Higher Meat & Poultry Prices Poised To Lift Retail Food Prices In Early 2013

Articles
November 30, 2012

Higher Meat & Poultry Prices Poised To Lift Retail Food Prices In Early 2013

Based on the upward trend seen in wholesale food prices recently, The Food Institute projects that retail food prices will move marginally higher in early 2013, more closely mimicking that upward trend than in recent months. Higher beef and poultry prices will account for a good portion of the overall advance.

Based on the upward trend seen in wholesale food prices recently, The Food Institute projects that retail food prices will move marginally higher in early 2013, more closely mimicking that upward trend than in recent months. Nothing extraordinary is projected at this time in the overall retail price index for food at home overall, although certain categories will be impacted more than others.

Higher beef and poultry prices will account for a good portion of the overall advance as noted below. Pork prices may add to that advance later in 2013 as could anticipated hikes in processed vegetable prices and dairy.

BEEF – Although the Bureau of Labor Statistics reported lower wholesale beef prices last month compared with September, lower cattle placements in the second half of 2012 are expected to result in lower steer and heifer slaughter in first-half 2013 as fewer fed cattle are available for slaughter. Thus prices will turn higher as well in early 2013 and continuing that trend in future months.

In a recent report, USDA noted: “Cattle feeders’ and beef packers’ poor margins will likely continue until cattle and beef prices reach levels that generate positive margins for both sectors, or until grain prices decline to levels that make cattle feeding profitable enough for packers to achieve positive margins. Currently, retail Choice beef prices continue to struggle to move above $5 per pound.”

PORK – Pork production is forecast lower due to lighter hog weights recently. Even so, pork production this quarter is forecast 1% above the same period last year. USDA expects fourth-quarter 2012 hog prices to average about 10% below a year ago.

Next year, however, look for pork production to decline by 1.4%, and for hog prices to rebound, increasing about 6% above average hog prices in 2012, according to the latest USDA projections. For the time being, however, prok price advances will not be nearly as great as as those in beef or poultry.

POULTRY - Broiler production is forecast slightly higher in the first quarter of 2013 as the hatchery data points to a smaller-than-expected reduction in birds for slaughter. Turkey and egg production forecasts are unchanged from last month. September broiler production was higher than expected and the production forecast for the fourth quarter is raised. Nonetheless, increased demand in the wake of higher prices for alternative proteins, and higher feed costs, could push chicken prices higher, reports the Food Institute

Overall broiler meat production in 2013 is forecast at 36.4 billion pounds, a decrease of 1% from 2012. USDA notes that broiler integrators are not expected to have any incentive to expand production due to the combination of continued high prices for corn and soybean meal and expected relatively modest growth in broiler prices.