The pressure for higher wholesale and retail beef prices is expected to increase through 2014, and that is leading to concern among some in the beef industry.

“I often get asked whether or not beef prices will go so high that consumers will quit buying beef, but I don’t believe there is much danger of people entirely stopping their consumption,” said Derrell Peel, Oklahoma State University Cooperative Extension livestock marketing specialist.

A degree of industry unease about beef demand is understandable. The expected decrease in beef production in 2013 will likely represent a 3.3 percent decrease in domestic per capita supplies. The decrease could be even more pronounced in 2014 with consumers potentially facing another 5 percent decrease in domestic per capita beef supplies.

“Fortunately, beef includes many different specific products; the question is more about how consumers will adjust the mix of products and total expenditure on beef rather than their likelihood of stopping consumption entirely,” Peel said.

One of the ongoing concerns is the slow recovery of beef demand from the 2009-2010 economic recession. Middle-meat demand was weakened the most as consumers switched from steaks to hamburger and other value cuts. In that process, a higher percent of total carcass value was borne by the end meats, such as chuck and round portions of the carcass.

“In 2011 and 2012, middle-meat values advanced along with end-meat values, thus maintaining the relatively large contribution of end-meats to total value,” Peel said. “Though it has been a slow process, beef demand has recovered from the recession.”

The All Fresh beef demand index provided by the Livestock Marketing Information Center shows significant recovery from the 2010 lows. The 2012 annual beef demand index level is near levels not seen since 2008. The beef demand index for the fourth quarter of 2012 posted a significant increase to the highest levels since the fourth quarter of 2007.

Unfortunately, while beef demand is increasing, it is likely not increasing fast enough relative to price pressure from falling beef supplies in 2013 and 2014.