RED MEAT REPORT Higher retail prices loom How wholesale beef prices perform from now on depends on how consumers respond to expected higher retail prices. Supply factors determine price directions, but demand determines price levels. Overall beef demand (retail, foodservice and exports) fell 10.8 percent in 2009 from 2008. Demand in this year's fi rst quarter was down 3 percent from a year earlier. But an encouraging sign is that it was up 1 percent over the fourth quarter. Demand is expected to recover somewhat faster the rest of the year and might end up 5 percent higher in 2010 than in 2009, say analysts. However, retailers began raising some of their everyday beef prices in mid-April in response to the huge increase in wholesale prices. Pricing for the Memorial Day holiday was mostly completed the second week of May. Total available beef supplies will continue to be smaller than last year for the rest of 2010 and into 2011. But there's little doubt that the MarchApril wholesale rally crimped retailers' ability to feature beef aggressively for the grilling holiday. The Memorial Day holiday is the biggest beef sales weekend of the year. So the volume of sales it created was Fast * Accurate Dicing! with CES/Foodlogistik Dicers. * Fresh & Tempered Meat * Poultry * Cheese * Roasting Meat * Sausages * Cold Cuts r r Foodlogistik dicers are perfect dicing and portioning of fresh or tempered frozen meat (up to -4ยบ) * MS 84.21 * MS 100.3 * MS 120.4 * MS 84.3 * MS 105.3 * MS 120.5 * MS 100 * MS 120JM HABLAMOS ESPANOL LLAMAMOS HOY FOODLOGISTIK Fleischereimaschinen GmbH For more information contact: Don Ballein CES/Foodlogistik U.S.A. * 2128 M So. Grove Ave. Ontario, CA 91761 U.S.A. Tel (909) 947-8511 * Fax (909) 627-0087 Toll Free 1-888-278-0885 dballein@foodlogistik.com www.foodlogistik.com 20 * Meat&Poultry * June 2010 * www.MeatPoultry.com expected to have an almost immediate effect on the market. A disappointing weekend would likely force packers to reduce production to keep wholesale beef prices stable. But a strong weekend might force retainers to reorder more beef than expected and allow packers to push wholesale prices higher. The holiday also marks a pivotal point in the outlook for the rest of 2010 because retailers were likely to raise their everyday beef prices sharply after the holiday. Prices are expected to be record high this summer. Retailers will also feature beef less the next two or three months. Foodservice business so far in 2010 appears to be stronger than last year, with some reports suggesting it was up as much as 7 percent in April from a year earlier. White tablecloth business is picking up a little and tourist destinations such as Las Vegas are seeing more visitors. Convention business there is starting to pick up as well. One concern is that quick-service restaurants, notably hamburger chains, face challenges the rest of this year. Beef raw material costs have increased sharply and will erode their margins unless they raise menu prices. It will also be important to watch how and if improved beef demand at the foodservice level affects retail beef demand. Consumers in 2009 transferred some of their food dollars from eating out to eating at home. If they eat out more this year, will they spend lesshttp://www.foodlogistik.com http://www.MeatPoultry.com