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Kansas City - High beef prices are getting in the way of active beef features in retail grocery stores and
sending grocers over to alternative proteins like pork and chicken for their front-page items in weekly
newspaper supplements.
The best cure for high prices is high prices because they cut buying interest and back up product, which
lowers prices, market analysts say. This is what is happening to beef, the market analysts said. However,
the lower prices haven't had time to materialize.
February often is a slow month for retail and restaurant meat sales, and many grocers are just waiting for
the gradually improving weather conditions of March and April to get serious about aggressive features,
market analysts said.
In the meantime, winter favorites like beef roasts generally are prominent in grocery advertisements.
The next item on the advertising agenda for retailers is the warming weather of spring and the Easter
holiday, market analysts said. Preparations are being made for Easter, but weather conditions are harder to
plan for, and buying is more hand-to-mouth.
Beef
U.S. Department of Agriculture choice boxed-beef cutout values rose above $150 per hundredweight in
mid-November and have remained above this benchmark ever since, one market analyst said. But
historically, beef hasn't spent a lot of time above this level.
"It's rare air," the analyst said.
Consequently, beef retailers are having trouble finding cuts they can feature at attractive levels for
consumers and still make money, a market analyst said. It resulted this week in an out-of-season set of
advertised specials in beef.
Normally, roasts are the favored beef item of winter because it's too cold to enjoy grilling out of doors,
the analyst said. But the desire for end cuts to cut into roasts is such that it's more difficult at these high
carcass values to find end cuts that can be featured profitably.
Meanwhile, wholesale prices for middle meats sagged a bit, and grocers picked up a few of these items
for steak specials in the middle of February, the analyst said. The result has been a weekly Dow Jones
report that focuses much more attention on steaks than on roasts.
"It's not what consumers really want, but they (retailers) are hoping it moves," the analyst said.
Packers have been caught in a squeeze, the analyst said. Retailers won't pay these high wholesale prices
for beef in any volume, and cattle feeders have gotten stubborn about how low they'll go on fed cattle
prices. Packing plants are losing money, and the companies responded this week with reduced slaughter
rates.
Retail grocers would love to feature beef if the price were right, market analysts said.
One analyst estimated it would take a choice cutout value reliably priced at about $145 for retailers to be
interested. Thursday's cutout was reported at $149.64.
The average price of the 15 cuts of beef in the Dow Jones Newswires survey was $3.80 a pound,
compared with $3.58 last week and $3.67 last year.
Pork
With beef pricing itself out of the picture for the next four to eight weeks, it looks like pork is stepping
up to the plate to carry the weekly retail advertisments for red meat, market analysts said.
Pork was featured actively around the country this week, which would be typical for middle-of-the-
month advertisements, but it also appears to be in the sights of retail grocers for the next few weeks, market
analysts said.
In addition, it looks like they may be planning to feature pork, or at least co-feature it with beef, the first
week of March, market analysts and buyers said. Generally, beef is the highlight of first-of-the-month
advertising campaigns, but wholesale market activity that has pushed pork carcass cutout values up steadily
for more than a week, indicating early March advertising plans.
In addition, a buyer said he expected to see more pork specials well into April to avoid high beef prices.
The average price of the 13 cuts of pork in the Dow Jones survey was $2.07 per pound, compared with
$2.25 a week ago and $2.31 a year ago.
Poultry
In addition to pork picking up the slack for absent beef features, chicken is ready to do its part for retail
grocers, trade sources said.
Bird flu in many parts of the world has shut off demand for chicken locally, even the imported product,
market analysts said. That leaves ample supplies of product to consume domestically, especially leg
quarters.
A meat buyer said he expected to see a lot of dark meat chicken advertisements in coming months like he
has seen the last two months.
A market analyst also said retail restaurant chains are coming up with new chicken sandwiches, and he
said it was likely the result of value-priced chicken white meat at the wholesale level versus high-priced
ground beef prices.
The average price of the four cuts of chicken in the Dow Jones survey was $1.47 a pound, versus $1.37 a
week ago and $1.53 a year ago.
To access the retail meat table, see story number 3239 or keyword search for "Retail Meat."
Source: Dow Jones
E-mail: sflanagan@sprintmail.com |
