Beef Demand Trends Look Positive Despite Events

Beef demand has had a lot thrown in its path over the past 18 months. The terrorist attacks, BSE discoveries in Japan, the Russian poultry ban and a faltering U.S. economy all impacted demand for beef.  These factors coupled with record large supplies of not only beef, but pork and poultry as well, served as further obstacles during 2002.  These all impacted beef demand to a degree but it continues to show considerable resiliency.  No matter how you look at it, beef demand remains on solid footing.

Retail prices remained relatively stable during much of 2002.  All-fresh retail beef prices were up slightly during 2002 compared to 2001.  This continues the trend of higher retail beef prices that began in 1998.  Retail beef prices have increased nearly 20 percent over the past four years but these increases have likely run out of steam.  Pricing at retail is expected to increase slightly (up 1 to 2 percent) during 2003 and 2004. 

Prices at the wholesale level didn’t fare quite as well during 2002.  Weighted-average cutout values averaged $113 during 2002, down from $119 or 5 percent from 2001 levels.  This measure was nearly identical to the average during 2000.  Available beef supplies were considerably larger during 2002 compared to either 2000 or 2001 and this negatively impacted pricing at the wholesale level.  During late 2002, wholesale prices are trading near the 2001 average and poised to move higher through the first quarter of 2003.

Wholesale values were limited, particularly during the late spring and summer when available protein supplies outpaced demand.  That’s not to say beef demand was bad, but consumers had plenty of competitively priced protein from which to choose.  Rib and loin values were particularly impacted due to the larger supplies.  However, by late in the year certain cuts from these two primals were trading near all-time highs.

Beef demand is expected to remain stable during the next several months.  The U.S. economy is expected to return to consistent growth, new products and brands will continue to impact demand and renewed growth is expected on the export front.  These factors will support at least stable beef demand.  Wholesale prices should move higher during 2003.  Higher retail and wholesale prices will continue to support values for all classes of cattle during 2003 and 2004.