FarmPolicy

April 24, 2019

A Closer Look at Beef Prices- Sunday’s Des Moines Register

Donnelle Eller reported on the front page of the Business Section in Sunday’s Des Moines Register that, “If the snow piled on your patio has you dreaming of firing up the summer grill, make sure to imagine doling out even more cash for the juicy steaks and hamburgers you’re flipping.

Beef prices climbed 19 percent in January over a year earlier, the federal government reported. And prices are expected to continue climbing this year, up 5-6 percent, according to the U.S. Department of Agriculture’s Economic Research Service.

“‘We’re in uncharted waters, given the level of prices,’ said Lee Schulz, an Iowa State University economist. ‘They can’t get too much higher before it will begin to impact demand.'”

Ms. Eller indicated that, “Prices will likely bump higher, too, for pork, chicken and turkey this year. But the increases are expected to be more modest, based on federal government estimates: Pork chops, ham and rib prices are expected to push 2-3 percent higher, and chicken breasts and ground turkey, 2.5-3.5 percent.

“That’s after a strong run-up last year for pork, climbing 7.4 percent in January compared to a year earlier, and poultry, a smaller 2 percent.”

The Register article noted that, “Despite higher prices for meat, demand for beef, pork and poultry will likely remain strong, even if consumers shift between them as they find better buys, economists say.

“Increasing incomes drive demand, whether it’s from higher pay or more people employed, said Schulz, the ISU economist. “We’ve seen demand improve as the economy has recovered,” he said.

“And falling gas prices help consumers, Kuhns said, with extra cash to cope with higher grocery bills and lower transportation costs to move food across the country.”

Persistent drought in the southwest and southern plains in recent years has curtailed livestock production; however, at USDA’s Outlook Conference earlier this month, the Department’s Chief Economist noted that, “Drought continues in the Southwest, but there have been some signs of recovery in the Southern Plains and elsewhere. Returns to cow-calf operators have been at levels that encourage herd retention which would point to a turnaround in the cattle cycle. Producers are now responding by increasing herds; the number of beef cows on January 1, 2015 was up 2 percent from 2014 and the number of heifers retained for addition to the cow herd was 4 percent higher. The latest NASS cattle inventory last month recorded the first increase in herd size since 2007.”

The latest monthly Agricultural Prices report from USDA noted that, “The January beef cattle price of $164 per cwt is unchanged from the previous month but is $26.00 higher than January 2014.”

Bloomberg writer Megan Durisin reported last week that, “There’s little relief ahead for record U.S. steak and burger prices. While cattle ranchers like Brenda Richards are expanding herds for the first time in almost a decade, it can take two years to get more meat on the plate.”

The USDA’s Economic Research Service is scheduled to update its Food Price Outlook on Tuesday morning.

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