May 2, 2008

 

US retail meat prices rising with approach of summer and holidays
 

 

Wholesale prices of the three major meat products in the US have risen over the last month, and market analysts said it was a result of the increased interest in booking meat products.

 

Meat sales are expected to rise during Memorial Day and the Independence Day holidays. Even Mother's Day and Father's Day is expected to boost meat sales.

 

In addition, the weather is warming enough for consumers to shift their fancy to steaks, chops and chicken breast portions. Thus, these items have been driving the latest wholesale price increases.

 

 

Beef

 

Aside from one down day, the choice beef cutout price reported by the USDA has been up every day since April 7, rising from US$137.09 per hundredweight on April 4 to US$155.27 Wednesday (April 30, 2008)  for a 13.3 percent gain.

 

Retail beef buyers are not really balking at the higher beef prices, but they may not be quite as aggressive as they were for some items, said Kevin Bost, president of Procurement Strategies Inc. Primal cuts most likely to be affected are the rounds and select middle meats, which are high by historical standards, he said.

 

Many of the larger grocery chain stores have already booked their beef needs for the foreseeable future. Regional chains are booking now.

 

Some of the early buyers of beef for May and June are set to offer shoppers some attractive features on beef through the period, a trader said. They expect sales to heat up with seasonal weather changes, and they feel ready to meet the consumer's needs.

 

Seasonally, chuck prices should be seeing some weakness, Bost said. But this year, packers are booking chuck rolls to South Korea, even though the beef market hasn't officially reopened yet, and the extra business is supporting the chuck primals.

 

The average price of the 15 cuts of beef in the Dow Jones Newswires survey was US$3.92 a pound, compared with US$3.70 a week ago and US$4.17 a year ago.

 

 

Pork

 

Pork cutout values also rose sharply in April, and while prices now are near normal levels historically, the rapid rise through April is off-putting to many buyers, Bost said.

 

USDA figures show the pork cutout value rising to US$74.62 on Wednesday (April 30, 2008) from US$54.87 on April 1 for a 36-percent increase in one month.

 

Retail grocers aren't doing a lot of booking right now in the wake of such hefty price increases. David Herrick, market analyst at Urner Barry's Yellow Sheet, said. Nor were they doing a lot of advance booking in April, he said.

 

Herrick credited much of the April pork price increases to short covering. Pork appears to be selling well, and buyers just needed to restock, he said.

 

The average price of the 13 cuts of pork in the Dow Jones Newswires survey was US$2.19 a pound, compared with US$2.27 a week ago and US$2.46 a year ago.

 

 

Poultry

 

Chicken breasts stand out as a value in the wholesale market in spite of recent price increases, Bost said.

 

Chicken breast features also attract more shoppers and afford better margins, competing better with beef than pork, Bost said.

 

Eric Scholer, market analyst with EMI Analytics, said grocers are planning to increase chicken breast features for Mother's Day.

 

"If there is a chicken holiday, it would be Mother's Day," Scholer said.

 

However, buying has declined lately as prices rose, Scholer said. The early buyers are happy with their move, but other buyers likely will be back in the market to fill their needs soon, he said.

 

The average price of the four cuts of chicken in the Dow Jones Newswires survey was US$1.55 a pound, compared with US$1.64 a week ago and US$1.60 last year.