Beef Buzz News
Tyler Cozzins says Inflation Environment May Be a Headwind for Beef Demand in the Future
Tue, 02 Aug 2022 09:43:54 CDT
Senior Farm and Ranch Broadcaster, Ron Hays, features comments from agricultural economist at the Livestock Marketing Information Center, Tyler Cozzins, talking about beef demand and recent beef retail prices in the U.S.
Cozzins says beef demand seems to be holding steady despite a very high plateau in current beef prices.
“In June, retail beef prices were $7.66 per pound,” Cozzins said. “This is up 20 cents per pound from last year. The record price we have seen for beef actually occurred in October of 2021 and that was $7.90.”
Cozzins said July prices are expected to remain high based on what we are seeing as far as wholesale prices that have occurred over the last month.
“Specifically looking at the chuck, round, loin and ground beef, often those grilling cuts that we see, the chuck and the round have been tracking about even with prices that we saw a year ago,” Cozzins said. “Chuck has been about $3.50 per pound and the round has been about $2.50 per pound.”
On the other hand, Cozzins said we are seeing the loin higher than it was last year at about $9 per pound, which is up about $2 from last year.
“Interestingly, ground beef is also holding very strong specifically looking at the 90 percent lean and 50 percent lean beef prices,” Cozzins said. “90 percent lean has been about $2.70 per pound. That is well above typical levels for this time of year, which are usually about $2.20 so about 50 cents higher.”
It is a similar case with 50 percent lean beef, Cozzins said, because it is at about a dollar per pound whereas it is typically 85 to 90 cents per pound this time of year.
“Expect those ground beef prices to remain high based on what we are seeing in those 90 and 50 percent lean beef prices,” Cozzins said.
In the face of inflation and slowing of herd rebuilding efforts, Cozzins said beef prices remain elevated and domestic beef demand holds strong.
Cozzins says he sees the signs of consumers backing away from buying beef in the domestic marketplace eventually.
“I think we would have expected that to occur a little bit sooner, but consumers still seem to be buying their beef,” Cozzins said. “I think they like consuming that at home and they’ve learned how to cook it.”
Foreign demand or exports of beef are a key piece of the demand picture, Cozzins said.
“Why I think this is important is because beef exports from a demand perspective is a product that will not stay on the domestic market,” Cozzins said. “What this means is that strong beef exports are price supportive domestically.”
The most recently available month of beef export data from USDA is only available through the month of May, Cozzins said, so through those first five months of this year, beef exports have totaled nearly 1.5 billion pounds.
“That is a record pace for the first five months of any year,” Cozzins said. “It is also a six percent increase from the same period last year. What this means is about ten percent of U.S. beef production is destined for these export markets.”
Looking at weekly export data that we have available to us, Cozzins said it is also an indication that June and July export levels are keeping a strong pace, so foreign demand is holding strong, similar to what we are seeing here domestically.
“This record pace of beef exports is being supported by strong shipments to our top three markets of Japan, South Korea, and China,” Cozzins said. “These three markets have accounted for nearly 2/3 of total beef exports this year.”
Overall, Cozzins the beef demand picture is looking positive, but the inflation environment that the U.S. and global economies are facing could prove to be a headwind in the near future. At this same time, he added, availability indicates beef demand is holding strong for U.S. beef, which is a positive sign for the industry.
Click the LISTEN BAR below to hear more from Tyler Cozzins talking on beef demand and beef retail prices for the U.S.
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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