With April Live Cattle Futures at $136, analysts with the Livestock Marketing Information Center say the implied Choice cutout value for next year is $205.50/cwt., 12% higher than this year. And that's if packers struggle to pass along higher costs to buyers.

Wes Ishmael

September 15, 2012

1 Min Read
High Beef Prices Are Challenging Consumer Demand

Perhaps unsurprisingly, a recent study funded by the Beef Checkoff says the primary limiters to increased domestic beef consumption relate to price. The study included more than 3,000 consumers.

For example, 64% of those surveyed said they would probably or definitely increase consumption if large-quantity family packs at a lower price per pound were more available.

Unfortunately, beef prices will get higher.

Last week the Livestock Marketing Information Center (LMIC) forecasted fed cattle prices in 2013 to increase year-over-year in every quarter.

LMIC analysts explain the daily average Choice boxed beef cutout value has never been more than $198.80/cwt. (in February this year). It has never been higher than $197.24 (June this year) for a monthly average. Plus, the margin between cutout values and live fed cattle prices has been historically narrow.

“…So, with April 2013 live (fed) cattle futures at $136, what does that mean for wholesale beef prices?” LMIC analysts ask. “If beef packers struggle to pass along those higher cattle costs like this year, then a record-high Choice cutout of about $205.50 is implied, a year-to-year increase of 12%. However, if the U.S. economy improves and packers can get their margins back to normal, that wholesale value will surge to $228.50, 25% above 2012’s. Even a 12% increase is large and may require an improving U.S. economy so that higher cattle costs can be passed along to consumers.”

Subscribe to Our Newsletters
BEEF Magazine is the source for beef production, management and market news.

You May Also Like