September 23, 2021

Pumpkin spice lovers, rejoice! Yesterday marked the first day of autumn and consumers are gearing up for cooler temperatures and hearty home-cooked meals. As we approach the fourth quarter, retailers are optimistic that fall-oriented demand will help maintain a strong consumer pull for meat and poultry products.  

For hog producers, autumn typically signals a period of seasonal expansion in supplies. Buying interest among packers who purchase hogs in the open market has slowed considerably in recent weeks, according to livestock dealers. This suggests that hog supplies overall are adequate for packers’ needs and current processing capacity, which continues to be strained by labor challenges.

With the conclusion of the traditional grilling season, shoppers at the meat case will begin to seek items utilized in fall-time favorites like roasts and stews. While this is typically supportive for beef, pork could become an attractive option over chicken and beef. Retailers will look to aggressively move pork products through the pipelines since hog supplies are readily available. Moreover, October is National Pork Month. This could potentially lead to attractive feature prices for some pork items in the weeks ahead.

Notably, the average retail price for whole boneless pork loin this week is at a sizable discount to boneless skinless chicken breast, a competitive item with pork loins. Pork loins this week average $2.70 per pound, compared to $3.58 per pound for chicken breast. The roast category averages $2.76 per pound, 9.2% below last year. Meanwhile, ribs, bacon, and pork chops continue to hold sizable premiums to year-ago levels. 

Wholesale pork prices have declined by about 21% from their summer peak achieved in early June. Urner Barry’s pork carcass cutout value has recently slipped below 2014 levels, which were elevated by PEDv, but remains at the second-highest level for this time in history.

On Wednesday afternoon, Urner Barry's pork cutout price was up nearly 20% from the same day a year ago. While cutout values could face seasonal pressure in the weeks ahead, sharply higher values on a historical basis indicate that demand for U.S. pork remains stellar.

In the latest USDA Cold Storage report, pork stocks at the end of August were up from the previous month but down about 19% from the five-year average. Bellies in cold storage were reported at 17.5 million pounds, 43.7% under a year ago. This may be bad news for bacon lovers, who are paying premiums for the item at the grocery store. Bone-in ham stocks were up nearly 65% from a year ago at 96.9 million pounds.

Labor limitations on boning lines and for items that require further processing may be behind the glut in bone-in inventories. "It does seem like many items that are usually further processed are at or near record highs, boneless ham muscles, b/s chicken breast, b/s chicken thigh but the bone-in counterparts are not nearly so high," said Bob Brown, private analyst in Edmond, Oklahoma.

In the beef sector, cattle supplies are forecast to tighten ahead. In the meantime, feeders continue to work through the lingering effects of the pandemic-induced bottleneck of supplies. Processing capacity is plagued with staffing shortages, mechanical issues, and recently — a plant fire at a JBS facility in Nebraska, making it increasingly difficult for feedlots to become current. While fed cattle prices continue to trek largely sideways, wholesale beef prices are softening post-Labor Day but remain elevated in record territory for this time of year. 

On a year-to-year basis, Urner Barry's Choice beef carcass value Wednesday was up 50% and Select was 41% higher. Urner Barry's Choice and Select values, however, were down about 5% and 7%, respectively, from their summer peaks. This week in retail, average retail prices for ground beef, roasts, and steaks were all up from a year ago in the latest Urner Barry survey.   

Frozen beef stocks in cold storage at the end of August totaled 414.9 million pounds, up 3.5% from July but 7.7% below the year-ago figure of 449.3 million pounds. Total end-August beef stocks were at the lowest level since 2014. 

Since beef is priced higher than pork and chicken at retail, grocers may promote beef more aggressively to capture consumer dollars on the protein. Beef steals the spotlight in buying opportunities this week, claiming nearly 28% of circular ad space, closely followed by seafood at 26.1%. Chicken narrowly beats out pork for third at 19.5%. Pork accounts for 19.4% of buying opportunities. Eggs make up 3.7%, down from 4.9% during this week in 2020. 

Turning to chicken, retail prices for whole birds are up 8.7% from a year ago and average $1.87 per pound in the Urner Barry weekly retail survey. Boneless skinless breasts are up 15.5% from 2020 and have been trading above year-ago levels since mid-August. Wings currently average $4.24 per pound, up a whopping 78.2% from last year. 

USDA reported frozen chicken stocks at the end of August at 708 million pounds, down nearly 20% from 2020. "Total chicken stocks were the lowest since 2014 and breast meat lowest since 2016. Wing stocks lowest since 2009 with a small August gain. No wonder since prices are near record high," Brown said. 

Tight cold storage holdings, for breast meat and wings in particular, could keep prices elevated at retail. 

To view this week's feature activity along with historical retail charts, subscribers can access the complete breakdown for the various meat and poultry cuts by clicking on the Retail Features option under the 'More' tab on the Comtell homepage or click here for Urner Barry's Weekly Summary.

Photo Credit: Natalia Lisovskaya / Shutterstock.com

 

Courtney Shum
Urner Barry
1-732-240-5330
cshum@urnerbarry.com