After a turbulent month in the markets, it seems like footing was rediscovered as the futures started rebounding and contracts started following the cash market as we distanced away from headlines and emotionally driven trading. A string of 200 steers in Bassett, NE, weighing 620 pounds brought $5/cwt—$3,100 per head! At the time of this writing, it was a new record for that weight class and crossed a threshold for the first time in history!
In a previous column, I addressed a few points about consumer statistics like mortgages, auto loans and credit card debt. There are some concerning points about the position of consumers. I have noticed a lot more media coverage and pushback through comments consumers are making on the WLJ social media pages. Additionally, while traveling to sales from Nevada to Montana recently, I had several conversations regarding consumer acceptance at the newer price levels. In one of the more interesting conversations with Jake Feddes, owner of Feddes Family Meats & Amsterdam Meat Shop in Manhattan, MT, he shared that his shelf price for high-end cuts hasn’t changed drastically over the past couple years, but customers are making more comments regarding the current shortage of cattle.
A consensus is that the consumer has been made more aware of the situation since the national cow herd has now made headlines across the country in mainstream media. It’s not necessarily more pushback, but more cognizance of our position in the marketplace. This was the biggest frustration I felt during the recent correction—nothing changed in the fundamentals, but clearly the futures markets were tripped.
The world of artificial intelligence (AI) implementation is in full swing now. Believe it or not, AI is being more widely used than most people realize. Applications like ChatGPT and Google Gemini allow people to access information much quicker than ever before. These programs scrape articles and public information and compose answers to questions asked.
This past week, I used the AI program Google Gemini and asked it a series of questions about the beef industry. Sharing the general information available to the public illustrates the education available to consumers. Media personnel consistently use this information to generate stances in editorials. Websites like ChatGPT receive nearly 200 million visitors per day, making this technology a huge source of education for students from elementary school age all the way through college graduates.
Regarding the beef industry, Gemini says: “The beef industry is currently defined by tight supplies and historically high prices. Herd inventories are at multi-decade lows due to factors like past droughts and low heifer retention, leading to a decline in U.S. beef production. Despite high retail costs, consumer demand remains strong, buoyed by a preference for quality beef.
“Producers are receiving record prices for cattle, though high input costs and processing capacity concerns (like recent plant closures) create volatility. The industry faces long-term challenges in herd rebuilding, labor, and sustainability pressures.”
While this information is generally correct, I decided to take it deeper. I furthered the conversation about the consumer.
Here is what Gemini had to say: “The decline in domestic production has led to a sharp increase in U.S. beef imports (particularly lean trimmings for ground beef from countries like Australia and Brazil) and a slight reduction in export volume, though export value remains high due to premium pricing.
“High input costs & volatility: Despite strong cattle prices, profitability is challenged by high and volatile input costs, including feed (hay and grains), fuel, interest rates and labor. This volatility, driven by low inventory and external factors, makes risk management crucial for producers.”
Then, I started asking questions about the consumer and this is what was generated:
“Consumers have a highly complex and resilient sentiment toward the historically high beef prices, demonstrating a willingness to pay more, though with clear adjustments. The prevailing trend is remarkably strong demand that has defied economic predictions of a significant drop due to high costs. The ‘all-fresh retail beef demand index’ has reached multi-decade highs, driven by two key factors:
“1. Quality and value: Years of focus on genetics mean 95% of U.S. beef is now grading Choice or higher. Consumers see this as a high-quality product—a ‘luxury good’ accessible for at-home consumption that offers a superior experience compared to less expensive proteins or dining out.
“2. Protein focus: Changing health perceptions and dietary trends (like keto and carnivore diets) emphasize protein, keeping beef positioned as the ‘king’ of animal proteins. However, consumers are not oblivious to the strain.
“To manage costs, many are trading down, shifting purchases from premium steaks (like ribeye) to more economical cuts, like ground beef and roasts. Despite purchasing fewer pounds overall, consumers are spending more in total dollars, confirming their loyalty. The demand strength is so potent that many analysts suggest the primary risk to beef’s price is ‘to the upside,’ indicating consumers are absorbing the costs and keeping the market bullish.”
This easily accessible information demonstrates how the general internet views the current state of the U.S. beef industry. To be honest, I expected a lot of misinformation and agenda-driven talk points, but the information was surprisingly accurate! I did see a few answers that mentioned buzzwords like environmental impact concerns, sustainability and husbandry practices, but they weren’t overrun with tainted information. This was an interesting exercise to do, especially after the market feels like it is settling in a bullish position once again. — LOGAN IPSEN
