Source: John Michael Riley, Asst. Extension Professor, Department of Agricultural Economics, Mississippi State University

I will simply play the role of messenger this week as I relay information provided by Dr. Jayson Lusk of Oklahoma State University.  On Friday, Dr. Lusk released a report[1] summarizing survey results from 1,000+ individuals related to meat and beef demand.  The respondents indicated an increase in their willingness-to-pay (WTP) for steaks and hamburger (as well as chicken breast, beans, rice and pasta) but a lower willingness-to-pay for pork chops, deli ham, and chicken wings.  The two beef products, steak and hamburger, that the survey inquired about received positive feedback, with WTP reported higher by 8.3% and 1.3%, respectively.  While this is positive news for the beef industry given concerns have crept into the closing months of 2013, the results related to expected food expenditures more closely follow other reports of consumers pumping their spending brakes[2].  Respondents indicated they were less likely to make more beef purchases during September (33.19% indicated they would not compared to 26.12% indicating they would) and 58.39% noted they would not eat out more.

A more interesting aspect of Dr. Lusk’s survey results was the inclusion of new questions related to the beta-agonist Zilmax.  When asked if they had heard of the product 83.65% of respondents replied they had not and of those who had only 3.23% correctly defined the drug’s role as a beta-agonist.  Many in the industry, myself included, were uncertain of how the general public would react to the news surrounding the product.  While not a gauge of the entire population the survey does encompass a representative sample and therefore should be viewed as win with respect to consumer response to this point.

The Markets

The five area live and dressed steer prices were steady this week, respectively at $123.01 and $194.28 per hundredweight, up $0.59 and $0.06. Wholesale boxed beef prices declined as Choice carcasses finished with a weekly average of $193.71 per hundredweight, down $2.23. In Oklahoma, feeder steers were $1.60 per hundredweight lower at $157 and steer calves where $2.38 lower at $168.65.  Corn prices in slid lower as USDA’s World Agricultural Supply and Demand Estimates report increased per acre yields to 155.3, which was above pre-report estimates. Distiller’s grains were reported slightly lower compared to last week.

Consumer’s respond to Zilmax

[1] Lusk, J. “Food Demand Survey” OSU Faculty Publication 4596.

[2] The August University of Michigan/Thompson Reuter’s Consumer Sentiment Index declined to 82.1 in August versus 85.1 in July and the preliminary September index value was even lower at 76.8.