Beef, Pork Demand Indicies Trending Higher

Beef and pork demand appear to be trending higher since demand indices of both continued to rise through last year from 2010 lows.

The beef demand index is calculated by the Livestock Marketing Information Center using Bureau of Labor Statistics and USDA Economic Research Service data.  With the 1990 Consumer Price Index equaling 100 on the index, the annual beef demand index rose to 92 last year from a low of 75 in 2010.

That was the highest demand reading since 1991 when it was 96 and shows an average gain of 3.4 points for the five years since 2010.

Projected forward, beef demand could reach somewhere around 95 this year, challenging 1991 for its second-place role.

 

DEMAND DRIVEN BY 2ND, 3RD QUARTERS

 

However, beef demand last year was not up in a linear fashion.  It was driven by gains in the second and third quarters.

First-quarter beef demand rated a 92 on the LMIC index, the same as a year earlier when it jumped from 80 in 2013 and 2014.  A 92 still was pretty good, though, since it is the highest since hitting 94 in 1992.

Second-quarter beef demand shows more of a linear year-over-year growth that might be expected from the annual graph.  Demand in this quarter rose to 91 from 84 in 2014 and up from 74 in 2010.  At 91, the quarter’s demand index was equal to 2004 and was behind 1991’s 96.

Third-quarter 2015 beef demand also showed more of a linear progression, rising to 93 from 87 a year earlier and up from 74 in 2009.  At 93, the index was the highest since 1991 when it was 99.

Fourth-quarter beef demand did not fare as well, dipping to 93 from 94 in 2014.  It was still above the 1990-2015 average of 87.88, but it showed that consumer beef demand was running into problems.

 

PORK DEMAND ALSO UP

 

The good news for beef producers was that 2015 demand gains came while pork demand also was rising.  The LMIC demand index last year rose to 95, the highest since 1992, from 90 in 2014.

Pork demand also is up from a low period stretching from 2006 through 2012.  The reading during this period was 80 in 2006, 83 in 2007, 79 in 2008, 80 in 2009 and 79 from 2008 through 2012.

The pork demand index rose to 84 in 2013, 90 in 2014 and then last year’s 95.  If the average gain over the last three years continues, pork demand this year could run near 100.

By quarter, consumer pork demand declined in the first quarter to 98 from 101 in 2014; it rose to 91 in the second quarter from 90 the previous year, hit 90 from 88 in the third quarter and rose to a second-place 97 from 95 in the fourth.

 

CASH CATTLE MARKET UP $5 TO $6

 

Cash cattle markets Monday were quiet after last week’s sharp jump with no bids or offers reported.  Feedlot showlists were estimated to be higher, dampening feeder hopes of seeing such steep gains again this week.

Cash markets last week were $5 to $6 per cwt higher at $132 to $134 on a live basis.  Dressed-basis prices were up $7 to $9 at around $207.

The USDA’s choice cutout Monday was sharply higher at $222.40 per cwt, up $3.84, while select was up $2.59 at $208.54.  The choice/select spread widened to $13.86 from $12.61 with 57 loads of fabricated product sold into the spot market.

The CME Feeder Cattle Index for the seven days ended Friday was $147.97 per cwt, up $1.76.  This compares with the May settlement Monday of $148.65, up $1.60.