June 13, 2008

 

US beef and pork comes out strong for Father's Day

  
 

Meat features for the Father's Day holiday weekend focused mainly on premium beef steaks with some pork grilling cuts included, according to meat market analysts. 

 

Most shoppers are willing to spend a little more to purchase higher quality meat cuts for Father's Day celebrations, the analysts said.

 

Chicken was a distant third and used primarily in a sub-feature role. However, it is expected to be more prominently featured in the weeks ahead due to attractive wholesale prices in recent weeks.

 

 

Beef

 

Premium beef cuts widely promoted this week include T-bones, strips and rib-eyes. Some supermarket chains also featured mid-priced steaks to attract customers.

 

Grilling cuts are expected to remain in high demand for the Independence Day holiday, but wholesale prices may begin to soften a bit as grocers complete their buying for the early July period.

 

Beef packers have been operating their plants at high levels in recent weeks to meet strong demand. Cattle slaughter rates in the past five non-holiday weeks have averaged about 710,000 head, a 3.1-percent increase compared with 688,000 for the same period a year ago.

 

The Dow Jones Newswires 10-city survey also showed that many of the grocers are offering hamburger, ground chuck or round at attractive prices. Prices this week were also cheaper than year-ago prices and that of the previous week. 

 

The average price of the 15 cuts of beef in the Dow Jones Newswires survey was US$3.81 a pound, down from US$4.02 a week ago and US$4.09 a year earlier.

 

 

Pork

 

Grocers have been reluctant to book as much pork for feature sales as they did in April and May when prices were more attractive, analysts and meat brokers said. Pork carcass values quoted by the USDA in early April were the lowest in 51 months but rallied sharply and by mid-May topped year-ago levels by nearly US$5.00 per hundredweight.

 

Analysts and brokers said grocers actively featured pork in May that they had purchased earlier at low prices. After wholesale prices moved up, buying interest turned slower in late May and early June.

 

There have also been anecdotal reports that pork export sales are moving down after prices moved higher. This can only be confirmed after about two months when data for May export shipments becomes available.

 

Wholesale prices for some cuts have declined since mid-May. The USDA's pork carcass composite value fell to US$73.96 Wednesday from US$82.25 on May 15.

 

Pork faces strong competition from chicken and beef for the feature spots and fewer promotions are slowing the overall flow of product through the distribution chain.

 

Meanwhile, pork production remains large. Last week's federally inspected hog slaughter was up nearly 11 percent from a year ago. Despite some disruptions to slaughter rates this week caused by flooding in Iowa, this week's total is still expected to be about 5.5 percent to 6 percent above a year ago.

 

Pork prices remain depressed due to this factor.

 

The average price of the 13 cuts of pork in the Dow Jones Newswires survey was US$2.24 a pound, compared with US$2.47 a week ago and US$2.58 a year ago.

 

 

Poultry

 

Chicken sales through the grocery stores in May were slower than had been expected despite wholesale prices for bone-in and boneless-skinless breasts being lower than year-ago levels, analysts said.

 

However, analysts and meat and poultry brokers said the rally in pork prices through mid-May likely encouraged grocers to turn to chicken for increased features in the weeks ahead.

 

Sue Trudell, vice president of EMI Analytics, said increased feature activity for chicken could occur at a time when production cutbacks initiated earlier in the year are finally reflected in broiler slaughter and chicken output. She expects chicken slaughter in July to be down about 2% from a year ago. If processors also reduce the weights of the larger boning broilers, boneless-skinless breast production could decline by between 4 percent and 5 percent.

 

Increased features and reduced production could cause wholesale prices for the breast meat items to start moving up soon, Trudell said. There is a possibility that boneless-skinless breast prices could rally sharply if the production cuts are sufficient to drive the market up, she said.

 

The return of high temperatures in the southern US where most of the broilers are produced also could contribute to higher prices, Trudell said. Higher temperatures means birds take longer to gain weight, causing slaughter weights to decline as well. 

 

Leg-quarter prices at the wholesale level are near record levels and could move to new highs if export sales remain strong. Leg-quarters are among the lowest-priced proteins available, and grocers promote them from time to time as a low-price option for shoppers with a tight food budget.

 

The average price of the four cuts of chicken in the Dow Jones Newswires survey was US$1.48 a pound, same as that a week ago, compared with US$1.53 a year earlier.