US - USDA’s Economic Research Service published February retail meat prices yesterday, write Steve Meyer and Len Steiner.
All Fresh Beef recorded its first month-to-month retail price increase since July of 2015. However, the increase from January to February was small for All Fresh Beef, up $0.04 per pound to $5.79 per pound.
This is still almost $0.23 per pound cheaper than February of 2015. Seasonally, this retail price increase is relatively normal, as we make our way into grilling season and beef demand heats up just as fed cattle supplies normally begin to get squeezed.
One aspect to remember of this retail price data series is the continued discussion regarding its ability (or inability) to accurately capture retail promotions and how that effectively “inflates” the average retail price we see in this report.
Relating this to the wholesale beef side, we did see rib and loin prices start to increase during February along with slight price increases in 50’s and 90’s grinds.
Boxed beef prices decreased from January to February however, at least partially due to the continued decrease in wholesale end cut prices (chucks and rounds). So to reiterate, seasonally it is fairly normal to see this retail price increase into the spring.
We do not think this will reverse the longer-term trend however, towards declining beef prices especially compared to year ago levels. Also, to remind readers, the markets between live animal, wholesale and retail do not always move the same direction in a given month, but will tend to trend the same direction over time.
Retail pork prices saw a decrease month-to-month with the average February retail price coming in at $3.74 per pound, $0.06 below January and $0.20 below February 2015. Seasonally however, retail pork prices normally experience an increase into spring.
Looking back at wholesale prices during February, pork loins struggled and were down 20 per cent the last week of February compared to the last week of January. Belly prices were strong however, and sparerib and trimming prices increased marginally during February.
Comparing beef and pork prices at retail level, beef is obviously the more expensive option for consumers.
If we look at the ratio of beef to pork prices though, it is fairly even with year ago, with beef at 1.5 times the price of pork. We expect that ratio to remain level or decrease slightly into the second half of 2016 as beef supplies cyclically increase.
Meanwhile, food sector retail sales during February maintained a growth pace similar to prior months. The additional day for Leap Year supplemented gains, but only to the degree that would normally be expected.
Food service and drinking place sales were up 9.5 per cent from the prior February, which on a comparable day basis would be a 6.0 per cent gain.
Increases of 7.8 per cent and 4.8 per cent in December and January bracket the February performance.
Grocery store sales during February were up 4.3 per cent, which translates to a 0.8 per cent gain after accommodating the Leap Day.
December and January grocery store sales were up 2.0 per cent and 1.1 per cent, respectively, on a year-over-year comparison. The pace of retail sales in the food sector was expected to slow down during the current quarter, following the robust gains for most of 2015.
Food services and drinking place sales during the October-December 2015 quarter were up 7.1 per cent from a year earlier; the smallest quarterly gains of the year.
Forecasted growth of 5-6 per cent for food service and drinking place sales in the current quarter seems reasonable, given expectations of 3 per cent growth in disposable personal income for the quarter.
Disposable personal income in January was up 2.8 per cent from twelve months earlier. Grocery store sales growth during October-December 2015 were up 1.5 per cent percent from a year earlier and this quarter is expected to extend that pace.
The January and February results suggest that expectations may be slightly too optimistic, but not a serious problem for food spending in total, if food service sales growth can hold up at 6 per cent.
TheCattleSite News Desk