Market Morsel: Down, down, prices are down (not)
Market Morsel
This week a major retailer announced some cheap prices for beef cuts with a $5 cap on prices of selected packaged cuts. Although, on a per kilo basis the price is still over $21.70 so perhaps it is that cheap. Indeed, it can’t afford to be that cheap with cattle prices at such high levels at the saleyard.
A quick look at the relationship between quarterly national heavy steer price changes at the saleyard compared to quarterly average retail beef price changes shows a reasonably similar directional trend, with saleyard prices understandably tending to lead the way.
Analysis of the annual price change between the saleyard cattle and retail beef shows that the linear association between the two price series is moderate with a correlation coefficient of just 0.3383.
In simple (non-statistical) terms you could say around a third of retail beef price changes can be explained by whats going on at the saleyard*. Similarly, the current retail beef promotion feels more like a marketing gimmick than reflective of anything that is going on currently in the cattle markets.
