Source: Dow Jones Newswires

KANSAS CITY (Dow Jones)--Looking past Father's Day and the Independence Day holiday, it appears that retail grocers around the U.S. are set to feature a mix of seasonal products, although none are expected to be at attractive prices through the summer, market analysts and meat buyers said.

Wholesale prices of all three major meats are rising, and grocers are caught between wanting to sell meat at levels that will attract volume sales and levels that will generate a profit. It looks like it will be hard for them to do both, the analysts and buyers said.

A Midwestern buyer said retail grocers were "buying everything" as they gear up for the summer mix of products after Independence Day.

And an eastern market analyst said retailers still were trying to find a variety of products for post-Independence Day newspaper supplements, and there were concerns about being able to cover their needs at current wholesale prices.

Beef

For the upcoming Father's Day celebration, retail grocers are said to be planning to lean heavily on beef features. Market analysts said steaks may grace the front pages of weekly newspaper circulars, although they may share space with other meat product.

However, most grocers are don't expect to sell large volumes of high-quality steaks for the observance because there are indications that consumers are beginning to scale back their purchases of such items. High gasoline prices are cutting into family budgets, and retail prices for steaks are moving above a growing number of consumers' internal product price limits, the eastern analyst said.

The analyst explained that each shopper has an internal price point at which a product will seem to be too high priced. This price point may shift over time with changes in spendable income, but at some point, a meat product may go over this line, and the shopper will decline to buy it.

The analyst said anecdotal evidence from food service contacts indicates that shoppers are getting squeezed by gasoline prices and other rising costs, and the price point is declining, just when actual prices for the product are rising. Shoppers are responding with a shift to less-expensive product like hamburger, he said.

At the same time, grocers will avoid featuring a product when it can't turn a profit, the analyst said. This could put pressure on wholesale beef prices because most retail meat products are sold when they are on special at the retail end of the chain, and if they aren't being put on sale, they won't sell very well.

In the dog days of summer, retailers will have difficulty selling end cuts because consumers will avoid heating up their kitchens to prepare a roast, a Midwestern market analyst said.

"They can't feature ends in July, so that leaves middle meats, and they're too high," the Midwestern analyst said.

As a result, quality beef products could be a slow feature in the summer, the Midwestern analyst said.

The Midwestern buyer said July will sift out the retailers who have already booked beef for delivery in July. Those who did will have beef at agreeable prices in their summer advertisements, even if it is hamburger, and those who are trying to cover July plans now will have little in the way of beef on the front pages of their weekly circulars.

The average price of the 15 cuts of beef in the Dow Jones Newswires survey was $3.53 a pound, compared with $3.58 last week and $4.16 last year.

Pork

As packers scramble for slaughter hog inventory to cover their product needs, USDA reported pork cutout values are pushed to $73.02 per hundredweight on Wednesday. This is the highest the cutout has been since Sept. 6 when it was $73.92.

At the same time, U.S. cash hog prices this week reached reached the highest level since Aug. 23, based on USDA figures. Seasonally tight supplies, current marketings with lighter carcass weights, reports of increased breeding problems last summer and disease losses in growing pigs last fall and winter are contributing to tight supplies for packers, according to industry sources.

That means prices for pork product are moving up as well, and retailers are pulling away from the market, the Midwestern meat buyer said.

An eastern pork analyst said pork marketing has a lull from now to the Independence Day holiday. Some retailers will have pork chops, pork steaks, spare ribs or country ribs in their advertisements for July 4, but the tight hog supplies are limiting feature plans.

Through the summer, large retailers are expecting to move large volumes of ham through their deli counters, and many will have boneless hams on inside pages of their circulars for sandwiches at home.

The average price of the 13 cuts of pork in the Dow Jones survey was $2.12 per pound, compared with $2.27 a week ago and $2.40 a year ago.

Poultry

The USDA this week reported broiler prices in its 12-city report rose 0.75 cent a pound from the previous week to 64.81 cents after rising 2.79 cents the previous week, and private trade sources said it was the result of a combination of influences.

First, chicken exports have risen as consumers in other countries relaxed their fear of chicken that was brought on by highly pathogenic H5N1 avian influenza in their own countries, market analysts said. This has boosted the USDA reported price for leg quarters in its Georgia dock report on Wednesday to 31 cents a pound from 30 cents reported on Monday.

At the same time, the USDA reported boneless/skinless breasts Wednesday at 137 cents a pound, versus 135.50 cents on Monday and 135 cents on Friday.

Trade sources said the leg quarter increases can be attributed at least partly to the increased export demand, but that the breast market is heating up as buyers look to offset some of the expensive red meats in their upcoming circulars. If beef or pork prices get above that mental value point for consumers, they may shift to a less-expensive product - chicken - and grocers want to be ready.

The average price of the four cuts of chicken in the Dow Jones survey was $1.19 a pound, versus $1.39 a week ago and $1.60 a year earlier.

To access the retail meat table, see story number 3239 or keyword search for "Retail Meat."