What is in this article?:
- Fewer cattle, strong exports create tight beef supply
- Consumer demand still strong
• It’s hard to tell when the situation will stabilize or reverse.
• In the big picture, this is only part of a cattle cycle that producers know well.
Consumer demand still strong
All that said, consumers still have a strong demand for beef products, and that means the United States will export about 2 percent less beef and import about 15 percent more.
“Even with strong demand, U.S. beef consumption per person dropped to about 55 pounds per year, compared to 63 pounds in 2008,” said Lee Meyer, UK College of Agriculture economist. “It had peaked at 94 pounds in 1976 and was at about 65 pounds just 10 years ago.”
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Jim Robb, director of the Livestock Marketing Information Center in Denver said in a recent Wall Street Journal article that in 2012, Americans spent $288.40 per person on beef, a 4.2 percent increase from $276.80 a year earlier as retail prices rose. He said U.S. beef sales reached $90.6 billion last year, up from $86.4 billion in 2011. Yet volume is in decline.
At the grocery store, consumers will be in for some sticker shock as experts expect beef prices to set record highs in coming weeks.
Although it won’t make a significant difference in overall beef supply, Kentucky does have many producers who produce beef for local markets. Meyer said that as feedlot production costs have gone up so much, the relative cost of producing beef on Kentucky pasture-based systems has decreased.
“Kentucky is becoming more competitive in local beef markets, and this will support market growth,” he said.
It’s hard to tell when the situation will stabilize or reverse. In the big picture, this is only part of a cattle cycle that producers know well.
“Supply and demand ebb and flow in what producers recognize as the ‘cattle cycle,’” Burdine said. “Most cycles are approximately 10-year periods where the number of U.S. beef cattle is expanded and reduced in response to how producers perceive changes in profitability. But, with the constraints facing managers, this expansion may see long delays.”
The cattle cycle seems relatively long because it takes time between when cow-calf producers decide to expand their herds to breed more beef cattle and the time when those animals reach harvest weight.
“There are always many fluctuations in prices and profitability for producers and consumers alike,” Burdine said.
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