Beef demand decent, with bumps
Marketing economist says restaurant trade still suffering and winter will bring challenges.
Derrell Peel, BEEF Magazine
Nov 18, 2020
By many measures, beef demand has remained remarkably strong since the pandemic started in March but with variations and looming challenges.
The first half of the year was characterized by unparalleled disruptions in both beef supply and demand. By the end of June, cattle slaughter was mostly recovered; and has continued that way thus far in the second half of the year.
Since July, steer and heifer slaughter has averaged one-half percent above year-ago levels. Total fed-beef production from steers and heifers is up 3.7%, year over year, from July to the end of October.
However, beef demand continues to be challenged with restricted food service. Restaurants have recovered somewhat from the initial lockdown with more emphasis on takeout and delivery. Retail grocery demand remains robust and numerous adjustments have helped to shift some food service supply chains to support retail grocery supply chains. There are indications that retail grocery demand is being boosted again by consumers stocking up in the face of increased uncertainty.
The shift from summer beef demand to winter raises additional concerns. Food service is typically more emphasized in winter months, which may be an additional challenge. The pandemic is resurging and additional restrictions on food service are a growing risk.
The current state of beef demand is a bit tricky to assess. Choice boxed beef prices have increased sharply the past two weeks after falling from Labor Day through the end of October. However, Choice boxed beef prices the past two weeks have averaged 9.2% below one year ago, with the rib primal down 4.4% year over year, the loin primal down 10.2%, the chuck primal down 8.4 and the round primal down 6.6% year over year.
Specific wholesale cuts provide additional insight...