Published on: 07:12AM Oct 24, 2008
What kind of influence has the recent financial market turmoil had on the protein markets? Choice beef, pork and chicken prices have all moved significantly downward since the financial markets debacle intensified in mid September. Why you ask? Demand particularly from the food service sector but also from retail has been sluggish to say the least. Yes the pork and chicken markets are typically declining during the early fall but chicken production cutbacks that finally came to fruition during this time period have yet to stabilize prices. Chicken breast prices last week were roughly 13% less than last year despite nearly a 5% decline in output. The USDA choice beef cutout usually moves upward during the early fall as buyers secure beef supplies for the upcoming holiday season. This year holiday beef procurement has been listless. Buyers are limiting forward purchases due to the uncertainty in the economy. Key holiday beef cut markets ribeyes (35%) and tenderloins (29%) were substantially below 2007 levels this week. Choice tenderloins were at their lowest levels this week in over 3 years, ribeyes were at some of their lowest levels in 7 years. So what do we expect going forward? One would have to believe that eventually production slowdowns and holiday demand would bring support to some of these markets. However, as I write this, US financial markets are poised for another large break downward which is certainly bearish for protein demand.
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