A study by university economists about beef demand presented to the Cattlemen’s Beef Board is instructive for assessing overall beef demand and changes to demand over time.
Economists Glynn Tonsor and Ted Schroeder, both of Kansas State University along with Jayson Lusk at Purdue University outlined the project’s objective to provide a muti-faceted assessment of factors that affect domestic beef demand.
KEY FINDINGS
Over the past decade, the quantity of beef consumers purchase has become less sensitive to changes in beef prices but more sensitive to consumer incomes, the economists concluded. This could be a result of record-high retail beef prices that resulted in loyal beef consumers who were less price sensitive having the strongest presence in the market.
As consumer incomes have grown, more of them might have been priced out of the beef market or have allocated some of that income growth to purchase beef again, thus increasing beef demand response to growing income, they said.
Their research also found that the relative effect of pork and chicken prices on beef demand was economically small relative to other factors. They said this did not imply that individual beef, pork and chicken products are not substitutes for beef but the substitutability overall is just not as strong as traditionally thought.
Print media and medical journal coverage of topics around beef changed appreciably over time in areas of focus and volume of coverage. They said certain types of media coverage were found to affect meat demand, and there was an emerging area of negative coverage focused on climate change.
“Having an impactful presence in the media is immensely important as it shapes perceptions,” they said.
Some demographic trends also were found to be favorable to beef demand, including anticipated growth of Hispanic and African—American populations within the US.
SOME RECOMMENDATIONS
The economists recommended an ongoing focus on beef quality aspects like taste, appearance, convenience and freshness as their importance to consumers has not diminished. This reflects the declining price sensitivity, increasing the effect of consumer incomes and a broader recognition of US beef’s comparative advantages to other proteins domestically and abroad.
They also said external coverage of “hot topics” was likely to continue to be important to the beef industry. They recommended systematic reassessment of which topics are changing the most with a focus on topics having the largest effect on demand. Factors that affect long-term perceptions were likely to be the most effective over time.
Attention to the latest hot topic should not be allowed to affect demand from loyal beef consumers, they said.
Surprisingly, they recommended increasingly collaborative approaches to the US pork and chicken industries, given beef’s declining cross-price sensitivity, and many common challenges and opportunities.
CATTLE, BEEF RECAP
No fed cattle sold Wednesday on the Livestock Exchange Video Auction. Only 126 head sold last Wednesday at $126 per cwt.
The USDA lists 356 head sold this week at an average cash price of $129.11 per cwt, up about $3 from last week.
Cash sales last week in the Plains were at $126.17 to $127 per cwt on a live basis, mostly $126, mostly steady to up $1 from the previous week, and a steady $200 on a dressed basis.
The USDA’s choice cutout Wednesday was up $0.45 per cwt at $207.81, while select was up $0.38 at $203.51. The choice/select spread widened to $4.30 from $4.23 with 91 loads of fabricated product sold into the spot market.
The CME Feeder Cattle index for the seven days ended Tuesday, was $147.62 per cwt, up $0.05. This compares with Wednesday’s Mar settlement of $148.17, up $0.90.