Looking ahead to what will be important to the cattle and beef markets for the rest of 2015, a few points keep bubbling to the surface among market analysts. They likely will be themes examined and discussed time and again as the year rolls on.
Stated points of interest for cattle and beef markets can be classified into two main categories – factors that affect demand, whether it’s total meat demand or just beef demand, and factors that influence competition for consumer dollars.
Meat demand in general doesn’t change much over the course of a year, but what satisfies that demand, whether it’s beef, pork or chicken, can, and does, shift depending on a host of factors that are ruled by price.
Taste also is high on the list of attributes important to any meat industry. It’s the primary reason consumers are willing to pay more for beef than for pork or chicken.
Often, it seems the three industries are just trading shoppers.
But what can affect demand?
Economists say measuring actual demand is difficult since a person’s buying ability can change, without changing the underlying desire to purchase the more expensive item. The trick for producers of any item that is more expensive than its competitors is to make it so appealing that consumers will shift to their products.
That is the reason for much of the mass advertising of many products in mass media. Manufacturers or producers are trying to steal customers away from competing brands or products.
BEEF HAS A PROBLEM
In the battle for consumer dollars, an industry must have product to sell, and this is where the challenge lies for the beef industry. Years of drought and the related loss of pastures and lowered feed production have taken the US cattle herd to 63-year lows.
In addition, the slower pace of reproduction and growth mean competitive meats like pork and especially chicken can expand more quickly, putting more of their products in front of consumers.
Based on supply alone, then, the price of competing meats goes down while the beef industry struggles to catch up and produce more meat. The immediate effect is for the beef industry to sacrifice some market share to competing meats while heifers are kept for breeding rather than being sent to feedlots and slaughter.
Whether the industry is beginning to grow the cattle herd will be seen more clearly after the semi-annual cattle industry report Jan. 30, but anecdotal evidence points to herd rebuilding efforts as pastures come back to life and corn production increases after the drought. Beef cow and heifer slaughter is down, even though in the short run beef production is up from a year ago because of heavier slaughter weights as a chart from the Livestock Marketing Information Center shows.
Pork production, also is up and is starting the year above both last year and the previous five-year average. The USDA projects pork production to rise this year as the herd expands and the PED virus is brought under control so the line on this LMIC pork production graph likely will remain above last year and the average for most of the year.
Chicken production already is ramping up with the USDA reporting more eggs set into incubators and hatched for broiler production than a year ago. The USDA reported 214 million eggs set during the week ended Jan. 3, up 3% from a year earlier.