Competitive Commodity Insights

Commodity Insights

Competitive Commodity Insights: Summer grilling outlook

It's time for summer grilling. Here's a commodity outlook

With summer grilling season under full steam, meat prices remain red hot.

Beef

The average boxed beef cutout, a composite of wholesale prices for Choice, Select, branded and other categories, gained 13 percent between the year's beginning and the end of April. That month, the wholesale prices appear to have topped, with wholesale prices dropping 11 cents per pound.

Beef price trends

Beef to chicken price comparison

Pork

The wholesale prices for beef, pork, and poultry are all driving each other toward higher levels. Wholesale pork remains particularly high in comparison to both beef and broiler prices. The pork cutout rose by 40 percent the first half of 2014, although like beef, they appear to have topped, slipping 14 cents a pound, or about 11 percent, in April.

Pork price trends

Beef to pork price comparisons

Chicken

Unlike beef and pork prices, broiler prices have continued to drive upward. After languishing for most of first quarter 2014 while beef and pork reached new highs, broilers have now caught up, increasing substantially the last two months. By the end of April, the composite broiler price reached $1.11 per pound, a 16 percent increase over the price at the beginning of the year. Poultry is no longer a relative bargain against beef.

Poultry price trends

Pork to poultry price comparison

Competitive Commodity Insights: Eggs on the sunny side

According to the American Egg Board, consumption is at a seven-year high with Americans adding three eggs per person for each of the last three years, bringing the 2013 per capita total to just over 250 eggs.

Kevin Burkum, senior vice president of marketing for the egg marketing group, sees the increase as being partly about the shift toward protein-based breakfasts as well as the fine dining trend that has turned eggs into the same type of dish-finishing flourish as bacon.

"The fact is ,there is nothing that isn't improved when you put a well-cooked egg on top of it," says Ruhlman.

- See more at: http://www.northjersey.com/food-and-dining-news/recipes/versatile-eggs-are-good-source-of-protein-1.842491?page=all#sthash.E0M8dGHy.dpuf

According to the American Egg Board, consumption is at a seven-year high with Americans adding three eggs per person for each of the last three years, bringing the 2013 per capita total to just over 250 eggs.

Kevin Burkum, senior vice president of marketing for the egg marketing group, sees the increase as being partly about the shift toward protein-based breakfasts as well as the fine dining trend that has turned eggs into the same type of dish-finishing flourish as bacon.

"The fact is ,there is nothing that isn't improved when you put a well-cooked egg on top of it," says Ruhlman.

- See more at: http://www.northjersey.com/food-and-dining-news/recipes/versatile-eggs-are-good-source-of-protein-1.842491?page=all#sthash.E0M8dGHy.dpuf

According to the American Egg Board, consumption is at a seven-year high with Americans adding three eggs per person for each of the last three years, bringing the 2013 per capita total to just over 250 eggs.

Kevin Burkum, senior vice president of marketing for the egg marketing group, sees the increase as being partly about the shift toward protein-based breakfasts as well as the fine dining trend that has turned eggs into the same type of dish-finishing flourish as bacon.

"The fact is ,there is nothing that isn't improved when you put a well-cooked egg on top of it," says Ruhlman.

- See more at: http://www.northjersey.com/food-and-dining-news/recipes/versatile-eggs-are-good-source-of-protein-1.842491?page=all#sthash.E0M8dGHy.dpuf

The egg is golden

Steadily increasing costs for eggs apparently aren't dampening consumers' demand for them, according to the American Egg Board, the trade association responsible for generic U.S. egg marketing. With American consumers increasing their consumption by three eggs per person per year for the past three years, U.S. consumption is now the highest it's been in seven years, the Egg Board says. We all now eat just a little over 250 eggs yearly.

Per-capita egg consumption rising

USDA has forecast another year of rising per capita egg consumption in 2014. In the short-term supply outlook, USDA reported the hen flock producing eggs for consumption stood at 294 million as of February, which was 1 percent higher than the previous year. With this increase in hen numbers, table egg production in first-quarter 2014 is forecast at 1.7 billion dozen, slightly over 1 percent higher than a year earlier. With somewhat lower feed costs and strong domestic prices through the first quarter, egg producers should have an incentive to continue to expand production. The current forecast for 2014 is for slightly higher production throughout the year (averaging around 1 percent higher).

However, that predicted increase in supply doesn't seem to be dampening egg prices. USDA's benchmark wholesale price for a dozen large eggs in the New York region averaged $1.43 in first-quarter 2014, about 13 percent higher than in first-quarter 2013. This increase comes on top of a 17-percent increase in first-quarter 2013 compared with a year earlier. With the Easter holiday in late April this year, egg prices began to strengthen seasonally in February. Althought they are now expected to decline seasonally after the holiday--forecast to fall to around $1.22 to $1.28 per dozen--that 12 percent fall from the very strong first quarter prices will still be 14 percent higher per dozen than the previous year.

In its annual report, the American Egg Board attributed the egg's continuing success to today's trend toward protein-based breakfasts, coupled with trends in white-tablecloth restaurants to add eggs as plate-presentation flourishes. The Egg Board has heavily emphasized market messaging that promotes the egg's nutritional story and its continued role in the weekday breakfast plate. It reports studies now show eight in 10 consumers agree with the statement that eggs are a nutritional choice

Competitive Commodity Insights: Grilling season could get ugly. A supply outlook update

Grilling could get costly this summer

With summer grilling season ready to kick off even as the U.S. Labor Department reported beef prices in February posted their biggest monthly gain in more than 10 years, what's in stock for meat supply and demand in the months ahead?

Beef

Heavy winter and spring rains in some western States still weren't enough to abate the overall lingering impact of drought in the southwestern United States. Now that ranchers liquidating their herds in reaction to resulting scarcity of feed have finally reached the end of their supplies, cow slaughter has begun to taper off, and cow prices have increased. Meanwhile, as higher cattle costs for beef packers have likewise squeezed their profitability margins, their ability and willingness to bid the price of market-ready beef cattle up has become erratic, USDA reports. In fact, with margins in the red, packers could begin to reduce slaughter, which would further impact supply--although that strategy may be only partially effective with market-ready cattle as scarce as they are now. Wholesale beef cutout values, while moving higher--into record terrotory for 50-percent lean trim--have still not gone high enough according to USDA to offset the record high prices packers are paying for cattle. All-fresh beef prices continue to set higher records each month--$5.04 per pound in January, for example--in part sustained by the current consumer popularity of ground beef products. On top of that supply/demand scenario, U.S. beef exports also rose 5 percent in January, and USDA increased its forecast for 2014 beef exports to 2.435 billion pounds due to higher demand in Asia. At the same time, beef imports fell 9 percent from a year earlier. Potentially importable cattle inventories remain tight in Mexico after several years of drought resulted in substantial herd liquidation, and inventories have also declined in Canada. Thus, imported cattle shipments are not expected to strengthen in 2014, and the forecast for overall U.S. beef imports in 2014 is only 2 percent higher than in 2013.

Beef supply outlook

 

Pork

With consumers likely already substituting pork in place of continued very high-priced beef, pork demand in the United States is now officially "white hot," according to USDA. That demand continues pushing prices upward, even as slaughter data indicate supplies of hogs remain ample. Estimated federally inspected hog slaughter during the last two weeks of February was about equal to the same period last year; therefore, the supply of slaughter hogs does not appear to be what pushed late February average prices of lean hogs fully 13 percent higher than a year ago. Adding to that beef-driven increase in domestic pork demand, January pork exports, starting the year on a positive note, increased 4.5 percent over a year ago. Higher domestic pork prices are eventually expected to limit pork exports in the second half of 2014. U.S. pork exports are expected to be 5.1 billion pounds, an increase of not quite 1.5 percent over 2013.

Pork supply outlook

Chicken

Broiler meat production fell by 2.8 percent in January due to a decrease in the number of birds slaughtered but a slight growth in average weights per bird, USDA reports. Overall production for 2014 is estimated at 38.7 billion pounds, down 175 million from USDA's previous estimate. Although the large broiler companies had been expected to expand production in 2014 primarily due to a decline in feed costs from a year earlier and relatively high prices for competing meats that should spur demand, the number of chicks they reported they had placed on feed in early 2014 declined unexpectedly to around only 0.5 percent higher--much less than the 1 percent to 1.5 percent reported for late 2013. With that higher broiler meat production expected in the first-half of 2014 and higher stock levels at the start of 2014, wholesale prices for most broiler products have been facing—and are expected to continue facing—downward price pressure. The impact these factors have on prices could vary considerably by product and will be impacted by price changes for other meats and the strength of any response to lower prices in the export market. In February, the national whole broiler price was $0.92 per pound, down 9 percent from the same period in 2013 and 4 cents lower than in January. Prices for most other broiler products were also lower.

Pork supply outlook

Competitive Commodity Insights: How will consumers react to rising meat prices?

Oklahoma State economics professor Jason Lusk regularly surveys shoppers to maintain an ongoing sense of preferences and sentiments on the safety, quality, and price of food, with particular focus on meat demand. His monthly on-line survey with a sample size of at least 1,000 individuals, weighted to match the US population in age, gender, education and region gives an ongoing glimpse into some sentiments and plans regarding meat and meal alternative pricing.

Consumer willingness to pay for meat and alternatives

 

Consumer plans in response to food prices

Competitive Commodity Insights: Have chicken prices peaked?

Why the jump in chicken prices?

U.S. Bureau of Labor Statistics data showed national average prices for fresh whole chickens hit their all-time high in the final quarter of last year. In the last ten years, BLS says, the price has risen 51 percent, from $1.02 in October 2003 to October 2013's $1.54 per pound. At the same time, USDA was cautioning that  projections for retail poultry prices were continuing to point upward, at an estimated 3.5 percent to 4.5 percent increase.

"Poultry demand continues to be very strong," a USDA economist said in an agency broadcast earlier this fall. "Even though supplies are healthy and there are no real issues with supply, the demand for poultry is very strong and the whole industry is still dealing with relatively high feed prices."

Can supply going forward keep pace with that demand?

USDA thinks so. The agency reported in mid-January that generally higher production over the last several months and higher overall cold storage levels had started to pressure prices for many broiler products downward. Most of the decline has come over the last several months, as year-over-year average prices for 2013 were lower for many broiler products. Wholesale prices for whole broilers averaged 95 cents per pound in December, 3 percent lower than in December 2012, although the annual average for 2013 was $1 per pound, a 15-percent gain from the 2012 average of 87 cents per pound. The price for boneless/skinless breasts followed the same pattern, with the December average 3 percent below the previous year, but with the annual average 15 percent higher. This pattern of price changes was also similar for boneless/skinless thighs.

Many of the price changes at the wholesale level are a reflection of the stocks changes over the last several months. With cold storage holdings at the end of November up fully 64 percent from the same period in 2012, prices of leg quarters fell, with the December 2013 average at just 42 cents per pound, a decline of 17 percent from the previous year. Prices for wings have also fallen sharply compared with the previous year. Average prices in December were $1.20 per pound, down 37 percent from 2012. Much of this drop can be attributed to increases in cold storage holdings, which at the end of November were 36 percent higher compared with the same period in 2012. In past years, wholesale wing prices have gradually strengthened in the fall and peaked in late January or early February. With the much higher level of cold storage holdings, wholesale wing prices are not as likely to reach their levels of past years.

With higher stock levels to start the year and higher production expected, broiler prices are expected to be under some downward pressure. The extent of the pressure will depend on the impact general domestic economic conditions and higher beef prices have on the demand for broiler products.

Partners

Supported by the Nebraska Corn Board

The Nebraska Corn Board, on behalf of 23,000 corn farmers in Nebraska, invests in market development, research, promotion and education of corn and value-added products. The board aims to work closely with the farmer-to-consumer food chain, to educate everyone about the role corn has in our everyday healthy lives. The Nebraska Corn Board is proud to sponsor the Farmer Goes to Market program to help bring its mission of expanding demand and value of Nebraska corn to the consumer, through the strongest touch point in that chain: the Nebraska retail grocer.


Supported by the Nebraska Farm Bureau

The farm and ranch families represented by Nebraska Farm Bureau are proud sponsors of the Farmer Goes to Market program. We take great pride in supporting Nebraska's agricultural foundation. A key part of that effort is to make sure we produce safe and affordable food. This newsletter is an important part of our effort to connect the two most important parts of the food chain -- the farmer and the grocer -- with the goal of increasing consumer awareness and information about how their food is raised in Nebraska.


In patnership with the Nebraska Grocery Industry Association

The Nebraska Grocery Industry Association was formed in 1903 by a group of Omaha grocery store owners, wholesalers and vendors to allow them to promote independent food merchants and members of the food industry, and to promote education and cooperation among its membership. NGIA continues to represent grocery store owners and operators, along with wholesalers and vendors located throughout Nebraska, by promoting their success through proactive government relations, innovative solutions and quality services. NGIA offers efficient and economical programs. NGIA also lobbies on both a state and national level, ensuring that the voice of the food industry in Nebraska is heard by our representatives.