

 

The average price of the 13 cuts of pork in the Dow Jones Newswires survey was $2.38 a pound, compared with $2.23 a week ago and $2.38 a year ago.