October 22, 2007

 

US Retail Meat: Grocers prepare for the holidays

 

 

It doesn't seem like it this year, but the holiday season is just around the corner, and grocers are preparing their weekly food advertisements now, market analysts and buyers said.

 

Booking for November and December use has begun, especially on those harder-to-find items needed for the holidays, market analysts said.

 

In the meantime, grocers are throwing a mix of items at consumers hoping something sticks, the analysts said. Most retail meat buyers report being somewhat disappointed they haven't seen a big, surprising weekend movement in a long time, but product appears to be moving out the doors in an orderly fashion.

 

However, grocers are selling beef, pork and chicken without aggressive price points, and market analysts aren't surprised that grocers haven't seen one of those explosive weekends they crave in a long while.

 

The theme of the ads is seasonal, a market analyst said. Lots of Halloween, fall festival and harvest tie-ins to the grocery products on special can be seen.

 

Shoppers in any given city probably can find some good deals on meat this week, but it probably won't be at the same store, and they may not be the items that particular shopper is interested in, market analysts said. Individual grocers appear to have a scattered mix of items in their advertisements, but the mix may be far different than their competitors'.

 

BEEF

 

Grocery buyers are said to be booking product for November and December delivery, which would be typical for the holiday needs, said Kevin Bost, president of Procurement Strategies Inc. As usual, there is less interest in December needs at this point, with the focus on filling November's expected needs, but some is being done for farther out.

 

Joe Muldowney, market analyst for Urner Barry's Yellow Sheet, said he expects to see ground beef features into the middle of November. He didn't think there were very many of them this week, but he's heard of rib roasts being booked for two, three and four weeks out.

 

Grocers are keeping beef on the front pages of their weekly newspaper supplements because beef ads have more potential to draw customers into the stores, market analysts said. Price points aren't real attractive, but beef still seems to do better in the long run than pork.

 

The average price of the 15 cuts of beef in the Dow Jones Newswires survey was US$3.96 a pound, compared with US$4.05 last week and US$3.80 last year.

 

PORK

 

Even though beef retains a psychological lead over competing meats, pork has an economic advantage, Bost and others said. It even has an economic advantage over chicken.

 

"The supply (of pork) is huge," Bost said.

 

That feeds an overall record beef production, market analysts said. Dan Vaught, livestock market analyst for A.G. Edwards & Sons said in an email that total red meat production for the week of October 6 was a record 1.0 billion pounds, the first time ever for meat production to cross over to nine figures.

 

But in spite of the record meat production, pork and even beef prices remain relatively firm at the wholesale level, Bost said.

 

That could change, though, as the holiday season gets going, Bost said. Prices "could drop to really cheap levels."

 

Market analysts said meat buyers are doing the best they can to play one meat against another in wholesale markets, but the need to keep a mix of products in the weekly advertisements will keep them from dedicating large volumes of space to pork.

 

As grocers prepare for the holidays, they are nearly done booking their holiday ham needs, market analysts and buyers said. Many have begun to receive them at the store levels.

 

The average price of the 13 cuts of pork in the Dow Jones Newswires survey was US$2.23 per pound, compared with US$2.24 a week ago and US$2.19 a year ago.

 

POULTRY

 

Among this week's advertised chicken specials, whole bird advertisements are up from previous weeks, although in most cases, the prices aren't exactly attractive, market analysts said. Boneless/skinless breast prices also seem high by historical standards.

 

However, split breasts appear to offer a relatively good bargain for shoppers. Leg quarter advertisements are scarce, although many stores will have trays of legs or thighs at attractive prices.

 

In wholesale markets, boneless/skinless breast prices are slipping seasonally, said Pablo Zuanic, market analyst at J.P. Morgan, in an emailed comment. This year's 18 percent decline in the Georgia Dock price over the last 45 days is only slightly more than typical and doesn't come close to the most extreme declines of 24 percent in 1999, 22 percent in 2004 and 20 percent in 2006, Zuanic said.

 

Leg quarters also are down over the last 45 days, Zuanic said, but the changes aren't out of the ordinary for these, either.

 

Sue Trudell, vice president of EMI Analytics, said in an emailed response to questions that boneless/skinless breasts are under pressure from seasonal demand shifts and gains in production. Slaughter is up 2 percent, and bird weights on deboning birds are up 1 percent to 3 percent, depending on the region.

 

Early indicators point to production being up "through the turn of the year," Trudell said. This is expected to keep pressure on prices through then.

 

Grocers currently are gathering their Thanksgiving turkeys, and many are advertising their "turkey bucks" or credit for a free bird if shoppers buy a certain amount of other products between now and then.

 

The average price of the four cuts of chicken in the Dow Jones Newswires survey was US$1.52 a pound, compared with US$1.64 a week ago and US$1.32 last year.