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Low meat prices warm hearts of barbecuers

If spring warms the hearts of backyard barbecuers, they have another reason to rejoice: U.S. meat prices are at their lowest levels in at least three years.
Dan Hogan, left, looks for a good cut of meat  at the Cub Foods grocery store in Burnsville, Minn.
Dan Hogan, left, looks for a good cut of meat  at the Cub Foods grocery store in Burnsville, Minn.Jayme Halbritter / AP file
/ Source: Reuters

If spring warms the hearts of backyard barbecuers, they have another reason to rejoice: U.S. meat prices are at their lowest levels in at least three years.

"There will be some very attractive prices for this grilling season. We already are seeing it on some major chicken, beef, and pork items," said Jim Robb, an economist for the Livestock Marketing Information Center. "I think they will be pretty darn attractive through the balance of the year."

On average, he said, retail beef and pork prices are at three-year lows, and chicken prices are the lowest in four years.

Particularly low priced are chicken leg-quarters. A slowdown in exports has created a supply glut and led supermarkets to price them to sell -- in some cases, under 20 cents a lb, Robb said.

U.S. meat sales increase in the spring and summer as the warm weather moves meat preparation from kitchen stoves to backyard grills.

Government figures show that over the past 10 years U.S. per capita meat consumption on average increased by 1.3 lbs in the second quarter from the first quarter, Robb said.

But what's good for meat-hungry consumers is not so good for the nation's meat companies. Two of the largest recently said the huge supply of meat has damaged their bottom lines.

The nation's top pork producer, Smithfield Foods Inc., on Friday said its fiscal fourth quarter earnings will be down sharply from the year-ago period because the abundance of meat has hurt its hog and pork businesses.

Two weeks ago, No. 1 U.S. meat producer Tyson Foods Inc. , warned that its quarterly earnings will be hurt by the abundance of meat.

Production up, exports down
Meat companies have blamed the large meat supply on the deadly bird flu overseas, which has blunted demand for U.S. poultry meat, and on the continued lockout of U.S. beef by some importing countries that are worried about mad cow disease.

The avian flu in Europe and Asia has cut chicken consumption and hurt U.S. exports of chicken, which normally accounts for about 15 percent of domestic production.

Japan and South Korea continue to ban U.S. beef because of the mad cow disease cases here. Before the bans, which started in late 2003, the two countries were leading buyers of U.S. beef.

Meat companies had expected those markets to be open by now. South Korea has said it hopes to start buying U.S. beef soon.

"There is too much meat. We are just producing too much of it," said Todd Duvick, a research analyst for Bank of America. "Avian flu is the contributing factor, but it is not the primary factor."

The U.S. Agriculture Department forecasts beef production will be up nearly 5.5 percent this year, pork production up 3 percent, and chicken production up more than 2 percent.

Combine those production increases with the large supplies of meat in U.S. warehouses and supplies should remain large, analysts said.

Domestic meat consumption has remained strong, but it is not at the level of a few years ago.

"The high protein diet craze of the past couple of years has faded," said Rich Nelson, analyst with the agriculture analysis firm Allendale Inc.