March 31, 2008

 

US retail buyers cautious about April's meat market
 

 

A month ago, retail grocers were planning for extra grilling specials after the Easter holiday. April looked rosy, and bookings for beef, pork loins and chicken were good.

 

Now, those same meat buyers are taking a more cautious approach.

 

" Market analysts say retailers have grown cautious on whether there would be a demand boost in April.

 

It's not that retail meat demand is poor but that retail grocers like to be surprised by stronger-than-expected demand every now and then.

 

The longer they go without a surprise, the more pessimistic and cautious they become as buyers in the wholesale market and as advertisers at the retail level, the analysts said.

 

In many cases, buyers and analysts who once looked ahead to April as a turnaround month are looking now to May.

 

In the meantime, advertisements from the retail grocers are expected to focus on a few items of beef for the next week or two and then drift back into a mix of products featuring lower-cost items going into the end of the month.

 

Beef demand slow 

 

Beef features this week were concentrated on ground beef and the last of the seasonal roast features, market analysts said. In addition, the newspaper supplements generally only had one beef item on the front pages.

 

Troy Vetterkind, director of livestock analysis and trading at Vetterkind Cattle Brokerage, characterized the retail beef market as "real slow. Consumer pulls are not good," he said.

 

Vetterkind said he expects wholesale beef markets to be sloppy for another week or two before retail buyers begin booking for May features.

 

Kevin Bost, president of Procurement Strategies Inc., was a little softer in his characterization of the retail beef markets.

 

"Demand is not bad from a historical perspective," he said. "It's just not living up to expectations."

 

Beef movement out of the retail grocery stores isn't even living up to Bost's expectations. He said he thought he'd see better post-Easter activity.

 

Even wholesale beef markets are not showing much activity, Bost said. Buyers would be buying for April and even for May deliveries, and prices are "pretty attractive," he said.

 

Some choice middle meats like the short loins (T-bones), strips, top sirloins and ribeyes are very priced well below last year for May delivery, Bost said. Because of this, he expects to see more attention from retail buyers at the first sign of good consumer demand.

 

The average price of the 15 cuts of beef in the Dow Jones Newswires survey was US$3.80 a pound, compared with US$3.93 a week ago and US$3.83 a year ago.

 

Pork demand strong
 

Wholesale pork prices are flat and cheap, Bost said. Loins and butts are holding at March prices, and they are attractive to retail buyers.

 

The USDA on Wednesday reported 1/4-inch trimmed pork loin primal cutout values at US$86.14 per hundredweight and 1/4-inch trimmed butts at US$62.80. In the first week of March, loins were quoted around US$91 to US$92, and butts were quoted around US$63 to US$67.

 

Pork item cuts will be strong competition for beef during April, at least, he said. .

 

The average price of the 13 cuts of pork in the Dow Jones Newswires survey was US$2.26 per pound, compared with US$2.38 a week ago and a year ago.

 

Poultry remains inexpensive
 

Bost said many wholesale chicken prices also are inexpensive, offering retailers an opportunity to feature it very competitively.

 

The problem for many retailers, said Sue Trudell, vice president of EMI Analytics, is that beef affords them a better gross return than chicken. And while chicken may bring a better profit, many meat managers are judged by the income generated by the meat case.

 

Up until the Easter holiday, retail grocery advertisements carried chicken products prominently, but wholesale orders from retailers have slipped since then, Trudell said. This has contributed to price weakness in boneless/skinless breasts and in the larger, deboning chickens, she said.

 

Generally, leg quarters and fryers remain firm at the retail level and could offer fewer feature opportunities at prices that will attract large retail interest, Trudell said. Demand from export markets was supporting prices.

 

The average price of the four cuts of chicken in the Dow Jones Newswires survey was US$1.55 a pound, compared with US$1.45 a week ago and US$1.54 last year.