Several Factors Steering Beef Prices Higher

Articles
February 09, 2012

Several Factors Steering Beef Prices Higher

The nation’s consumers have beef prices rising all but one month during 2011and winding the year up 11.5% from December 2010, according to The Food Institute. That all put beef prices 10.2% higher than 2010 on an annualized basis – the largest jump in such prices since 2004 based a data from the Bureau of Labor Statistics Consumer Price Index.

The nation’s consumers have beef prices rising all but one month during 2011and winding the year up 11.5% from December 2010, according to The Food Institute. That all put beef prices 10.2% higher than 2010 on an annualized basis – the largest jump in such prices since 2004 based a data from the Bureau of Labor Statistics Consumer Price Index.

And based on industry reports at the end of February, further increases will be forthcoming, albeit likely not nearly as great as last year. The Department of Agriculture’s Cattle inventory report showed the number of cattle and calves on farms as of January 1, 2011 was the lowest since 1952 when the U.S. population was just over one-half of the current head count of 312.6 million.

Americans currently consume about 60 pounds of beef per year reports The Food Institute, about 10 pounds more than they did in 1952. Demand for beef however peaked back in 1976 when about 94 pounds were consumed per capita and has been declining fairly steadily since that point, as poultry became a much more popular center of the plate item.

Many catltlemen were forced to reduce their herds over the past year, partulcarly in Texas and Oklahoma where a severe drought devastated pastures. At the same time feed corn prices moved higher, further incentivinzing farmers to reduce their herds. Add to that, a growing demand for beef from foreign nations, and higher prices were pretty much unavoidable last year.

Looking ahead beef prices are expected to rise at least another 4% to 5% this year as inventories remain extremely low.

Consumers in many cases will switch to lower priced proteins such as pountry and pork, but those prices are also seen rising this year ---  poutry by as much as 4% in supermarket meat cases, and pork by as much as 5%.