Beef demand to govern cattle & beef prices in 2013

Farm Forum

02/18/13 – The outlook for cattle and beef prices in 2013 and 2014 is decidedly bullish when examining the supply side factors. As discussed in several previous Cattle & Corn Comments articles, cattle numbers are at half-century lows and any growth this year will be modest at best. While these supply fundamentals could push cattle and beef prices to new record highs in 2013, price advances will be limited by the willingness and ability for beef consumers to continue to pay more for beef.

While a multitude of factors affect beef demand, including prices of competing proteins and consumer tastes and preferences, consumer disposable income is of special interest in a sluggish economy. Generally, consumer income and beef demand are positively related; that is, when consumer income declines, beef demand declines. That’s especially true for higher-valued cuts, but demand for lower-valued beef, like hamburger, can increase when consumer incomes decline. Still, during economic recessions and periods of high unemployment, beef demand as a whole would be expected to struggle. Interestingly, beef demand has been increasing for the last two years. Here’s