1. Sponsored by
Vol. 11, No. 72 / April 17, 2013
USDA’s monthly Cattle on Feed report for April will be Pre-Report Estimates -- USDA Cattle On Feed
released this Friday afternoon and the eleven market analysts sur- Friday, April 19, 2013
veyed by Dow Jones Newswires expect lower placements, lower
marketings and lower inventories. Those are all three familiar stories Average of
Range of Estimates
for the feedlot sector of late. The ranges and averages of the survey Estimates
responses appear at right. Should these estimates prove accurate, they (Percent of year ago)
would imply an increase of 39,000 head in the number of cattle in U.S. On Feed, April 1 92.7 - 95.35 93.9
feedlots with capacities of 1000 head and more during March, pushing Placed in March 92.1 - 103.2 99.1
that number to 10.896 million. The 93.5% estimate for marketings Marketed in March 92.4 - 95.1 93.5
would put them at 1.793 million head, a figure lower than the lowest
Source: DowJones
March of the last 5 years. Placements at 99.1% would put that figure at
1.776 million head, an increase of nearly 300,000 head over the Febru-
ary placement level. RETAIL MEAT PRICES, USDA
USDA released its estimates of retail meat prices for All-Fresh Beef Choice Beef Pork Composite Broiler Turkey
March yesterday. In spite of the well-documented struggles of whole- Cents/lb.
sale prices, every retail price except the composite broiler value in- 550
creased during the month. Choice beef led the way in March gains at 500
1.5% while the whole broiler price increased 1.1%. All-Fresh beef, pork
450
and turkey all gained less than 1% in March while the composite retail
400
broiler prices fell by 2.5%.
350
Relative to one year ago, beef prices and whole broilers
300
showed large gains in March. The Choice beef price was record-high at
$5.30/retail pound, 4.9% higher than last year. All-Fresh beef was also 250
record high at $4.918/retail pound, up 5.3% from March 2012. Whole 200
broilers, at $1.471/pound, were 7.2% higher than last year. 150
Pork, composite broiler and turkey prices were lower than last 100
year. The average turkey price in March was $1.593/pound, down over 50
12% from last year. But remember that the March ‘12 turkey value was 0
far and away the record high at $1.812/pound. Pork prices were 0.7% 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
lower than one year ago while composite broilers were down only 0.2%.
There is growing concern that retail prices are not mirror- out of line with wholesale and farm values. Is that bad? Yes from a
ing wholesale values in a manner that will keep product moving to fairness — to both suppliers and consumers — standpoint but maybe
consumers. The charts on page 2 show USDA’s data for retail price, not from a long-term business view as long as product is moving and
wholesale value and net farm value. There is no farm value for chicken not backing up either in cold storage or in feedlots. “Value space” can
since there is no significant farm-level trade in the sector due to vertical allow upstream prices to move quickly where having to lift the entire
integration. All of these values are adjusted to a retail weight basis and price structure can be an arduous task.
are thus comparable from level to level. The same net situation is true in the pork complex even
It is easy to see where concerns are rising in the beef and pork though the drivers are different. Retail pork prices have not risen but
sectors. Retail beef prices have risen by nearly 8% since September have in fact remained high even as wholesale values have struggled.
2012 while the average wholesale and net farm values have increased This is a situation where there is more product available on domestic
by only 1%. We believe much of this discrepancy is, to a great degree, markets due to export challenges and keeping it moving may indeed
happenstance in which we and other analysts have played no small require lower prices at retail. Having some “value space” to support a
role. Virtually everyone has expected wholesale beef prices would wholesale pork or hog price rally is good but keeping product moving is
climb to new records due to drought– and cost-impacted placement paramount, we think, in this situation.
patterns of the past two years. That expectation has been ubiquitous to And that brings us to the curious case of chicken where retail
say the least and has led retailers to prepare for the cost shock by prices have been stable in spite of a rapid increase in wholesale values.
pushing retail values higher. Consumers never like price increases but Are retailers swallowing margin to keep chicken attractive as a traffic
they like abrupt increases even less so easing into the higher price sce- driver? Some of the recent increase in wholesale chicken value is due
nario was a good strategy. $200-plus wholesale choice beef, though, to a change from 12-city to national composite values. But the 12-city
has proven an elusive creature and now it appears that retail prices are price was rising rapidly before being eliminated by USDA in January.
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2. Sponsored by
Vol. 11, No. 72 / April 17, 2013
RETAIL, WHOLESALE & FARM LEVEL BEEF
PRICES, USDA
Cents/lb. Retail
600
Net Farm Value
500 Wholesale Value
Retail Value
400
300
200
100
0
86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13
RETAIL, WHOLESALE & FARM LEVEL PORK
PRICES, USDA
Cents/lb. retail
400
Net Farm Value
350
Wholesale Value
Retail Pork Price
300
250
200
150
100
50
0
86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13
COMPOSITE RETAIL & WHOLESALE
BROILER PRICES, USDA
Cents/lb., Retail
250
Composite Retail Price
Composite Wholesale Broilers
200
150
100
50
0
86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13