Cattle prices have dropped more than 32% during the last 16 months, but beef prices haven’t seen the same dramatic decline.
Steak prices in January reached their lowest value since October 2014 at $7.47/lb. Choice and Select cuts are approximately $25-30 lower than the same time last year.
According to QSR Magazine, restaurants are expecting prices for primal cuts of beef to drop another 10-17% in 2016. It is “the biggest story of the year” says DeWayne Dove, vice president of risk management for supply chain management firm SpenDifference.
“The drop in beef prices is clearly the best news (restaurant) operators have had in many years,” Dove says.
There is hope the lower beef prices will bring customers back to restaurants buying more high-end cuts of beef.
“With growing supplies that is going to increase per capita consumptions of beef,” says Derrell Peel, livestock marketing specialist with Oklahoma State Extension.
Demand stayed strong when supplies tightened and prices jumped to all-time highs.
“Now, the demand question going forward is ‘Can we attract back the people who got priced out of the market as we increase supplies?’” Peel says.
Peel does not expect a huge shift in beef buying by consumers, but the trend should be on the increase throughout 2016 leading into the coming years.
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