Strong beef demand at home and abroad is without doubt the top story of the year so far for the U.S. beef industry. Consumers have kept buying beef despite record high retail beef prices. This in turn has enabled cash live cattle prices to set new record highs for seven straight weeks. The averages the week before last were $226.97/cwt live and $361.74/cwt dressed.
April’s All Fresh Beef retail price averaged $8.50/lb., up from $8.42/lb. in March and up 6.9% from $7.95/lb. in April last year. April’s Choice beef retail price averaged $8.83/lb., up from $8.75/lb. in March and up 8.3% from $8.15/lb. in April last year. April’s pork retail price averaged $4.91/lb., down from $4.95/lb. in March but up 2.1% from $4.81/lb. in April last year. April’s chicken retail price averaged $2.06/lb., the same as in March but up 5.6% from $1.95/lb. in April last year.
Beef demand in Canada can be viewed as a good news story, while U.S. beef demand can be viewed as a great news story, says Canadian market analyst Kevin Grier. Based on beef production and trade and population data, per capita beef consumption in 2024 can be estimated. Based on that data, it is estimated that per capita beef consumption in Canada declined about 3% last year to hit just over 23 kilograms (50.7 lbs.) on a carcass basis. That consumption was the lowest value on record and was more than two times smaller than the largest per capita beef consumption of 52.75 kilograms (116.3 lbs.) which occurred in 1976, he says.
Coinciding with the very low consumption last year was record high retail beef prices that increased 8%, says Grier. Beef prices have increased 38% over the average in 2019. Prices increased more than chicken and pork last year and since 2019. When consumption and deflated consumer beef pricing are tabulated, it shows that Canadian beef demand increased about 2% last year compared to 2023. Despite the decline in per capita beef consumption, beef demand, which includes price, increased last year, he says.
While Canadian beef consumption declined by 3% last year, U.S. beef consumption increased by 3%, says Grier. When combined with a 5% increase in the U.S. beef consumer price, it translated into a 5% increase in demand in 2024. U.S. beef consumption was higher than at any time from 2011-21 despite much higher prices. This is the definition of improved and robust beef demand. U.S. beef demand is the engine that is powering cattle prices now. If it were not for consumer demand, there is no chance that cattle prices would be close to where they are today, says Grier.
However, demand might face headwinds in the coming months. Record-high live cattle prices and the currently higher beef cutout values have yet to be fully reflected in current retail beef prices, says Andrew Gottschalk, HedgersEdge.com. As such, consumers should encounter ever higher retail beef prices entering the dog days of summer. How will consumers react to these increases at a time when demand is suspect at best, he asks.
Meanwhile, demand for U.S. red meat is at record levels in many international markets, even in the face of heightened competition. This was the message from U.S. Meat Export Federation (USMEF) President and CEO Dan Halstrom to USMEF’s spring conference in Fort Worth, TX. A lot of times the best defense is a strong offense, and in many key markets USMEF is doing both, said Halstrom. It is defending where necessary, especially against newcomers like Brazil, which has recently gained greater access in several key regions. But at the same time, USMEF is aggressively pursuing new opportunities in both established and emerging markets, he said.
As an example, Halstrom pointed to the recent expansion of USMEF’s staff presence, with new representation in West Africa and Malaysia, and an additional staff member in Indonesia. He also shared video highlights from USMEF’s recent two-day trade seminar in Accra, Ghana, which attracted buyers from 12 African nations. Halstrom concluded by comparing USMEF’s approach to international marketing to the insights shared recently at Berkshire Hathaway’s annual shareholders’ meeting. He noted that Berkshire’s leadership views holdings in markets such as Japan, for example, as investments of 50 years or more, focusing on company fundamentals rather than being distracted by short-term issues that dominate headlines, he said.
That is really what USMEF also does, focusing on the long-term vision of building demand in targeted export markets, said Halstrom. Global populations are growing and the middle class is expanding but it’s really about the spending power. USMEF is not focused on all consumers. It is focused on the top tiers in these markets and those top tiers want and can pay for high-quality proteins. Despite there being a lot of noise about international trade, USMEF is going to keep its eye on the ball and remain focused on the long term, he said. — Steve Kay, WLJ columnist
(Steve Kay is editor/publisher of Cattle Buyers Weekly, an industry newsletter published at P.O. Box 2533, Petaluma, CA, 94953; 707-765-1725. Kay’s Korner appears exclusively in WLJ.)
