Consumers should see ample supplies of their favorite meats in 2017. Brisk demand will keep prices from falling too much further, although producers of cattle and hogs have seen supply drive prices.
Those were major points made by Dr. Karl Skold, head of agricultural economics for JBS, at a workshop held during the American Farm Bureau Federation’s 2017 Annual Convention & IDEAg Trade Show in Phoenix, Ariz., this week. Skold said the historically unusual situation of expanding herds, growing supply and significant demand is driving an overall positive outlook for producers of beef and pork.
“Start with lower feed costs,” Skold said, adding that "the economy continues to improve. We are nearing full employment, and wages are picking up.” Skold said these trends are having an influence on how consumers are making meat choices.
“We are seeing a big jump in eating meat, but we are also seeing a shift to steaks,” Skold said. “We haven’t seen this big a jump in demand in a long time.”
This is encouraging news for cattle producers who have seen steep declines in cattle prices from record highs only a year ago.
The situation with pork is similar, Skold said, and pork had been profitable until a fourth-quarter drop last year. Per capita pork consumption has been stuck in the neighborhood of 50 lb. per person for some time. Pork also is more dependent on the export market.
Skold noted that per capita consumption for all meats, including chicken, is going up, tracking along with the lower prices, but beef is gaining favor again thanks to the ample supplies. The economist said a survey of retailers revealed that the last quarter of 2016 was the first time they had priced steak that low in six years.
“You go to the meat case and see $5.99 steaks, you’re going to buy them,” he said, whereas if those steaks hit $9.99/lb., consumers switch to chicken. However, Skold said, the prices are spurring significant increases in demand.
Skold said exports would be a huge factor in continuing the economic health of the livestock sector. There are what he called “headwinds,” starting with the U.S. dollar being strong against most other currencies. Other nations cannot buy as much U.S. meat with their own currencies.
Also, Skold said many of the gains in U.S per capita consumption have already been realized, so the industry may have to seek additional gains in the export market. “You have the population increasing at six-tenths or eight-tenths per year, (but) you get supply increasing 4%, 5% or 6%; you’re going to have to export it,” he explained.
Skold said consumers should see many opportunities to stock up on beef and pork as huge supplies will encourage demand. “Consumers have really returned and are eating more meat,” he said.