Food Prices Archives - California Agriculture News Today

Meat Price Trends Point to Increase in Poultry Sales

By: Ching Lee; Ag Alert

The Memorial Day weekend usually kicks off the summer grilling season, and Bill Mattos, president of the California Poultry Federation, said he expects shoppers will look more to chicken and other poultry products this year as less expensive protein alternatives to beef and pork.

“The barbecue season is a big time for chicken,” he said. “We think prices will probably go up for chicken, but not at all like we’re seeing in beef and pork.”

With the U.S. cattle herd at its lowest in more than 60 years—made worse in recent years by drought-related downsizing—and the porcine epidemic diarrhea virus lowering U.S. pork production, market analysts say poultry meats are poised to fill that market gap.

The bright outlook for poultry producers is expected to continue into 2015, as U.S. beef production is forecast to drop by nearly 6 percent this year, while pork production will also fall by as much as 7 percent, according to the Rabobank Food and Agribusiness Research and Advisory division.

William Sawyer, an analyst with Rabobank, said although overall U.S. meat consumption has declined in recent years—even before the recession—chicken consumption has stayed relatively stable and is now growing.

“That’s been largely driven by the fact that beef prices have risen significantly more than chicken has,” he said.

With the price of ground beef eclipsing that of chicken breast, Sawyer noted that fast-food restaurants such as McDonald’s are taking advantage of poultry’s lower price points by offering more new menu items featuring chicken.

Given how expensive it is to raise cattle compared to chicken in terms of feed cost, Sawyer said he expects chicken will continue to gain market share.

“Once consumers have the appetite for value, which is what we’ve seen in the growth in the chicken sector, it’s unlikely that beef is going to regain that per-capita consumption that it’s lost in the last seven or eight years,” he added.

Sawyer said consumers who buy specialty products such as organic, free-range or antibiotic-free are much less sensitive to price changes anyway, so producers who raise birds for these markets are not as impacted by current price trends in the conventional market.

Although USDA projects U.S. pork production will bounce back from the PED virus next year with a growth of 2.9 percent, beef production is expected to continue to decline, as ranchers retain their heifers in an effort to expand their herds.

That means meat prices will likely remain strong—and with lower corn prices, poultry producers will still have incentive to increase production, Sawyer said.

In addition, U.S. chicken exports, which take up 20 percent of total production, are expected to continue to grow, particularly to Mexico, and that will also help to support higher chicken prices, Sawyer said.

“So the outlook is very positive and very profitable,” he added.

Patrick Cavanaugh2016-05-31T19:35:31-07:00May 21st, 2014|

Drought Could Affect Current and Future Food Prices

California Farm Bureau Federation reported today that with hundreds of thousands of acres of farmland expected to be left unplanted this year due to water shortages, market analysts and economists say shoppers will likely begin to see higher prices on some food items later this year.

Sean Villa, president of Great West Produce, a produce broker in Los Angeles County, said he expects a number of products to be affected later this year, including broccoli, sweet corn and melons from growing regions in Fresno, Mendota and Huron, where farmers will likely cut acreage due to water shortages.

Gary Tanimura, a vegetable grower based in the Salinas Valley, said he will have to reduce his summer melon production in the San Joaquin Valley by about 20 percent due to lack of water.

Tanimura said spring and fall lettuce production in the San Joaquin Valley also could drop by 25 percent to 30 percent this year.

Cindy Jewell, director of marketing for California Giant Berry Farms in Watsonville, said farms in the Oxnard growing region—which typically plant a second crop in the summer for fall production—may not be able to do that this year.

“If the water situation continues to be this severe, there may not be as many of those acres replanted for fall production,” she said, adding that if the drought continues into fall and winter, when most strawberries are planted, it could affect what’s planted for next year’s harvest.

Because California supplies nearly 90 percent of the nation’s strawberries, Jewell said it is not likely that there will be much of a production shift to other regions.

“It’s not like someone else could step in and do that,” she said. “It’s all about climate and location.”

On the beef market, the California drought may have the most impact on niche products such as grassfed, organic or natural beef, said Lance Zimmerman, a market analyst for Colorado-based Cattlefax. Those programs typically rely more on local or semi-regional supplies, he said.

Retail beef prices have risen nationwide, Zimmerman said, because of improved demand and continued declines in supply caused by several years of drought in other major beef-producing regions in the Southern Plains and the Southeast.

In states where drought conditions have improved, ranchers are now trying to build back their herds, so they’re not sending as many animals to market, particularly mature cows, and that has driven up prices on meat cuts such as chuck roast and ground beef, he added.

On the produce market, fair weather accompanying the drought has, for now, caused vegetable crops to come to market ahead of schedule, creating an overlap of products from the desert region and the San Joaquin Valley.

That, combined with reduced demand from East Coast markets due to severe winter weather, has led to temporary oversupplies of some vegetables, Tanimura said, while Jewell reported that berry production has also been stimulated by warm winter weather.

Patrick Cavanaugh2016-05-31T19:38:09-07:00March 18th, 2014|