American consumers haven't lost their taste for beef. If anything, lower retail prices and an improving economy will increase sales through the remainder of 2017.
Chris Hurt, Purdue agricultural economist, says it's important to see beef demand in the context of the economy as a whole. As the stock market climbs, it builds in a kind of optimism that sometimes seems to defy reality.
"The old market adage is buy the rumor and sell the fact," Hurt says. He conjectures that if the Trump administration follows through on verbal commitments to stimulate the economy, this will reduce the unemployment rate. That, in turn, will encourage consumers to purchase more meat and to eat out more often—both facts that generally benefit beef sales.
As things stand now, protein production continues to trend up, right along with consumption. Per-capita supplies of the four major meats (beef, pork, broilers and turkey) will finish the year up 1.7% from 2016, when the level hit 213 pounds.
This year, per-capita supply is projected by the USDA at 216 pounds. Leading the way, pork supplies are expected to increase 3.2%; turkey 1.8%; beef 1.6%; and chicken 1%.
Looking at retail price levels, beef hit a record in 2015, with an average price of $6.29 per pound (USDA composite retail). In 2016, that average fell to $5.96 per pound; and this year, the decline is expected to continue through the first half of the year. Hurt notes that while prices will be lower, more beef will likely be sold, meaning the decline in price won't have much, if any, impact on beef prices at the producer level.
Retail pork prices have followed the same trend line, falling during the past two years after peaking in 2014 at $4.02 per pound (USDA composite retail). In 2015, the price declined to $3.85, and in 2016, to $3.74. While Hurt anticipates lower average prices this year, he expects producers will see higher live or lean hog prices because of increased packer capacity. Two new packers expected online this summer mean more bidding for hogs, and that should be a positive for producers.
To put per-capita meat consumption in context, Hurt points out the peak was in 2007, when supplies hit 220 pounds. Through the period of high feed prices and drought, the industry trended down to a low of 201 pounds in 2014 and is now in the process of making the climb back up. Hurt expects it will be 2019 before the U.S. approaches the 220-pound mark again.
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