Agro Perspectiva

US cattle and beef prices cool off

25.05.2010 09:01 "Agro Perspectiva" (Kyiv) — With the US Memorial Day long weekend now 10 days ahead, the normal build-up of wholesale meat orders for the start of summer cook-outs seems to have come early and nearly gone according to some meat grinder firms and wholesalers, as reported in this weeks North American Market Update. Feedlots and beef packers pushed maximum cattle numbers into the market pipeline, with slaughter margins staying high near US$55 per head last week. This pressure pushed live steer values down from the 100c/lb ceiling to 96–98c range. Choice-grade beef cut-out value is 168.9c/lb (down 2.2c) and Select 164.3c (-2.7c). Reflecting this broad trend for fed beef, all cattle futures are down near 2c/lb this week and other commodity futures also fell, corn is down 6 to 10c/lb, and soybeans down 30 to 40c. Cow slaughter also stayed seasonally high (near 26,000 head daily) and the canner-cutter cut-out value eased 1.5c to 134.1c/lb, with 90CL boneless cow beef declining 2c to 168c/lb, on a near par with imported frozen 90CL cowbeef at around 170c/lb fob at port of entry (down 4 to 5c). The biggest drop was in fresh 50CL steer trim, down from a crazy peak of 120c(2 weeks ago) to near 95c/lb and heading lower. Part of the reason is trade expectations of Australia’s beef shipments to US rising toward 35,000m/t for current month of May — the most in a long time — which will help relieve recent US supply tightness of lean processing beef. Hog markets also took an about-turn after recent phenomenal price increases. Pork carcass cut-out is quoted at 89.5c/lb (down 1.8c) and futures contracts fell 4 to 7c (ranging 81–82c). Chicken seems to be gaining market share within the US. Boneless breastmeat is holding the big 15c/lb gains it made in early May, quoted at 167–68c in northern markets — 161c in south. Whole birds rose another 4c to 89c/lb, according to USDA 12-city average price index. Leg quarters are still below 40c in wholesale trade (near 37–38c) and wings in the pits at 120c/lb. Retail food stores are still promoting boneless chicken breasts at past regular prices of 188–199c, but up to US$3.98 for 98CL — this is not a typo error — some consumers pay high for fancy packs. Leg quarters were priced from 49 to 89c/lb. Despite high wholesale prices, many pork items also are still at past bargain price levels including whole boneless loins US$1.99/lb, smoked ham 99c to US$1.99, fresh spare rib US$1.88–99 (boneless US$2.19), pork chops US$1.88 — US$2.48, and tenderloins US$2.99 to US$4.99. Ground beef is the big retail variant for Memorial Day weekend. High-profile Wegmans stays the lowball promoter with US$1.99/lb for 90CL (big loss leader) — up to US$3.99/lb. Giant is matching Wegmans US$1.99/lb price, but with fatter 73:27 mix, and smaller family chain Weiser is offering 85CL at US$1.98/lb, others up to US$2.98. Other competition is ground turkey ranging US$1.99/lb for 93CL — up to US$4.00 for 99CL, with chopped chicken at US$1.88/lb. Middle beef steaks, from striploins to T-bones, flatirons and bone-in ribeye range US$5.99 to $7.99/lb. A sign of retailers facing consumer resistance is Karns giving 12 eggs free with 1/lb sausage at $1.69/lb Foodservice business is also getting tougher. Taco Bell is starting first-ever US$2 combo meals, with McDonald’s watching very closely (latter’s sales/profits were up worldwide near 2% in latest quarter). Arby’s-Wendy’s chain was publicized in Forbes magazine May 13 issue for poor financial performance, with latest loss of US$3.4 million, on a sales rise of 1.4% to US$784.2 million, but Arby’s sales fell by US$33 million, with same-store annual sales decline of 11.6%. Wall Street Journal’s Personal Section today cited a Harvard University research report praising steak and hamburger for minimal threat to heart disease, but saying processed meats are questionable due to salt content. American Meat Institute Foundation had promptly refuted any risks in processed meats and advocated all red meats being a healthy, enjoyable part of balanced human diets.