Tuesday, May 20, 2008

Meat Market: Where are Prices Going?

After we put up "Ma Climateer Just Bought Some Chicken, Cheap (And That's NOT A Good Thing)" I was wondering which restaurant stocks would benefit from increased pork supply (and lower food costs).

This is not a recommendation to play pork. We figured that Famous Dave's would be a beneficiary. This is not a recommendation on DAVE. Not having looked at hog prices in some time ("barrows and gilts were higher today") we didn't know that in the last seven weeks pork prices have skyrocketed. So much for that idea.

Then we received an email from someone who has actually kicked a cowpie: "...They're coming for the cows"

And son-of-a-gun they are. From CattleNetwork:

April Cattle On Feed 11,684,000 Change

(+) Placements
1,536,000 -11.52%

(-) Marketings
2,010,000 9.12%

(-) Other Disappearance 75,000 19.05%

(=) May Cattle On Feed 11,135,000 -4.70%

On Feed February March April May % Change
U.S. 11,966 11,853 11,684 11,135 -4.70%
Texas 2,930 2,920 2,880 2,690 -6.60%
Nebraska 2,510 2,490 2,450 2,380 -2.86%
Kansas 2,430 2,410 2,420 2,290 -5.37%
Oklahoma 355 350 340 305 -10.29%
Colorado 1,090 1,050 1,020 950 -6.86%

This is not a recommendation to buy Ruth's Chris Steakhouse (RUTH) but that may come, after we do some on the spot due diligence.