Amid the continued high consumer demand for beef that has surprised many, investors should be aware that public financial sentiment matters, said Glynn Tonsor, agricultural economist at Kansas State University, in a commentary for the Livestock Marketing Information Center.
Things can change quickly.
SENTIMENT DECLINING
Friday, April 11,, the University of Michigan released its mid-month Surveys of Consumers information indicating US consumer sentiment had declined by historic magnitudes so far in April, Tonsor said. Reaching pessimistic levels last seen in the early 1980s, consumers hold elevating expectations for inflation (6.7% year-ahead expected, up from 5.0% in March) and unemployment (double the November 2024 level and the highest since 2009).
While differences in consumer sentiment can vary across demographic cohort, it is noteworthy, he said. Director Joanne Hsu wrote: “[t]his decline was, like the last month’s, pervasive and unanimous across age, income, education, geographic region and political affiliation.”
One of the few certainties currently is the US public collectively can be described confidently as very concerned about the state of the economy, Tonsor said.
MEAT IMPLICATIONS
Homing in on meat/livestock sector implications, the above notes build upon related information published in late March with Justin Bina. In a Meat Demand Monitor special report it was documented how financial sentiment may be even more influential on meat demand than income itself.
To paraphrase, income stability (ideally growth) is likely necessary but not itself sufficient for meat demand support if the public is highly concerned about their finances, Tonsor said.
Looking more narrowly at 2024, the US beef industry experienced higher per capita consumption AND higher inflation-adjusted retail prices clearing the market, he said. This combination clearly signals positive domestic beef demand growth that underpinned improved economic viability of industry stakeholders.
Looking further back to the 1980s (recalling Univ. of Michigan’s reference to multi-decade level of concern held by consumers), more experienced industry participants will recall multiple instances of declining beef demand that ultimately shrank the industry and led to a more collective focus in understanding and improving beef demand.
While the US is just beginning the 2nd quarter of 2025, and many developments seem bound to happen in what can be described as a unique and memorable year, the broad point would be for industry stakeholders, analysts and policymakers to not take strong beef demand for granted, Tonsor said. Recent years have been characterized by strong demand for US beef and hopefully for industry stakeholders that can persist.
However, macroeconomic history lessons and development of associated “storm clouds” should not be ignored, he warned.
CATTLE, BEEF RECAP
The USDA reported formula and contract base prices for live FOB steers and heifers this week ranged from $210.78 per cwt to $210.80, compared with last week’s range of $205.00 to $214.53 per cwt. FOB dressed steers, and heifers went for $325.96 per cwt to $327.48, compared with $322.23 to $329.95.
The USDA choice cutout Monday was up $2.00 per cwt at $333.52 while select was up $3.22 at $318.77. The choice/select spread narrowed to $14.75 from $15.97 with 48 loads of fabricated product and 27 loads of trimmings and grinds sold into the spot market.
The USDA-listed the weighted average wholesale price for fresh 90% lean beef was $379.75 per cwt, and 50% beef was $116.62.
The USDA said basis bids for corn from feeders in the Southern Plains were down $0.02 at $1.18 to $1.30 a bushel over the May corn contract, which settled at $4.81 3/4, down $0.00 1/2.
No live cattle were tendered for delivery Friday.
The CME Feeder Cattle Index for the seven days ended Friday was $289.30 per cwt, down $3.12. This compares with Monday’s May contract settlement of $285.52, down $1.32.