May 4, 2007

 

US retail meat: Grocery advertisements focus slightly more on beef

 

 

In the race to be the meat product that dominates the front pages of weekly retail grocery advertisements, it's beef by a nose, according to meat market analysts, buyers and the Dow Jones Newswires' weekly survey.

 

Unseasonably cold, wet, even snowy conditions plagued much of the country from late March through late April, and meat sales at many grocers and restaurants flagged. In addition, high wholesale prices for beef, pork and chicken kept retailers from pushing any one in aggressive features.

 

Since this is the first weekend of May, retail grocery advertisements should be focused on beef for grilling with other products running a distant second or third, market analysts said. But the combination of weather and pricing factors leading up to this week kept the product listings pretty well balanced, with beef steaks gaining a slim lead based mostly on tradition and hope.

 

It was rare, however, to find a hot special on anything, market analysts and meat buyers said.

 

Since grocers were dancing between which meat products to feature and opted for a mix of items, they left themselves open to filling in with spot market purchases if something began to catch on with shoppers and show signs of a big weekend, buyers and analysts said.

 

 

Beef

 

And beef is beginning to look like it will pull away from the other meats for the weekend finish line, market analysts meat buyers and cattle traders said.

 

Bruce Longo, market analyst at Urner Barry's Yellow Sheet, said grocers around the country were reporting more beef movement this week, and many were going back to the packers for fill-in purchases ahead of the weekend. Buyers apparently don't expect the weekend beef movement to be a runaway, but they are buying a little more in the spot market.

 

The US Department of Agriculture this week reported active movement of boxed beef, coinciding with the reports of more fill-in buying interest from the retail grocers. Lower wholesale prices also greased the skids for those additional sales into retailer hands, Longo and others said.

 

In addition to the fill-in buying, retail grocers are booking beef products for delivery later this month ahead of the Memorial Day holiday weekend, market analysts and buyers said.

 

Recent price declines in wholesale prices have made beef a little more attractive to the retailers for features in coming weeks, Longo said. But none are expected to push other products too far into the background.

 

Until prices pull back a little more, however, it is hard for retailers to push beef to the consumer at a profitable level, even though they feel compelled to offer the products because of seasonal trends, a Midwestern meat buyer said.

 

Even so, as of this week, it looks like the Memorial Day holiday advertisements will lead with traditional beef items and follow up with any grillable pork or chicken item, the analysts and buyers said.

 

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

 

 

Pork

 

As the USDA's reported pork cutout price rose this week, some retail buyers were more likely to resist the moves, said David Herrick, market analyst at the Yellow Sheet. Product is moving, but is starting to pile up after loin prices jumped US$10 per hundredweight last week, he said.

 

Some grocers who had the flexibility to make last-minute changes to their advertisements did so, Herrick said. They switched out of loin advertisements and moved into something that worked a little better for them.

 

The Midwestern meat buyer said butts and loins now are trending lower, making them more attractive as advertised items.

 

In coming weeks and into the Memorial Day holiday, grocers will be looking to offer grillable items, Herrick and others said. This includes brats and other sausages.

 

The average price of the 13 cuts of pork in the Dow Jones Newswires survey was US$2.46 per pound, compared with US$2.23 a week ago and US$2.12 a year ago.

 

 

Poultry

 

Chicken features were visible this week in some cities, but the product often was a co-feature with beef or pork, and some cities didn't even have much in the advertisements for shoppers, according to the Dow Jones survey and market analysts.

 

Chicken features have not been exceptionally strong the last couple of months because beef and pork were so available, said Eric Scholer, market analyst at Express Markets Analytics in an e-mailed response to questions.

 

First-quarter ready-to-cook chicken production was down 4 percent from last year, making less product available, Scholer said.

 

However, Mother's Day tends to be one of the biggest observances for chicken, and retailers are getting ready, Scholer said. It's also part of the reason retailers are carving out more room in their weekly ads for the product.

 

The Mid-western meat buyer said the resulting buying could give wholesale chicken prices a bump in the near future. He and Scholer said they expected to see chicken in the Memorial Day ads as well and into early June.

 

With fewer cattle on feed, it's likely grocers will have to deal with a coming lag in beef production over the next couple of months, and this could lead to higher chicken prices, Scholer said.

 

The Mid-western meat buyer said, though, that he expected increased chicken production to be available by late June.

 

The average price of the four cuts of chicken in the Dow Jones Newswires survey was US$1.60 a pound, compared with US$1.52 a week ago and US$1.35 last year.