Protein Deflation

Published on: 06:57AM Feb 26, 2009

The chart of the week is weekly beef, pork and chicken cutout changes versus the 5 year averages. As one can tell from the chart, the major protein markets have been trending well below their 5 year averages for most of 2009. February has been a particularly difficult month for protein prices. As of February 25th, key restaurant protein items 90% beef trimming (10%), choice beef strip (18%), boneless skinless chicken breast (11.5%), and pork belly (8.3%) market prices were well below the same week a year ago. Now what makes these depressed price levels especially remarkable is that protein production for most of 2009 has been trending well below 2008. One would think that lower production and thus lower supplies equals higher prices. And that is usually true in a normal economic environment. But as we have discussed time and time again, this is not a normal economic environment. This is a demand story and protein demand has been soft to say the least. As a commodity market analyst who spends all day every day in the commodities, the commodity markets become my window to the macro economy. And the protein price depreciation in recent weeks is concerning from a macro standpoint. That being said there are signs that the current depressed protein prices may be spurring demand. For example, beef top butt (top sirloins) shipments in February are likely to be their largest in 4 months. And I would not be surprised to see strong retail feature activity in the coming months on high end beef cuts. What does the rest of the year and 2010 look like for protein prices? I invite you to find out by attending the 2009 Windy City Commodity Exchange at the Chicago Board of Trade on May 18th- the same week as the National Restaurant Show. To learn more visit


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