Beef Demand Index Shows Rising Beef Demand

Kansas State University’s All Fresh Beef Demand Index estimates first-quarter beef demand rose 15.5%, the largest quarterly increase since the index’s inception in 1990.  This indicates rising beef demand could underpin beef and cattle prices in spite of growing pork and chicken supplies.

In economist circles, actual demand is difficult to assess or quantify since it resides in the desires of the purchaser of any particular commodity or product.  Consumption often is confused with demand since it’s easier to measure, but it’s not demand and can be influenced by the product’s price in relation to other competing products.

Demand is measured as the point at which consumers are willing to pay for a varying supply of product with all other factors being equal.

In the first quarter of this year, beef prices increased 13.5% from the same quarter in 2014 as per capita consumption rose only 0.01%.  This implies rising demand.

K-State Agricultural Economist Glynn Tonsor said in a comment about the figures that the All Fresh Beef Demand Index illustrates rising or falling beef demand in relation to previous years.

In the first quarter of 2014, the index was at 80.3, implying that retail beef prices were 19.7% lower than they would have been at the 1990 level.  Conversely, the most recent quarter of 2015 index was 92.8, implying 2015 beef prices were only 7.2% below what they would have been at its 1990 level.

The rise in beef demand is critical for the beef and cattle industries.  Higher retail prices from the rise in demand spread through the cattle industry clear back to seedstock producers.




The rise in demand becomes even more critical as herds grow from 63-year lows and supplies of competing meats expand.

While the H5N2 bird flu virus keeps cropping up along the Mississippi Flyway necessitating the slaughter of millions of chickens and turkeys, the supply cuts to total production supplies at retail likely will be small, and pork production shows scant signs of a decline until next year.

Over time, as US cattle herds continue growing, the supply of beef also will increase, so keeping or growing actual demand will help support consumption to support market prices.

In addition to the supplies of competing meats, consumer beef demand could be influenced by the confidence in the safety of the meat.  If consumers consider the beef to be unsafe, they won’t buy it at any price, and maintaining this confidence in the product has become a cost of doing business.

A growing number of consumers also fear certain practices or rations and what they mean to their own health, or to the health and comfort of the animals themselves.




The USDA reported only 300 head of cattle sold in the cash market Thursday at $159 per cwt on a live basis.  Otherwise, bids were posted at $156 live against asking prices of $161.  On a dressed basis, bids were unreported with asking prices of $263.

Cash cattle markets last week traded lower to $157.50 to $160, mostly $158, on a live basis and at $252 to $254, mostly $253, dressed.  These were $3 to $6 below the previous week’s mostly $160 to $161 and $256 to $260.

The USDA’s beef cutout value Thursday was lower, with choice at $256.90 per cwt, down $1.65 and select at $244.05, down $2.01.  Volume was active with 131 loads of fabricated product sold into the spot market.

The CME Feeder Cattle Index for the seven days ended Wednesday was $217.37 per cwt, up $1.58 on the day and $1.82 above the Apr settlement of $215.55.