Harrington's Sort & Cull
John Harrington DTN Livestock Analyst

Friday 08/22/14

The Lost Grills of Labor Day?

Time was when outdoor grilling and Labor Day were locked together like Mom and apple pie, do-nothing and Congress, the Cubs and last place.

But as the strange summer of 2014 gathers itself for the home stretch, I'm worried that the traditional Labor Day feature is shaping up to be as meatless as Paul McCartney's ashram.

Typically, August represents a marketing period when retailers and food managers look past the dog days of summer and restock coolers for the season's grand finale of meat consumption. Stockpiling steaks and chops and hamburgers for the Labor Day extravaganza has always been a no-brainer, like filling a few canteens before stroll across Death Valley.

Apparently not this year.

Judging from the way beef and pork cut-outs have absolutely imploded over the last three weeks, meat buyers couldn't care less about what you throw own your Weber late next week. For example, since peaking on July 31, the choice beef box has retreated in value by more than $13. Over the same period, the pork carcass has depreciated by nearly $23.

While you can blame some of wholesale pork crash on increasing production, beef tonnage this month has remained essentially steady.

So why has pre-Labor Day meat buying been such a bust this year? Look no further than the most recent meat spread data released by the USDA on Monday.

In an inelegant but precise word, retail meat margins suck.

Although grocers have been pricing beef and pork cuts higher as fast as their magic markers can fly, they fell seriously behind the explosive wholesale pace through the first half of the summer. The retail share of the beef dollar paid by consumers last month totaled no more than 35.3%, 10 points below July 2013 and the smallest take since the first quarter of 1993.

Pork margins at Safeway et al are little better. The retail share of the pork dollar in July total just short of 46%, 7 points below midsummer last year and the thinnest slice of pie served to these guys since late 1996.

Next time you take the expensive promenade along the meat counter, note how many trays have been reduced and re-stickered "Manager's Special."

Consumer demand for beef and pork has turned as sticky as late summer humidity itself. Retailers are sick of the exorbitant cost of maintaining inventories, too much of which must be painfully discounted before it begins to smell.

The unacceptable cost of being stuck with leftovers.

In a nutshell, that's why more grills this Labor Day could stay lost in the end-of-summer shuffle.

(AG)

Posted at 1:26PM CDT 08/22/14 by John Harrington
Comments (3)
Cash strapped wage earners just can't afford to pay these kinds of prices at the stores for beef, pork......its a rich mans item any more kind of like shrimp and lobster. Now with corn at 3.00 or less, when will meat products start going down at the store? Ethanol has not done much for the American consumer really. I think some of the agriculture entities are going to be in for a bumpy ride. Late model used combines seem to be taking a real hit now. Livestock equipment seem to be doing ok. 1400-1600 dollars for a calf ? How many people are going to jump into to the cattle business? When will this peak before it crashes? Lots of uncertainties in this world, it seems.
Posted by GWL 61 at 11:49AM CDT 08/24/14
At this time, beef has a long row to hoe...we are at all time lows of beef cows as many farmers sold off the cows, tilled up the pastures and are now farming those acres....drought in many areas has also made it hard for ranchers to expand. Now with the high price of replacement heifers it may become worse as you have feedlots trying to purchase the same heifers that the rancher wants as replacements...this also makes it hard for any young person that WANTS to get into the cattle business....takes way to much capital to start up, so dad or grandpa will need to help. With pork we have had some time to get beyond the PED and pig survival has been really good in our area...HOWEVER, PED likes the cooler temps and may come back this fall and winter...I hope not as I have friends who are pork producers and its not a fun thing when the PED hits the barn. If they can get PED under control, pork will probably be the meat of choice for families in the future...litters of 10 make more meat than the single calf.
Posted by Corey Gall at 11:39AM CDT 08/26/14
the habit of under paying for ag products needs to stop so stability can happen what the market people do not want.It is a threat to security in our country
Posted by andrew mohlman at 9:55PM CDT 08/26/14
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