Beef and pork demand appear to be declining, even though per-capita consumption of both is rising and expected to climb even more next year.
The Livestock Marketing Information Center uses data from the Bureau of Labor Statistics and the USDA’s Economic Research Service to arrive at its own retail fresh beef and pork demand indices. In both cases, first-quarter retail demand for fresh product appears to have declined in each of the last two years.
Actual demand is difficult to measure. Many use consumption or purchases as proxies for demand, but it’s not entirely accurate. Demand, which is an attitude of buyers, can hold steady but be influenced by price relationships and economic conditions.
Someone might have strong demand for certain widgets but not be able to purchase them because of availability or price. No consumption, but strong demand.
RETAIL FRESH BEEF DEMAND DOWN
The LMIC’s graph of its first-quarter retail beef price index uses 1990 as its base of 100. This year’s first-quarter beef demand index was 88, a decline of 12 points, or 12%.
The graph also shows that beef demand likely declined in the first quarter of 2016 to a reading of 91 from the most recent high of 92 in the first quarter of 2015.
But beef demand isn’t as bad as a simple index number might indicate. First-quarter 2015’s retail beef demand index reading of 92 was the highest reading since first-quarter 1992 when it was 94, but this year’s first-quarter reading of 88 was higher than 20 of the last 27 years, and the average index reading was 87.3.
In addition, Jim Robb, senior agricultural economist at the LMIC, said in an email that the index should be viewed “with some caution.” He expressed concern about the quality of the ERS data.
Robb also said the economic simplifications used to create the index probably resulted in overstated index ratings the last couple of years.
Beyond, that, Robb said competitively priced chicken and pork at the time may have been a factor in the index’s decline.
PORK DEMAND INDEX ALSO DOWN
The pork demand index also was down in each of the last two first quarters, but, at 90, it remained above 15 of the last 27 years. The index was down from 99 in the 2015 first quarter and down from 98 in the 2016 quarter.
The retail pork demand index graph looks like this:
Like beef demand, the low point in the first-quarter pork demand index was the 2010 quarter when it registered 76. The average of all 27 years was 92.9.
CATTLE, BEEF RECAP
Only moderate fed cattle sales were seen on the livestock exchange video auction Wednesday, with trade in the north at $117.25 to $118.75 per cwt on a live basis, steady to up $1.50, some with extended pick-up. In the South, cattle sold at $117.75 to $118.00, steady to up $1.00.
Cash cattle subsequently traded at $117 to $121 on a live basis, down $1 to up $2 from the bulk of last week’s action. Dressed-basis sales were reported at $190 to $191, up $2 to $3.
The USDA’s choice cutout Monday was down $0.30 per cwt at $209.05, while select was up $0.39 at $195.81. The choice/select spread narrowed to $13.24 from $13.93 with 91 loads of fabricated product sold into the spot market.
The CME Feeder Cattle index for the seven days ended Friday was $148.61 per cwt, down $1.13. This compares with Monday’s Aug settlement at $154.42, up $0.15.