US beef prices down on economy pressure

US wholesale beef prices fell this week, pressured by sluggish demand caused by the weak economy along with competition from the cheaper pork and chicken products. 

The USDA's midday boxed beef prices Friday represented a US$3.60-per-hundredweight decline in choice grade beef from the end of last week and a US$1.76 loss in the select grade. These were off 2.6 percent for choice and 1.3 percent for select on the week.

Market analysts said packers were forced to sell beef at lower prices at midweek after product began to stack up within the plants. Prices were up slightly early in the week, but the volume of sales was insufficient to clear the inventories.

They also said buying interest from grocers for shipments over the next one to two weeks was not brisk enough to generate much optimism from sellers for business out ahead.

Seasonally expanded hog supplies and low prices in the pork and broiler categories are limiting beef sales at the retail and wholesale levels, the analysts said.

The beef/pork spread, or difference between the USDA's choice beef and pork quotes, as of Thursday afternoon was US$81.92 per hundredweight. That also put the choice beef carcass price at 2.5 times the pork carcass value.

Analysts said the lower price points offered by pork and chicken are causing budget-minded shoppers to take advantage of the bargains, resulting in slowed sales of beef.

Seasonally larger hog slaughters and heavier carcass weights are adding to the tonnage of pork available as well. The USDA reported record-large pork production in August, and some analysts predict that September output was also a new record.

Chicken production is down from a year ago and has been throughout the year, but prices have been under some pressure from smaller exports and the weak economy, which has negatively affected food-service sales especially.