Beef Magazine is part of the Informa Markets Division of Informa PLC

This site is operated by a business or businesses owned by Informa PLC and all copyright resides with them. Informa PLC's registered office is 5 Howick Place, London SW1P 1WG. Registered in England and Wales. Number 8860726.


Beef Demand Stays Robust Despite Challenges

Beef Demand Stays Robust Despite Challenges
Beef demand continues to defy fears and expectations.

Domestic beef demand has surprised analysts, including myself,” says Glynn Tonsor, Kansas State University agricultural economist. And there have been plenty of reasons for concern.

• Choice wholesale beef prices declined more than $20/cwt. from the end of February to the middle of April – lower almost every day during that span.

• Gasoline prices continued to rise, pinching consumer wallets tighter.

• The fiasco associated with lean finely textured beef that folks in the beef industry rightfully feared would dampen demand.

• The discovery of a fourth case of BSE in the U.S.

But Tonsor explains the Choice Beef Demand Index (CBDI) he maintains for the industry increased in the first quarter of 2012 for the seventh consecutive quarter since the third quarter of 2010. Compared to the first quarter of 2011, the CBDI increased right at 6%.

Meanwhile, the first-quarter All Fresh Retail Beef Demand Index is 3.6% higher than a year earlier. Admittedly, that timeframe can’t account for all the potential impact from the latter-mentioned demand shocks, but many view it as extraordinary, especially considering that beef prices are historically high.

What really is beef demand?

In his quarterly Beef Cattle Economics Webinar in early May, sponsored in part by BEEF magazine, Tonsor stressed the importance of recognizing the difference between per-capita beef consumption and beef demand. The former is solely a function of beef supply – the greater the supply, the higher the per-capita consumption and vice versa. Beef demand, on the other hand, accounts for how much consumers are willing to pay for a given supply of beef.

By that measure, Tonsor reckons Choice retail prices were 6.24% higher in the first quarter of 2012 compared to 2011, while per-capita consumption was 0.19% less. Keep in mind, though, when adjusting price to an equivalent basis, Tonsor says the Choice retail price of $2.15/lb. in 1990 at 67.8 lbs. of per-capita consumption was the same as it was in 2011 at 57.3 lbs. of per-capita consumption.

Food service continues to emerge from the doldrums of the recent recession, too. The National Restaurant Association (NRA) Restaurant Performance Index – a closely watched gauge of consumer demand – ended the first quarter of this year at a post-recession high.

“The first quarter finished strong with a solid majority of restaurant operators reporting higher same-store sales and customer traffic levels in March,” says Hudson Riehle, senior vice president of NRA’s Research and Knowledge Group. “In addition, restaurant operators are solidly optimistic about sales growth and the economy in the months ahead.”

Foreign demand remains strong

Though U.S. beef exports have slowed compared to last year’s record pace, international demand still remains bullish. According to the U.S. Meat Export Federation (USMEF), beef export volume in March (89,803 metric tons) was 23% less than last year, but 3% more than in February. March export value of $438.5 million was lower by 8% year over year, but was 7% higher than the previous month.

According to USMEF, March beef export value equated to $204.65/fed steer and heifer slaughtered. That was down slightly from the $205.40/head equivalent in March 2011. Beef exports accounted for 12% of total U.S. production when including both muscle cuts and variety meat; 9% for muscle cuts only.

Anecdotally, more good news was expressed by some of the nation’s top chefs and restaurateurs at the grand opening in early May of the Certified Angus Beef® Culinary & Education Center in Wooster, OH. (View photos from that event here.) They says the current consumer trend is a return to comfort foods like beef.

TAGS: Prices
Hide comments


  • Allowed HTML tags: <em> <strong> <blockquote> <br> <p>

Plain text

  • No HTML tags allowed.
  • Web page addresses and e-mail addresses turn into links automatically.
  • Lines and paragraphs break automatically.