This Week in Retail: Protein Indices Are Above 3-Year Average

In the face of ongoing inflationary pressures along with animal disease issues impacting the protein industry, wholesale beef, pork, and poultry prices continue to reside at or challenge all-time highs.

In the retail red meat complex, Urner Barry’s weekly retail feature beef index this week averages $6.34 per pound, down $1.02 per pound from a week ago but 6 cents per pound above the 3-year average.

The boxed beef market is currently moving mostly sideways but has dipped to 52-week lows in recent days. Despite this, Urner Barry's Choice and Select cutouts remain at near seasonal all-time highs, second or third to 2021 and 2014.

Consumer demand for beef has remained strong even with these higher price points. Grocers continue to widely feature beef, which holds the top spot in retail buying opportunities this week with 32 percent of the share.

The retail feature pork index has gained 5 cents from last week’s level and is 91 cents per pound higher compared to the 3-year average. The pork index has trended at all-time highs for most of 2022 so far.

The pork cutout, while moving lower from its summer peak, remains at a near seasonal record high. Urner Barry's cutout is holding above $100 per cwt, indicating solid domestic pork demand overall. Pork has gained the spotlight at retail this year for being an extremely competitive item. Pork chops currently average $3.38 per pound, compared to $4.67 per pound for boneless skinless chicken breasts.

Hog supplies are undergoing a seasonal expansion but could remain on the tighter side this fall and winter, depending on the extent of porcine reproductive and respiratory syndrome (PRRS) and porcine epidemic diarrhea virus (PEDv) complications in the months ahead.

UB's weekly retail seafood index has declined sharply in recent weeks but is still 79 cents above the 3-year average at $9.09 per pound. 16-20 raw shrimp currently averages $8.81 per pound at retail, up from $8.05 per pound last year.

The weekly retail feature chicken index is down 53 cents per pound this week at $2.86 per pound but is up 24 cents per pound compared to the 3-year average. Meanwhile, the retail turkey index is about even with the previous week but is currently $1.15 per pound above the 3-year average.

According to data from USDA, the highly pathogenic avian influenza outbreak has affected 44.05 million birds year to date. The bird flu has recently returned to the Midwest, impacting a commercial egg layer operation of around 3 million birds in Ohio earlier this month.

Urner Barry's retail egg index is currently a whopping 67% above the 3-year average and at a seasonal all-time high. Along with HPAI, heavy seasonal flock rotations are curtailing egg supplies. At present, large eggs retail at $3.26 per dozen on average, up 29.4% from last year.

While all major retail features are above historical norms, a few pork items will likely stand out in the meat case over comparatively more expensive beef, seafood, and in some cases, chicken items.

The latest Consumer Price Index data from the Bureau of Labor Statistics showed the food index rose 0.8 percent in August, the smallest monthly increase since December 2021. However, the annual rate gained 11.4 percent—the highest 12-month increase since May 1979.

Last month, the index for food at home gained 0.7 percent as all six major food indexes increased. The index for meats, poultry, fish, and eggs increased by 0.5 percent in August.

The index for food away from home in August rose 0.9 percent, following a 0.7 percent rise the month prior. Over the last year, the index for food away from home has risen 8 percent, while food at home gained 13.5 percent.

The wide spread between the food at home and food away from home indexes may have resulted in more consumers opting to dine out over cooking at home. However, seasonal occasions like tailgating and the upcoming holidays continue to be the driving forces behind consumers' eating patterns.

Par: Courtney Shum (15/09/2022)

Source: Foodmarket newsletter (Urner Barry)