Demand the difference makerDemand the difference maker
Four years ago, some groups were especially vocal about the market being 'broken.' Now, ask yourself: Has anything in the market substantively changed?
January 22, 2025
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200+ Weeks: The market has been on an incredible run. As noted in my previous column, over the past 200+ weeks—except for four brief exceptions—the weekly fed steer market has consistently been stronger on a year-over-year basis. Fed prices have climbed by ~$90/cwt during this period and still appear to have room for further gains.
As mentioned earlier, this success is all attributable to beef demand: 'It always has been and continues to be the difference maker. Consumers ARE the business—they’re the market makers—not government mandates or programs.' (More on that below.)
Skeptics: Despite this success, some skeptics attempt to dismiss or discredit this reality. Their arguments come in several forms.
First, there's the line “Tight supplies are driving the market.” Next, comes the common “Yeah, but what about inflation?” argument. Finally, there’s always a segment that credits the success to the collective skill of feedyards that negotiate in the cash market.
The critics always point to ’14 / ‘15 as the apex of industry prosperity. They argue ten years is too long to achieve new record highs and you’ll often hear something about a COOL and/or thinning cash market.
Background: With that in mind, let’s look closer at the market. To test some of these assertions, we need to compare apples to apples, accounting for both fed beef production and inflation changes. There’s a couple of things to keep in mind.
First, there’s the issue of adjusting for inflation. This year’s fed market averaged $187+ - the highest annual average on record. However, when adjusting for inflation (2012 dollars), that number reverts to $149. That’s only $2 back (inflation-adjusted) from 2015 and ~$11 back in 2014.
Second, there’s the issue of bigger volume. Not only did fed steer/heifer headcount exceed last year, but weights are up sharply versus 2023. As a result, this year’s fed beef production will total ~22.6B lb; the third highest on record (trailing only ’21 and ’22).
That’s nearly 15% bigger than the low-water mark established in ’15. So, while cow numbers are down, and feeder cattle supplies are tightfed beef production hasn’t waned.
Apples-To-Apples: Now, let’s pull all of this together. The chart below compares volume with inflation-adjusted annual averages (note that ’20 and ’21 are intentionally omitted from the analysis). The past few years have established a new demand curve that’s shifted up and to the right compared to the previous decade.
The data enables some apples-to-apples comparisons and facilitates asking the, “what if?” questions.
Consumers ARE The Business: Let’s revisit the previous column. Four years ago, some groups were especially vocal about the market being 'broken.' Now, ask yourself: Has anything in the market substantively changed?
Consumers are the business, and the past several years have demonstrated the importance of driving demand. That’s best illustrated by 210 Analytics' year-end retail meat sales data: beef accounted for 55% of all sales and captured ~78% of all new spending in 2024.
A record-fed steer market on bigger volume is no accident. The market’s success is the direct result of maintaining a disciplined consumer focus—and allowing free enterprise to operate without government interference.
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