051136 Retail Meat: Looking Beyond Thanksgiving Holiday

Kansas City (Dow Jones) - While consumers are busily planning their menus for next week's Thanksgiving Day festivities in order to serve their family or guests the "just right" turkey or other entre item, grocers' meat buyers, packers and meat processors are looking beyond the holiday into late November and December.

This week's grocery advertisements, of course, were full of turkeys along with several varieties of hams and all the fixings for a Thanksgiving feast.

Preparing for a huge sales event such as a major holiday like Thanksgiving requires many days work and close coordination between grocers and their suppliers in order to have the right amount of each product the stores will need for the promotions.

The planning process and time needed for purchasing the products along with printing of the mail-out or in-store advertisements combined can require from two to four weeks, depending on availability and other factors. Therefore, negotiations are underway between grocers' meat buyers and processors for product to be delivered well into December.

Beef

Market analysts said grocers this week are looking mainly for end cuts, such as chuck and round products, for post-Thanksgiving delivery since wholesale prices for the rib and loin cuts have risen significantly in recent days.

According to the U.S. Department of Agriculture's daily beef price reports, the choice-grade composite rib primal value Wednesday was $248.04 per hundredweight, up about $23.59, or 10.5%, from two weeks ago. The choice-grade loin primal value has rallied nearly $9.00 so far this week as of Wednesday afternoon.

A Midwest-based analyst said most of the strength in rib and loin cuts, particularly for choice and prime beef, is coming from the food-service sector and particularly the higher-end hotels and restaurants for December and year-end festivities. Grocers, meanwhile, are buying mainly rounds and chucks along with some of the select-grade middle meats, the analyst said.

However, some of the analysts said because wholesale beef prices have been forced higher across the board due to stronger cattle prices the past three weeks, grocers are resisting paying what packers are currently asking for the beef. This may result in a decline in beef featuring in early December and more space given to chicken and/or pork instead, the analysts said.

The average price of the 15 cuts of beef in the Dow Jones Newswires survey was $3.58 a pound, compared with $3.52 last week and $3.50 last year.

Pork

Buying interest from grocers in the wholesale pork markets this week is mainly for loins and butts, sources said. They already have most if not all of the processed items like hams and bacon booked that they will need from now through the end of the year. Wholesale prices for loins and butts normally soften ahead of the Thanksgiving holiday due to a combination of seasonally larger supplies of hogs and slowed fresh pork sales during the week of the holiday. However, this presents an opportunity for grocers to purchase these items at attractive price levels for featuring after the holiday.

The Midwest-based market analyst said the currently quoted prices for loins and butts are very attractive and should result in more pork features in late November and December. Wholesale prices for these cuts typically rally as the buying interest increases for product to be delivered after Thanksgiving, and supplies are not as plentiful since all major packers are closed for the national holiday.

The average price of the 13 cuts of pork in the Dow Jones survey was $2.22 per pound, compared with $2.08 a week ago and $2.33 a year ago.

Poultry

Chicken is poised to gain some advertising space in early December due to the current low and attractive prices and ready availability of the products, market analysts said.

The USDA's current price for boneless/skinless breasts delivered into the northeast U.S. is $1.05 to $1.10 per pound, compared with $1.25 to $1.30 at this time a year ago. Bone-in breast prices currently are down about 8 cents per pound from a year ago.

There was a fair amount of fresh chicken in the printed advertisements this week, which market analysts contributed largely to low wholesale prices making it difficult for grocers not to take advantage of the opportunity.

Grocers in several of the cities included in the Dow Jones Newswires survey featured whole birds. However, the prices were not very attractive with the national average coming in at $1.08 per pound, up about 8% from a week ago and a year ago. Analysts and other sources said that since many of the grocers are losing money on turkeys, they are not willing to offer other meat and poultry items at aggressive price levels.

The average price of the four cuts of chicken in the Dow Jones survey was $1.39 a pound, versus $1.45 a week ago and a year ago.

RETURN TO HOME PAGE

E-mail: sflanagan@sprintmail.com