Consumers Schizophrenic About Meat Buying

It seems consumers are becoming more schizophrenic about their meat and poultry purchasing.  On the one hand, they are willing to pay more for meat and poultry, but on the other, they seem to be angling toward less expensive products.

Oklahoma State University’s monthly Food Demand Survey showed consumers were willing to pay more for almost all cuts of poultry and red meat.  Chicken wings were the only notable exception.  They remained the same as a month earlier.

But while the survey showed consumers were willing to pay more for what they purchased, beef consumption is forecast to hold about steady with last year as pork and chicken consumption rises.

In its latest World Agricultural Supply and Demand Estimates report, the USDA estimated 2015 per-capita beef consumption at 54.0 pounds, pork at 49.8 pounds and chicken at 89.0 pounds.  This compares with 2014 per-capita consumption of 54.1 pounds of beef, 46.4 pounds of pork and 83.3 pounds of chicken.

So, if consumers are willing to pay more for beef but actually are buying about the same amount, they are buying more of the cheaper cuts, paying more for higher-quality products or both.  It certainly can be said that consumers are searching for value, whether it’s in the form of price or quality.

 

WHOLESALE TO RETAIL BEEF PRICE SPREAD RECORD WIDE

 

Retail grocers have been able to charge more for beef all year, but the holiday season brought even more joy to retailers’ wallets.

The spread between wholesale and retail beef prices in November was record wide at $132.60 per cwt as retailers capitalized on consumer willingness to pay more for beef.  This is up from the May low of $109.84.

And the wholesale-to-retail price spread has been wider than last year and the 2009-2013 average all year.  A year ago, the spread was $109.63 per cwt, and the previous five-year average spread for November was $95.54.

But that doesn’t mean things are looking up for cattle feeders losing an estimated $600 plus on each animal sold.

 

CATTLE FEEDERS LEFT OUT

 

The spread between the price of live cattle and the retail price of beef continued to widen in November to record highs.  The spread in November was $148.17 per cwt, compared with $114.93 a year earlier and the previous five-year average of $108.25.

A  graph illustrates the point.  Cattle feeders have not been able to capitalize on the consumer’s willingness to pay more for beef.

But pork producers are being left out in the cold as well.  The live-to-retail price spread for pork in November was $423.33 per head, compared with $399.29 a year ago and the 2009-2013 average of $330.08.

 

CASH FED CATTLE PRICES STEADY

 

Cash fed cattle trade continued to be reported at $117 per cwt with a high-grade lot here and there at $118, about $1 below last week but steady with early week activity.  Dressed-basis trades were reported at $183, compared with $187 to $188 last week.

The USDA Thursday reported its choice beef cutout value at $195.76 per cwt, down $1.14 from Wednesday.  The USDA’s select cutout was $185.54, up $0.63.  The choice/select spread narrowed to $10.22 from $11.99 on Wednesday, and there were 92 loads of fabricated product sold into the spot market.

The USDA said rounds and loins were weak.  Select ribs and chucks were firm while choice grades were weak.  Trimmings were steady in a light test.

The CME Feeder Cattle Index for the seven days ended Wednesday was $154.69, down $0.41.  This compares with the Jan settlement Thursday of $144.25, down $3.45.