Are consumers fed up with high beef prices?

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Cattle herd numbers have yet to recover from consecutive years of drought and herd liquidation, but as beef supplies remain tight and beef prices remain high, consumer are becoming disgruntled.

A new Rabobank report shows global beef supplies are steady with 2012 levels as herd sizes in the United States remain light and drought conditions drive the cattle market lower in Australia and New Zealand.

Rabobank analyst Albert Vernooij says economic forces are leading consumers to take a second look at budgets and question the relative value proposition for beef compared to the cheaper alternatives of chicken and pork.

“The broader picture for demand still points to tempered consumer appetite to paying high prices for beef as increases in disposable income worldwide appear to be slowing and threats of inflation continue across the globe,” Vernooij said.

Rabobank’s Global Cattle Price Index shows cattle prices are six percent lower In May compared to Q1 led by lower prices in the major export countries of Australia and Brazil. A stronger U.S. dollar has also pushed global cattle prices lower.

Vernooij expects cattle prices to increase in the European Union as supplies tighten on higher demand from consumers and companies replacing horsemeat with ‘real’ beef following the media attention in Europe earlier this year. South American countries are in the process of rebuilding herds, but demand in Brazil may be limited as pork and poultry prices are falling

Cash prices in the U.S. will likely remain near $120 over the summer before moving around the $130 level in the second half of the year. Until prices improve, feedlots are facing higher feed costs brought on by adverse weather.

Bloomberg reports U.S. beef processors have experienced a drop in operations with low herd sizes bringing fewer cattle to slaughter in the Southwest. Cargill has already closed one of its beef-processing plants in Texas and could close another plant elsewhere in the U.S. if numbers don’t improve.

“Industry relief will come when the drought breaks, input costs moderate from their current levels and herd expansion takes place,” Mike Martin, a Cargill spokesman, told Bloomberg.

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Phillipe Violette    
34669  |  July, 11, 2013 at 06:57 AM

The EPA is driving meat prices higher by mandating that corn is made into ethanol. It takes almost two gallons of fossil fuel to grow and process corn into one gallon of ethanol. That is not climate friendly at all. Its typical EPA arrogance and lawlessness. Abolish the EPA

San Jose, California  |  July, 11, 2013 at 07:02 AM

So why aren't we importing beef from places where it's cheaper and more plentiful? There are articles here, "Economic crisis impacts global beef demand," "Rebuilding global beef demand," "CME: Global beef production higher." My guess, US import controls promoted by the beef lobby, in opposition to conlsumer interest.

Texas  |  July, 11, 2013 at 02:32 PM

We are importing beef from MX. I can't wait for the e. coli outbreaks that will result from the "rare" burgers people grill. Of course, the origin of the beef will be ignored, since MX and Canada brought legal action against COOL, claiming it hurt their ability to do biz in the U.S. They must have something to hide... NO?

Texas  |  July, 11, 2013 at 02:48 PM

WHY do we need to depend on Rabobank, of The Netherlands, to gain perspective on America's current and future beef market? WHY is Rabobank suddenly inserting themselves into every aspect of American agriculture? Wasn't there some pro-capitalist U.S. based entity this author could rely on for stats, data and predictions concerning this issue? I'm curious, what philosophy of government does The Netherlands practice? The last I knew they were at least unabashed socialist. How comfortable would we be relying on the Bank of China for such predictions on our beef industry? Could it be that Rabobank is possibly a PR tool of the UN's Agenda 21 campaign?

Tillamook, Oregon  |  July, 11, 2013 at 06:24 PM

It is about time beef prices go up. The consumers have to realize that if there is no farmbill, then they will have to pay more for their beef and eventually their pork and chicken meats. You can not have it both ways. Either we have agricultural support or we allow the market to determine the prices.

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