KANSAS CITY (Dow Jones)--U.S. grocers are in various stages of gearing up for the grilling season, which is already well underway in southern regions of the country while more dependable weather conditions for backyard cookouts in the northern areas could still be a few weeks away.
It's a safe bet though that shoppers will be seeing more grilling cut features in the weeks to come as the stores make the transition from cool weather promotions to products that are more popular during the warmer months, market analysts said.
April weather can be fickle, and this week is a good example of that with a winter storm that moved across the upper Midwest at midweek to be followed by another one forecast for Colorado and parts of Texas, Oklahoma and Kansas Friday and into the weekend.
However, with increasing odds of warmer temperatures and more dependable grilling conditions just around the corner, grocers will make sure they have some grilling cuts to offer consumers.
BEEF
Market analysts and brokers said a number of the grocers' meat buyers have been focusing first on getting their beef needs covered due to expectations of reduced supplies compared with a year ago through May or June and volatile prices in that category so far this year.
At midday Thursday, the U.S. Department of Agriculture quoted the choice boxed beef cutout up $0.48 per hundredweight at $172.44. If the cutout remains higher for the afternoon closing market report, it will represent a fresh 3 1/2-year high. Select grade prices were higher at midday as well, which also put that category in position to post a fresh 3 1/2-year high.
Based on the stronger midday quotes, boxed beef prices have climbed for nine consecutive days. During this period, choice prices have advanced $20.58, or 13.6%. Select beef prices for the same period have climbed $16.73, or 11.7%.
However, the lofty prices are said to be causing retailers along with meat wholesalers to take a cautious position about adding to their inventories at this time.
There is also buyer resistance to the high beef prices and speculation that grocers may reduce the number of beef items in the weekly promotions currently being planned then replace them with either pork, chicken or other products such as processed meats.
Bruce Longo, market analyst at Urner Barry's Yellow Sheet, said some grocers and food service operators are looking for better deals on beef through secondary suppliers such as wholesalers and distributors. These suppliers may have product available at lower prices that was purchased earlier, so there are opportunities for some stores to buy beef at prices below the current levels being quoted by packers, he said.
Longo also said some grocers may keep the same number of beef items in their weekly advertisements but switch some of the items from premium cuts to medium or lower-priced products such as London broil, round steaks, or sirloins.
Beef features this week included a general mix of steaks, roasts and ground products. The cheaper regular ground beef and roasts captured most of the lead advertising spots on the front pages, and the premium priced steaks were used mainly in a sub-feature role.
Dow Jones Newswires' latest beef-o-meter index, which is a daily comparison of current to year-ago prices expressed as a percentage, showed USDA's choice at a 122.6 rating, while select is at 124.7.
The average price of the 15 cuts of beef in the Dow Jones Newswires survey was $3.98 a pound, compared with $4.18 last week and $3.70 last year.
PORK
Bone-in and boneless pork chops received a fair amount of advertising space this week in some cities but not as much elsewhere. Some chains also offered their shoppers other options including spare-ribs, country-style ribs, and butt roasts.
Wholesale pork prices are higher than year-ago levels but not up as much on a per-pound or percentage basis as beef or chicken. On Wednesday, the U.S. Department of Agriculture's pork carcass composite price, commonly known as the cutout value, was reported at $66.16, up 13.5% from the year-ago quote of $58.28. The USDA's quote for the primal cut value for loins was $80.55, compared with $74.76 at this time last year, which represented a gain of 7.7%.
Larger-than-expected supplies of slaughter-ready hogs in recent weeks have limited the gains in wholesale pork prices. USDA's preliminary data show that for the past five weeks, federally inspected hog slaughters have averaged 5.3% above a year ago. That compares with just 0.4% above a year ago during the first eight weeks of 2007.
However, indications of a seasonal reduction in hog supplies this week and expectations of further tightening for next week may be a catalyst that could lead to higher prices for loins, butts and spareribs, according to some analysts and meat brokers.
The Yellow Sheet reported at midday that buying "interest in fresh pork has improved somewhat, however the reduced rate of production seems to be more price supportive."
The average price of the 13 cuts of pork in the Dow Jones Newswires survey was $2.50 per pound, compared with $2.47 a week ago and $2.15 a year ago.
POULTRY
Chicken prices have advanced the most on a per-pound and percentage basis from a year ago, compared with beef and pork. However, year-ago prices were near record lows for breast meat and leg quarters.
The USDA on Thursday quoted wholesale prices for most chicken cuts on a delivered basis into the northeast U.S. at steady to firm compared with a week ago. USDA's price for boneless/skinless breasts was at $1.80 per pound, which represents an increase of 75% from the $1.00 to $1.05 prices a year ago. Line-run bone-in breast prices were quoted at 99 cents, compared with 56 cents a year ago. Leg quarters this week were 44 to 45 cents, versus just 16 to 17 cents at this time last year.
Following several months of holding production below a year-ago, the broiler industry has been modestly expanding egg sets over the past four weeks, according to USDA's egg sets/chicks placed reports. During this period, egg sets have averaged nearly 1.4% above a year ago, which amounts to about 2.9 million more eggs placed into the incubators per week.
Higher prices and improved profitability for processors have encouraged the industry to boost production slightly for the higher demand period ahead from the Memorial Day holiday through Independence Day, meat and poultry analysts said. However, current production is not keeping up with the buying interest.
Improved export sales have contributed to gains in leg-quarter prices, which are more than double the level quoted at this time a year ago. The rebound in exports along with reduced production levels since last fall have considerably trimmed frozen chicken stocks. The USDA's monthly cold storage report for data as of Feb. 28 showed 626.4 million pounds of chicken in storage, compared with 923.7 million a year ago.
The average price of the four cuts of chicken in the Dow Jones Newswires survey was $1.52 a pound, compared with $1.49 a week ago and $1.24 last year.
Source: Curt Thacker; Dow Jones Newswires; 913-322-5178; curt.thacker@dowjones.com