July 13, 2009

Grocers featured a few less meat cuts last week and give more of the promotional space to fresh vegetables and fruits, pre-cooked deli products, hot dogs and cold cuts heading into the dog days of summer.

 

Market analysts said many consumers choose to eat lighter meals during the hottest period of the summer, which means less meat and high-calorie foods. Salads with some meat to add protein and flavour, such as ham or bacon, are more popular during the middle of summer.

 

To attract more shoppers to the meat cases, several of the supermarket chains focused on low priced items as the lead features and spread the offerings across the three main categories.

 

Market analysts said grocers' meat buyers continue to purchase meat and poultry items mainly for near-term use and are closely monitoring their inventories to ensure that surpluses do not develop. Retailers are buying cautiously because shoppers have cut back on their spending, the analysts said.

 

The most actively featured items in the beef category last week included ground products, medium-priced steaks such as sirloins, along with a few roasts and premium steaks.

 

An analyst said grocers do not normally feature many roasts at this time of the year, but some store groups and supermarket chains included one or two of these cuts at attractive per-pound prices. These cuts gave grocers an opportunity to offer consumers a low-priced beef item to compete with the cheaper pork and chicken categories.

 

Wholesale prices for beef so far this week have been flat to up slightly from last week's closing quotes. Bruce Longo, analyst with Urner Barry's Yellow Sheet, said the modest gains are mainly a function of reduced cattle slaughters the latest two weeks.

 

The US Department of Agriculture's quotes for choice and select beef last week have averaged nearly 20 percent below a year ago.

 

Beef sales through the food service sector remain slow, and prices for items typically sold through restaurants have been steady to weak, indicating that sales in that sector remain sluggish, Longo said.

 

To lower their price points on the premium steaks, some chains and store groups featured more of the bone-in cuts and fewer boneless. Shoppers then have a choice of paying less per pound for the bone-in items but have more waste or more per pound for boneless with little or no waste.

 

The average price of the 15 cuts of beef in the Dow Jones Newswires survey this week was $3.75 a pound, compared with US$3.83 a week ago and US$3.95 a year earlier.

 

Low price points were also the focus in the featured pork items. Some grocers elected to promote boneless sirloin chops versus the more expensive centre cut chops. Pork steaks and country-style ribs produced from shoulder butts also were featured in some cities. More assorted bone-in chops also were seen in the printed advertisements this week.

 

Several grocers included one or more brands of bacon at the lowest prices seen in several months. With locally grown tomatoes more readily available, grocers are hoping to use bacon as a drawing card for customers who enjoy bacon-lettuce-tomato sandwiches.

 

Analysts and brokers said fresh pork sales over the Independence Day holiday weekend were near grocers' overall expectations, but not brisk enough to generate a need for many fill-in orders in the days following the holiday.

 

Lower wholesale pork prices and deeply negative processing margins have contributed to a slowdown in slaughter rates this week. Packers processed fewer than 400,000 head in three of the four days this week, and this week's total is expected to be the smallest for a non-holiday period of the year.

 

Slow export sales and sufficient supplies for the domestic markets have weighed on wholesale pork prices since late April. USDA's pork carcass composite value has averaged 31 percent below a year ago during the past 2 1/2 weeks.

 

The 13 cuts of pork in the survey averaged US$2.27 a pound, up slightly from US$2.24 last week but down from the US$2.37 year-ago figure.

 

Wholesale broiler prices have softened a bit following the Independence Day holiday.

 

Sales of fresh chicken during the holiday weekend were somewhat disappointing overall, said Sue Trudell, vice president of EMI Analytics in Ft. Wayne, Ind.

 

She said the featured prices were generally attractive, and the ad space devoted to chicken was about what had been expected, but the sales volume came up a bit short of what the industry had projected. There was stiff competition for consumers' food dollars from the other protein categories.

 

Wholesale prices for boneless/skinless breast meat will likely slip a little during the next week or two but should then stabilize and likely firm up some by late in the month, she said.

 

Broiler processors continue to limit production. The USDA's latest eggs set report, for last week, showed a 4 percent drop from a year ago. And, the trend at this time last year ago was declining from the numbers of eggs placed into the incubators in May and early June.

 

Chicken features this week included mainly a mix of bone-in and boneless breasts. Some whole bird and leg-quarters ads were also seen.

 

The four cuts of chicken had an average price of US$1.42 a pound, down from US$1.55 a week ago and US$1.56 a year ago.