Senior Farm and Ranch Broadcaster, Ron Hays, is visiting with Kansas State University Extension Livestock Market Economist, Dr. Glynn Tonsor, about meat demand.
Tonsor talks about meat demand as being a three-legged stool. The first leg, Tonsor said, is international meat demand, followed by retail domestic demand, and demand away from home, domestically.
The most recent numbers on export demand based on information from the USDA, Tonsor said, support the statement that foreign demand for U.S. beef is continuing to slip.
“Year-over-year, we have had declines since July,” Tonsor said. “My main thesis on why we have had a decline in foreign demand for U.S beef is a pause in macroeconomic activity uncertainty in general around the world. It is kind of a mixed bag of whom you ask if the next 12 months are going to be that way or not.”
Most people believe that inflation has improved globally, Tonsor said, so there is a chance interest rates are at their peak.
“Potentially, we are hitting that peak on interest rates and some federal reserve parallels around the world might start loosening their monetary policy, which historically stimulates economic activity and then ultimately maybe some buying power,” Tonsor said. “If the U.S. dollar weakens further compared to foreign currencies, that makes our beef cheaper on the global market, so that is possible as well.”
Tonsor said that of domestic retail categories tracked, specifically ribeye steak, ground beef, pork chops and bacon, demand was up in May compared to April. Tonsor tracks eight categories of domestic retail, and those were up in May of 2023 compared to May of 2022.
“That is a very new statement,” Tonsor said. “For several months, I have been talking about year-over-year declines, and what that is getting at is domestic demand by most of my estimates, peaked sometime in 2022, but fortunately, here in May of 2023, the grocery channel at least- retail channel we are tracking- were higher in May of 2023 than May of 2022.”
Domestic away-from-home demand, which is specifically dinner meals, Tonsor said, was up in May versus April.
“There is more clear demand strength month-over-month basis here for the beef and pork from the grocery store channel than there was through the food service channel in May,” Tonsor said.
Going forward, Tonsor said consumers’ expectations of meat prices have lowered year-over-year.
“Expectations for higher meat prices are there, but the rate of those increases, indeed, has moderated a lot in the last few months,” Tonsor said.
To view the latest Meat Demand Monitor, click here.
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