Meat price inflation at the retail level was a mixed bag in 2012. In large part, the shifts in retail prices responded to the supply dynamics in the marketplace. Pork values deflated the most while both broiler and turkey retail prices rose by double digits in some cases after three years of flat prices. Below is a brief recap of the latest retail price update:

Beef: Retail beef price inflation slowed down in 2012 after double digit increases in 2011. In December, the retail price for choice beef cuts was pegged at $5.1180/lb., 0.7% lower compared to November but still about 2% above year ago levels. Choice beef prices are almost 20% higher than what they were three years ago but retailers are facing increased resistance in passing along higher prices to the consumer. In large part we think this is a function of the supply available. Coming into 2012, the expectation was for prices to escalate higher due to significant cutbacks in cattle slaughter. The number of cattle coming to market did indeed decline but the cattle that did go to slaughter were significantly heavier, with total beef pounds only down about 1.2% from the previous year. With beef exports lower and imports higher, domestic per capita beef disappearance was down only 0.4%. Choice beef prices since August rose at less than 2% while all beef price inflation has increased by an average 5.3% compared to the previous year. The consumer shift to lower priced beef items has been discussed at length and the data appears to support this view as well. Beef prices at retail are expected to rise in 2013 but this will be highly dependent on how supply trends develop.

Pork: For the most part pork prices at retail have been steady to lower this year. Pork prices since last May have averaged 1% below year ago levels. The December retail pork price was pegged at $3.427/lb., 1.5% lower than the previous month and 1% lower than the previous year. Note however, that pork prices rose sharply in 2010 and 2011 as production increases did not keep pace with strong export demand, leading to a net decline in per capita pork availability. Per capita pork disappearance in the domestic market (a measure of supply availability) declined 4% in 2010 and 2011 but was basically flat in 2012. The expectation is for per capita pork disappearance to be somewhat lower in Q1 and Q2 of 2013, an expectation predicated on modest slaughter increases (+0.5%), modest declines in weights (-0.5%) and some increase in export volume. Lower per capita supplies and higher prices for competing items should help push pork retail prices higher in 2013 but don't expect the kind of double digit inflation we saw in 2010 and 2011, however.

Poultry: The jump in retail poultry prices is due in part to the ability of broiler producers to reduce supplies. Per capita broiler disappearance in 2012 declined by some 3%. For all of 2012, broiler retail price inflation averaged 10.1%. The December composite broiler retail price was $1.9710/lb., 10.6% higher than a year ago and the highest price on record. Producer margins are improving and with higher supplies already in the pipeline, the expectation is for retail broiler price inflation to moderate in 2013.