October 29, 2007

 

US Retail Meat: Big pork, chicken supplies shape weekly promos

 

 

Record large pork and chicken supplies are causing grocers to feature more products from these categories versus the higher-priced beef cuts.

 

Last week, the front pages of the newspaper inserts and store flyers included mainly the cheaper products. Many families have tighter budgets during the previous week of the month so they try to stretch their food dollars and tend to purchase fewer expensive meat cuts.

 

Competition continues to be stiff among the beef, pork and chicken categories for meat-case and advertising space, analysts said. However, consumers want a variety of choices from among the three fresh-meat categories along with seafood and fish. In addition, grocers need the higher dollar sales that beef provides, so the stores continue to promote beef, just not as much or as aggressively as they would otherwise, analysts said.

 

BEEF

 

Beef products featured on the front pages of the newspaper inserts and store flyers this week were mainly the cheaper items such as 70 to 80 percent lean hamburger along with some roasts.

 

A number of the up-scale grocers included one or more premium steak cuts such as T-bones, rib-eyes or strips as well. Most of the supermarket chains, however, put the majority of the beef items in the middle pages of the printed advertisements in a sub-feature role.

 

Bruce Longo, an analyst with Urner Barry's Yellow Sheet, said beef demand remains soft given the attractive prices from the competing proteins.

 

Market analysts said grocers will probably feature more beef items on the front pages of the advertisements in early November since shoppers tend to spend more money on food at the beginning of the month. Also, this will be an opportunity to move more beef before grocers turn their focus to turkeys and hams for the Thanksgiving holiday.

 

Longo says beef sales may not be as large as grocers would like because of tighter food budgets in general, driven by concerns about the economy.

 

The average price of the 15 cuts of beef in the Dow Jones Newswires survey was US$3.89 a pound, compared with US$3.96 last week and US$3.85 last year.

 

PORK

 

October historically has been a strong demand period for pork, and this month's sales have exceeded the expectations of some brokers and analysts.

 

Hog slaughter for the month is up about 7 percent from a year ago and has set weekly records on its way to a new high expected for the month above 10.0 million head for the first time.

 

A combination of strong domestic demand, a likely gain in exports from a year ago and reduced pork imports are helping move the record production through the pipeline, analysts said.

 

However, there are concerns that demand could ease a bit into November due to the Thanksgiving holiday when the stores will be featuring fewer fresh meat items.

 

A Midwest-based meat broker said pork complex prices have been holding up well in the pork month, but he foresees lower meat and hog prices from now through the Thanksgiving holiday.

 

Analysts said if the huge pork supplies continue to be pumped out, any slowdown in demand - even for a short period - could force wholesale prices down in order to clean up the backlog.

 

Cheaper fresh ham prices than a year ago and larger supplies are fuelling increased featuring of smoked hams in some areas this fall. A few grocers are giving shoppers their choice of a free turkey or boneless ham for Thanksgiving provided they spend a certain amount - usually around US$300 - from early October through the holiday.

 

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$2.30 a year ago.

 

POULTRY

 

Grocers included more chicken cuts and whole birds in the advertisements this week. Analysts said this wasn't surprising since pork was actively promoted earlier in the month. Wholesale prices for chicken are down from this summer and are allowing grocers to pass some of the savings on to consumers.

 

Some grocers offered boneless/skinless chicken breasts just under $2 per pound, and the average price in the Dow Jones Newswires' 10-city weekly survey was $2.60 per pound, down 14 cents from a week ago and 16 cents below a year ago.

 

Whole birds were found in the printed advertisements in seven of the 10 cities in the weekly survey, while leg-quarters were seen in four of the 10 cities. Leg-quarters offered consumers another low-priced protein option at 92 cents per pound on average.

Meat and poultry analysts predict wholesale chicken prices will be flat to weaker in November on expanded production and softer demand. The US Department of Agriculture showed broiler chick placements into growing houses most weeks in September at 2 percent above a year ago. Egg sets in recent weeks have ranged from 2 to 4 percent above a year ago, so broiler production is expected to be large through at least the end of the year and into early January.

 

USDA's northeast price quotes Wednesday showed boneless/skinless breasts at US$1.30 per pound, unchanged from a week ago and 25 cents to 30 cents above a year ago. Leg-quarter prices were quoted at 43 to 44 cents, up about 15 cents from a year ago.

 

The average price of the four cuts of chicken in the Dow Jones Newswires survey was US$1.57 a pound, compared with US$1.52 a week ago and US$1.52 last year.