Beef Buzz News
Many Moving Parts Will Influence Beef Demand for Remainder of 2022
Thu, 07 Jul 2022 09:07:16 CDT
Beef cattle producers find themselves in a challenging environment this year with various headwinds impacting production and profitability. Senior Farm and Ranch Broadcaster, Ron Hays, is back with Extension Livestock Market Economist, Derrell Peel, talking about an outlook for the third and fourth quarters of 2022.
Listen to Ron Hays and Derrell Peel on Beef Demand Outlook
"We are going to continue to see the general trend we have," Peel said. "There are obviously competing forces at work here. The supply fundamentals are going to get more support as we go through the year."
On the other hand, Peel there are issues on the demand side such as inflation that may limit beef demand more so in the future than it has thus far.
"The bottom line is, I don't expect the cattle prices to go down and they certainly have the potential to go higher if some of these other moving parts will kind of line up for us," Peel said.
With higher input costs, the higher cattle prices do not guarantee that ranchers will be more profitable.
Many producers are uncertain about profitability, Peel said, and input costs are increasing faster than cattle prices at this point and time.
"I think at some point in time, as these numbers do tighten up and all of the supply fundamentals get linked up and get on the same page, then we are going to have a little more concerted push for higher cattle prices," Peel said. "Not sure that happens in 2022, but it should start to build as we move into 2023."
As for beef demand, Peel said there has not been a decrease so far.
"I think it is being moderated right now," Peel said. "For one thing, there is no cheap protein alternative. Pork and poultry prices are high, which is helping to support beef prices, but if you look within the beef market at some of the cuts and the seasonal patterns, it is pretty clear that there are some impacts here that are moderating beef demand."
Beef demand going forward, Peel said, will depend on what happens from a general economy standpoint.
"There is a lot of recession talk now and clearly there is some potential for a recession to develop, so beef demand comes down to consumer willingness and ability to pay."
In the event of a recession and additional levels of inflation, Peel said many factors will limit beef demand.
"It is tough right now because there are so many moving parts," Peel said. "This is a very complex industry always, but you know, it's not often that we have so many of the parts moving at one time and that is a real challenge."
Producers right now are being cautious in terms of cost management, Peel said, to protect potential for profitability.
"The industry fundamentals are actually looking pretty good and will look even better as we go forward from this numbers standpoint," Peel said. "It is really the external factors. Those cost and macroeconomic factors are outside the industry and those are the ones we are going to have to watch going forward."
Click the LISTEN BAR below to listen to Ron Hays and Derrell Peel on a beef demand outlook.
The Beef Buzz is a regular feature heard on radio stations around the region on the Radio Oklahoma Network and is a regular audio feature found on this website as well. Click on the LISTEN BAR below for today's show and check out our archives for older Beef Buzz shows covering the gamut of the beef cattle industry today.
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