CME: Surprising Strength for Pork in Retail Meat Price Data

US - The September retail meat price data from USDA suggest challenges for Choice beef, surprising strength for pork and chicken continues to be “steady Eddie“ at the retail case, write Steve Meyer and Len Steiner.
calendar icon 20 October 2015
clock icon 4 minute read

The historical data for USDA’s price data appear in the graph. Note that September is the fourth straight month of decline for Choice-grade beef products with September’s $6.230 per retail pound was 1.5 per cent lower than August’s.

The average Choice price has declined 2.8 per cent since setting its most recent record high back in May and we expect further declines this fall as the recent declines in whole-sale cutout values are passed along to consumers at retail.

Perhaps most noteworthy is the fact that September’s Choice-grade beef price was lower than one year earlier - the first time that has happened since February 2010! The All-Fresh beef price, which included Select- and store-grade products, has held up better, dropping by just 0.1 per cent in September to $6.077 per retail pound.

The narrower Choice-Select retail spread likely represents some substitution of lower-grade product by consumers. The September All-Fresh price is 1.1 per cent lower than its record level set in July.

Pork prices were once again higher in September. The month’s average price was $3.919 per retail pound, 2.2 per cent higher than in August but still 7 per cent lower than one year ago.

September’s prices probably say more about the impact of last winter’s export woes on wholesale values - and subsequent retail values this past summer. This retail price strength is quite likely a contributor to recent counter-seasonal strength for pork wholesale prices but we expect seasonally lower wholesale values to allow some decline in retail prices this fall.

And chicken prices continue to rock along with September’s $1.95 per retail pound coming in $0.01 (0.5 per cent) lower than in August and $0.021 (1.1 per cent) lower than one year ago.

The average composite retail price for chicken has been within 10.2 cents per pound of its October 2013 record high ($2.031) in every month since that record was set. And it was within 10 cents of the record for an entire year before it was set.

That’s three years with the average retail composite chicken price between $1.929 and $2.031 per pound. Consumers know what to expect from chicken. That’s a fact that marketers can use to their advantage!

Consumer attitudes remained quite positive but the two indexes that we monitor separated pretty dramatically in September. The University of Michigan’s Index of Consumer Sentiment fell from 91.9 in August to 87.2 in September, its lowest level in eleven months.

While that’s certainly a negative short-term trend, the September value is still higher than any month prior to the eleven month period (ie. October 2014) since May 2007. Further, it does not appear to us that the September decline is enough to conclude that the uptrend that began in early 2009 has been broken.

UM Survey of Consumers chief economist, Richard Curlin notes in the UM report that “Americans continue to realise that the domestic economy has become more vulnerable to global trends” and “view the recent stock movements as symptoms of global weaknesses rather than domestic conditions.”

The decline was driven primarily by the Expectations Index which declined by over 5 points from August.

Meanwhile, the Conference Board’s Consumer Confidence Index improved moderately in September to 103.0. That is up from 101.3 in August and marks a new post-recession high, breaking the previous such high of 102.9 set last January.

This measure of consumer attitude was driven higher by a sharp gain (5.3 points) in the Present Situation component while its Expectations component fell slightly (0.6 points) for the month. Consumers’ appraisals of business conditions and labour markets both increased in September.

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