Beef-Demand Strength Surprises Pundits

The $100 question this spring has been, "Will beef demand be strong enough to give packers some margin at these higher price levels and allow us to sustain the strong fed prices we've been experiencing?"

Many industry pundits have been surprised by the strength of beef demand, but improvement is needed to maintain these types of fed prices. The industry is finding it difficult to gauge beef demand as it has in the past. The hard numbers and economic indicators used to be strong indicators of consumer attitude, but beef demand softened significantly last year during a time of strong economic performance. The trend then reversed itself in the first quarter of this year, with beef demand rising in the face of leading economic indicators that were solid but softer than expected.

I think the reason for this disconnect between consumer attitude and actual economic performance is that 2006 was an election year. Despite a very strong economy, the media were willing coconspirators in raising doubts about the economy and shaking consumer confidence.

Since the Democrats took over the House and Senate, the economic rhetoric from the mainstream media has mellowed drastically. Part of the change can be attributed to more media emphasis on the war in Iraq, but there's also been a significant change in the media's depiction of the economy over the last several months.

As a person with a fairly strong conservative bent to my politics, I'm not advocating the U.S. elect a liberal president, but I definitely think we'll see far more favorable reporting of economic conditions with a Democratic administration in power.

The biggest driver in demand change is no longer economic conditions, but rather how the media depicts those economic conditions.
-- Troy Marshall