CME: Pork Retail Prices Lower than Last Year

US - USDA-ERS published March’s average retail price data on 15 April. These values provide an estimate for average retail prices for pork, turkey, broilers, and beef, write Steve Meyer and Len Steiner.
calendar icon 20 April 2016
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One caveat to these numbers is that they are not able to capture retail featuring or store specials and therefore actual prices consumers pay are not fully represented. Additionally these average retail prices do not immediately catch in store protein price movements and trends.

For the month of March average retail prices were down year-to-year for pork, beef (both Choice and All Fresh Beef), and broilers. Average turkey prices were even to year ago levels.

All proteins showed increased prices from February to March, however, this is seasonally normal.

Average pork prices at the retail level were $3.76 per pound, 3 per cent below March of 2015 and 0.1 per cent above February 2016’s.

March average All Fresh Beef prices were $5.86 per pound, 3.3 per cent below 2015’s and 1.2 per cent above February 2016.

Composite broiler average March price was $1.89 per pound, 5 per cent below year ago and 0.1 per cent above February of 2016. The average retail turkey price in March was $1.51 per pound, even with year ago prices and 1 per cent above February’s price.

Again this month-to-month price increase, from February to March, is seasonally normal for most of the proteins.

Historical average retail price increase from February to March has been 1 per cent for pork, 1 per cent for All Fresh Beef, and 3 per cent for turkey. Composite broiler prices have historically been flat month-to-month.

One other aspect to note in this retail price report is the month-to-month change for beef.

For example compared to a year ago, average Choice beef prices were 1.4 per cent lower in March but, compared to February, Choice beef price increased 4 per cent month-to-month to $6.22 per pound.

According to the notation in the March retail beef price series, these prices are partly calculated using a formula and it was noted that the price of fresh 50 per cent lean beef heavily impacted the calculation for the beef average value.

From the first week of March to the last week of March, fresh 50 per cent lean beef price increased 46 per cent, from $66.72 per cwt. to $97.11 per cwt.

Generally, the message from these retail values, is that protein is overall more affordable to consumers compared to a year ago, but seasonality is still present in the price environment at least at the retail level.

Production increases are expected across the board this year for pork, poultry, and beef. Continued reduced prices will benefit the consumer, however competition at the meat case for the consumer’s dollar will continue to be aggressive.

Moving on, we will review calculated retail margins briefly.

This margin is referred to as the cutout to retail price spread and is strictly the difference between the average monthly cutout value and retail price of a respective protein and does not include any other retail costs such as transportation, labour, energy, packaging, etc.

For March, the cutout to retail beef price spread continued to climb to $1,242 per 1000 pounds of beef. This was almost 10 per cent higher (up $108 per 1000 pounds) than a year ago.

The cutout to retail pork price spread was down 8 per cent (down $32 per head) year-to-year for March to sit at $352 per head. This is still significantly above the previous five year average though.

Generally, the numbers show retailer margins are still doing fairly well for both pork and beef. This shows there is still some room for those retail prices to move downward, depending on how cutout prices move, but retailers will be reluctant to give up beneficial margins.

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