Little Relief in Beef Prices Expected

ANALYSIS - With soaring feed prices, a weak economy and a drought still affecting parts of the US and the Southern hemisphere, it is unlikely that the price of beef in the US will come down, as producers continue to liquidate cattle herds.
calendar icon 11 January 2012
clock icon 1 minute read

The question is how long will the demand for high priced beef hold up?

These concerns over the state of demand have been reflected in the US market, with live cattle futures modestly lower this week. Choice beef values also fell, however, there is a case for this being the norm after the Christmas period.

Supply of cattle is still surprisingly strong, considering the large numbers slaughtered in the second half of 2011. There are some concerns about the ability of the market to absorb higher supplies at current price levels.

Already in Argentina, upward pressure on beef prices has caused beef consumption in the country to fall. Domestic beef consumption fell to 53.8 kg per capita, the lowest levels in 91 years.

Brazil has reported increased consumption of poultry, possibly because people are finding an alternative for high priced beef.

Despite these trends in South America, Australia and the US are still benefitting from strong export markets, which analysts claim are the saviour of the beef industry.

Charlotte Johnston, Editor

Charlotte Johnston - Editor

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