US beef, pork face threat from cheaper chicken

Beef and pork producers in the US face an intensifying battle at the supermarket meat case from cheaper, more plentiful chicken, according to analysts.

US grocery stores probably will step up discounts and specials on fresh chicken in coming weeks after wholesale beef and pork prices soared near two-year highs, BB&T Capital Markets analyst Heather Jones said. Wholesale chicken prices have also risen, though not nearly as much as beef and pork.

As a result, price ''spreads'' - or the difference between what retailers pay for wholesale meat and what they charge in their stores - suggest grocer discounts will favour chicken breasts and legs more than steaks and chops.

Increased chicken competition could be troubling for beef and pork demand, which suffered in recent years from the recession and a slump in exports. Retailers have been reluctant to raise prices with the economy's recovery still fragile. Some major chains, such as Wal-Mart Stores Inc., recently launched advertising campaigns touting lower prices for most goods.

For beef and pork, retail prices have yet to catch up with the run-up at the wholesale level.

Retail pork prices on average were about US$1.61 a pound above wholesale values during March, compared with a spread of US$1.83 a year earlier, Jones said, citing USDA data. In beef, retail prices were about US$1.91 above wholesale, compared with US$2.21 a year earlier.

Chicken prices at retail during March were about 92.8 cents above wholesale, compared with 95.4 cents a year earlier.

Rising beef and pork prices reflect tighter supplies of slaughter-ready animals, after livestock producers cut herds in recent years.

On wholesale markets, choice beef cutout values on April 27 averaged US$1.7027 a pound, the highest since prices approached US$1.74 in July 2008, according to USDA data. Pork carcass values averaged 89.83 cents a pound, up 33% this year.