Declines in US beef production, consumption ahead

by Editor fleischwirtschaft.com
Tuesday, January 15, 2013

Derrell Peel, Oklahoma State University Cooperative Extension livestock marketing specialist said, that the beef production in the United States is expected to decrease 4.8% in 2013.

This is the second largest year-over-year decrease in 35 years, trailing only the 6.4% drop in 2004. The reason is a combination of mostly steady carcass weights and a projected 5% or more decrease in cattle slaughter.

Beef production in 2012 decreased by approximately 1.1% compared to 2011 with a 3.3% decrease in slaughter, which was partially offset by a 2.3% increase in carcass weights.

However, the effect on consumption of beef does not always match the change in production, Peel said. Domestic per capita consumption will depend on production levels but must be adjusted for beef imports and exports. In 2011, domestic per capita beef consumption decreased 3.8%, in large part because of a sharp increase in beef exports despite a minimal decrease in beef production.

Though 2004 had a sharper production decrease, per capita beef consumption that year increased nearly 2% because of a sharp drop in beef exports, largely attributed to the first case of bovine spongiform encephalopathy in the United States.

Choice boxed beef has been trapped in a narrow range between $193 and $198 per cwt for the past three months. Retail beef prices were flat to slightly lower through much of 2012 but did jump sharply in November. The pressure for higher boxed beef prices will increase significantly with an expected 4.5% decrease in beef production in the first quarter of 2013.

Choice boxed beef should move above $200 per cwt in the next few weeks, said Peel. Beyond that, he believes it will be a question of how much and how fast retailers can pass along the higher wholesale prices to consumers.
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