Retail Beef Price Lag Frustrating, But Not All Bad

The frustratingly slow lag between a decline in fed cattle prices and drops in retail beef prices is not necessarily a bad thing as it indicates consumer beef demand is strong relative to other meats, said Oklahoma State University Agricultural Economist Darrell Peel in a market commentary.

“Slowly adjusting retail beef prices in the face of growing beef supplies indicates stronger beef demand,” Peel said.  Weak beef demand would cause retail prices to adjust more and faster to move increased supplies through the market.

Currently, retail beef prices are adjusting downward slowly but not as fast as wholesale prices or cattle prices.  Cattle producers often are frustrated by the slow response of retail prices when such things occur in their industry.

“Retail beef prices are declining but continue to be near record levels relative to retail pork and broiler prices,” he said, but “the fact that retail beef prices have adjusted slowly thus far, especially in the face of ample pork and poultry supplies, is a sign of strong beef demand.

Eventually, though, retail beef prices will continue to fall, but this does not indicate a decline in demand.  Adjustments in wholesale and retail prices will be forced lower by increases in total meat production.

Beef consumption will increase then, but it is not an indication of increased consumer demand, he said.




Economists will say that consumer demand for any product is difficult to measure even though it is simple to define.  It is the willingness of a purchaser to pay a certain price for a certain product or amount of that product.

Consumption is not the same as demand, although it is easier to measure, since a simple tally of products sold will yield a measure of consumption.

The hard part in measuring demand comes in keeping all other factors except price constant in a dynamic market.  To measure demand simply, all other market influences like supply, or the price of that supply, constant.

Businesses spend considerable amounts trying to determine consumer demand for their products or services.  Being wrong can result in production missteps that can be costly.

Unlike demand, supply is easier to measure.  Just count, weigh or measure them.  The ease with which this half of the supply/demand curve can be measured and the elusiveness of actual demand numbers often causes people to equate consumption with demand.

Some attempts to measure demand more simply have resulted in various surveys asking consumers how much they would pay for a product.  Such surveys make interesting reading but often miss the mark when it comes to consumers shelling out hard-earned currency for the product.




Then what does that leave?  It leaves retailers to market products at the highest possible price that will clear the product.

In the case of beef, Peel said “retail beef prices that decline relatively slowly as supplies increase is a measure of strong beef demand.




Cash cattle markets Thursday traded $5 per cwt lower on a live basis at $105.  Dressed-basis prices were $9 lower at $166.

Cattle traded last week at mostly $110 per cwt live and $175 dressed.

The USDA’s choice cutout Thursday was $1.51 per cwt lower at $189.14, while select was off $1.03 at $182.63.  The choice/select spread narrowed to $6.51 from $6.99 with 131 loads of fabricated product sold into the spot market.

The CME Feeder Cattle Index for the seven days ended Wednesday was $138.15 per cwt, down $0.14.  This compares with the Sep settlement Thursday of $131.60, down $1.55.




–The US Food Safety Inspection Service surprised meat industry representatives at the North American Meat Institute’s pathogen control conference in Chicago this week.  FSIS will propose to subject beef primals and sub-primals to the same pathogen testing as boneless manufactured trim.  The reason for the increased scrutiny is that these cuts often are ground into hamburger and, thus, should come under the same scrutiny.  Industry leaders objected, but this will be an easy sell to an already-safety-conscious public for the FSIS.

–However, the beef industry could find a counter punch in lab-grown meat.  This up-and-coming product more and more is becoming comfortable with the label “clean meat” to ward off the yuck factor of the lab meat, according to  This product could be dubbed with a label that is more undesirable than clean meat.  After all, “pink slime” was a moniker for an intermediate step in the production of lean finely textured beef, and look what that did.