Retail pork prices averaged $3.40 per pound in January, dropping 2.5 cents from December. Lower retail prices are also reflected in a lower wholesale-to-retail price spread, which declined from 196.8 in December to 193.4 in January.

Lower retail prices and corresponding price spreads suggest that retailers are finding it necessary to lower prices in order to move pork supplies out the door.

There are a number of factors that affect how much animal protein consumers decide to buy; but among them right now, higher payroll taxes and higher gasoline prices may be causing consumers to back away from the meat purchases.

Retail pork prices are expected to average in the low $3.40s per pound during the first quarter, down from $3.49 a year ago. Weaker foreign demand for U.S. pork products cou ld benefit domestic pork consumers.

If lower foreign demand pressures wholesale pork prices, retailers could pass along those lower wholesale prices. However razor-thin retail margins associated with currently high-priced beef may limit what retailers choose to fully pass along to pork consumers in the form of lower retail pork prices.

Source: Livestock, Dairy and Poultry report