April 6, 2007

 

US retail meat: Red meat buying rises to fill upcoming advertising programmes

 

 

Retail meat buyers this week were busy buying red meat to fill upcoming advertising programmes, meat buyers and analysts said.

 

Chicken activity was more muted, although some grocers could feature chicken prominently next week after the heavy emphasis on red meat this week for the Easter holiday, the buyers and analysts said.

 

This week's Easter holiday advertisements focused heavily on the traditional hams but also elevated beef rib roasts to a more prominent position than in previous years, according to market analysts and survey participants. Turkeys also were prevalent in most newspaper supplements.

 

The next focus for retail grocers will be the grilling season, market analysts said. After the Easter holiday, grocers will focus on anything that goes well on the backyard grill.

 

The activity will become increasingly popular as the weather moderates into more predictable spring-like conditions, market analysts said.

 

 

Beef

 

For most grocers, grillable items must focus on beef, the analysts and buyers said. Steaks, ribs, hamburger and brisket are among the most popular grill items. Through the summer, many of the end cuts, the chucks and rounds, will be ground rather than sold as roasts.

 

Increased buying interest for beef products has been evident in wholesale beef markets all week. The USDA's choice beef cutout value hit a near-term bottom on March 30 but has moved steadily higher this week, rising US$5.14 per hundredweight to Thursday's midday quote.

 

In addition, Bruce Longo, market analyst at Urner Barry's Yellow Sheet said in an e-mail that the boxed-beef market Thursday was "crazy."

 

Buyers were booking middle meats for late April and early May features because they know they have to have beef prominently displayed in their newspaper supplements during that time period, the analysts said.

 

A mid-western analyst also said that because of the high wholesale costs, nearly every beef item that goes into weekly advertisements will be at historically high prices because of the higher wholesale costs.

 

Longo said the demand for steaks was why packers were able to achieve the higher prices they did this week. Ground beef also was attractive, he said.

 

The USDA quoted the choice primal rib value Thursday morning at US$247.09 per hundredweight, up US$9.86 from US$237.23 reported on March 30. The USDA's choice-grade loin primal value Thursday morning was US$254.10, up US$6.95 from its March 30 low.

 

The average price of the 15 cuts of beef in the Dow Jones Newswires survey was US$4.18 a pound, compared with US$3.83 last week and US$3.62 last year.

 

 

Pork

 

Higher pork cutout values over the last two days notwithstanding, the huge weekly hog slaughter totals for this time of the year are keeping retail meat buyers guarded and prices for many items on the defensive, said Jim Kenney, market analyst for the Yellow Sheet. Strong demand for some specific items was blamed for pushing the cutout.

 

"Boneless loins were higher for the USDA (Wednesday), but you can't call the market legitimately strong," Kenney said. Sellers have had a hard time drumming up adequate business over the last 1 1/2 weeks.

 

Kenney said the higher slaughter rates and the increased pork production that goes along with it mean pork probably is moving into retailer hands and that a greater number of them could show up in weekly advertising campaigns through April. But the overall wholesale pork market seems sluggish with only mediocre post-holiday booking interest.

 

The average price of the 13 cuts of pork in the Dow Jones Newswires survey was US$2.34 per pound, compared with US$1.48 a week ago and US$1.60 a year ago.

 

 

Poultry

 

Chicken advertising is mixed at the end of the Lenten season, said Sue Trudell, senior director of Express Markets Analytics. Some retailers have chosen to play up seafood instead of chicken.

 

Other retailers appear to be ready to push chicken next week, right after the Easter holiday, Trudell said.

 

But the mid-western meat buyer said the chicken market may sit back for a while and generally rely on contract movement since it is such a red meat time of year. He sees retail buyers being very cautious about extra purchases since they expect production to increase at all producers except Pilgrim's Pride, which has announced its intention to hold to reduced production plans.

 

In the meantime, wholesale chicken supplies are adequate, Trudell said.

 

In addition, reduced plant hours over the Easter holiday weekend could keep supplies and demand balanced and prop up any tendencies to move lower, she said.

 

Dark meat chicken markets are "doing pretty well," Trudell said. As a result, leg-quarter advertisements at the retail level may be slim because grocers can't get the product at a low enough price to give consumers an attractive price and grocers a good return.

 

The average price of the four cuts of chicken in the Dow Jones Newswires survey was US$1.49 a pound, compared with US$1.54 a week ago and US$1.24 last year.