A monthly column written for Beef Central by US meat and livestock industry commentator Steve Kay, publisher of US Cattle Buyers Weekly
The United States beef complex enters its sixth month of 2024 with a performance so far that is contrary to what many observers expected in January
Cash live (grainfed) cattle prices are the biggest surprise, as they have defied the odds that appeared to be stacked against them. These odds included futures prices that are far below cash prices, a contra-seasonal increase in front-end cattle supplies and carcase weights that have declined far less than normal.
The second surprise, and a pleasant one, is that beef demand in the US has so far been much more resilient than expected, and has offset weakness in beef exports sales volume. It’s important to remember that the US exports only 12-14pc of its beef production, unlike Australia’s 65pc.
Many had believed that food inflation, including that for beef, would hammer demand at home and that Americans would trade down to cheaper beef cuts and to much cheaper pork and chicken.
There has been little evidence of that so far this year.
USDA’s All Fresh beef retail price in January averaged US$7.81 per pound while its Choice beef price averaged US$8.08 per pound. These were up 6.7pc and 8.5pc, respectively, on January 2023 prices. Prices inched up the next three months, with the April All Fresh price up 3.8pc and 8.5pc, respectively, on the prices of a year earlier.
Conversely, April’s chicken retail price averaged US$1.95 per pound, down 32.1pc from a year ago. But this dramatic differential appeared to have little impact on US beef sales.
Live cattle prices basis a five-area steer averaged US$182.67 per cwt live or US $292.35 per cwt dressed the week ended April 21. They increased for five straight weeks after that and averaged US$190.09 per cwt live or US$303.49 per cwt dressed the week ended June 2.
Both prices were all-time record highs. Price eased slightly last week but it is apparent that cattle are in strong hands and that cattle feeders are determined to get higher prices during the best two demand months of the year (May and June).
The strength in live cattle prices comes despite the fact that the front-end supply (cattle on feed 150 days or more) was the second largest ever on June 1, and that carcass weights remain far above last year. Weights have failed to decline seasonally, which is leading to a buildup in front-end supplies that will drag into the summer months, says Andrew Gottschalk of HedgersEdge.com.
Global beef market worth US$450b
Meanwhile, I recently came across a fascinating report that said the global beef market in 2024 will be worth US$450.5 billion and its value is expected to reach US $645.6 billion by 2033, at a CAGR of 4.5pc during the forecast period 2024-2033.
So says a new report from Custom Market Insights, a market research and advisory company. The report segmented the global beef market by product type, distribution channel and region.
The market is classified into loins, chucks, rounds, brisket ribs and others. Loins dominated the market in 2023 with a market share of 35pc and are expected to keep their dominance during the forecast period 2024-2033.
The beef industry is significantly impacted by consumer demand for multiple loin by-products, which are essential components of the business. Sirloins, tenderloins and T-bone steaks fetch high rates due to their tenderness and flavor, says the report.
These high-value cuts increase profits for cattle ranchers and processors, says the report.
Furthermore, loin trimmings and ground beef made from loin cuts are popular among consumers looking for low-cost, delicious solutions. Moreover, loin by-products such as ribs and backbones are used in a variety of culinary applications, increasing the total flexibility and marketability of beef products.
The demand for various loin by-products varies according to customer tastes, culinary trends and economic circumstances, making them important drivers of the beef market’s dynamics and profitability, says the report.
Rising consumer preference for protein intake is the first factor the report cites for the beef market’s growth.
The increasing consumer appetite for protein consumption is a major driver of the beef business. As consumers become more aware of the necessity of protein in a well-balanced diet, they seek out high-quality protein sources such as beef.
Beef is not only high in vital minerals such as iron, zinc and B vitamins but it also has a full amino acid profile required for muscle development and repair. The popularity of high-protein diets, fitness trends and the impression of beef as a satisfying and tasty protein source all add to its demand, says the report.
Beef’s adaptability in many cultures and recipes also makes it a popular choice among consumers looking for healthful and enjoyable meals, it says.
The National Cattleman’s Beef Association, a contractor for the US beef checkoff program, collects a wide range of consumer information about their attitudes and eating habits regarding beef.
Interestingly, for the third year in a row, beef is listed in the top three proteins, whereas plant-based replacements and insect proteins score far below. More than 60pc of consumers constantly see beef positively, with less than 15pc viewing it negatively, says the report.
The increase in disposable income benefits the cattle industry in numerous ways, it says.
People tend to consume more high-quality protein sources such as beef due to its flavour and nutritional content. This increases the need for beef products. Customers with greater financial resources are more likely to purchase premium beef cuts and value-added goods, increasing beef producers’ sales and earnings.
Furthermore, increased disposable income is frequently associated with urbanisation and lifestyle changes such as dining out and convenience food consumption, which fuels the popularity of beef-based meals and packaged beef products.
The rising popularity of internet channels has greatly increased sales in the frozen beef industry, says the report. Online platforms offer consumers easy access to a large range of frozen beef products, allowing them to purchase from the comfort of their own homes and quickly compare pricing.
Furthermore, internet shops frequently provide coupons, sales and bulk buying opportunities, which appeal to price-conscious customers looking for good value for money. The convenience of accessing product descriptions, customer feedback and nutritional data online boosts consumer trust in buying frozen beef products.
Moreover, the worldwide accessibility of internet platforms allows consumers to obtain niche or imported beef items that may not be available in local brick-and-mortar retailers, says the report.
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