In June the USDA released May monthly beef retail price information. University of Tennessee ag economist Andrew Griffith says it illustrates the trends in beef consumption.
“The Choice beef price topped $8.08 per pound while the all-fresh beef retail price exceeded $7.50 per pound,” he says. “The Choice beef price is a historic high and represents a 23 cent per pound increase from April. The all-fresh beef retail price for May was 18 cents per pound higher than April and the third highest monthly price on record and the highest it has been since November 2021.”
Griffith says these numbers raise questions about demand in the coming months.
“This is the reason so many in the beef and cattle industry ask the question of how high can prices go before consumers stop purchasing beef,” he says. “It is unlikely consumers stop purchasing beef all together.”
Input costs raise a related question for cattle producers.
“A similar question for the cattle producer is, how high do feed prices have to go before they stop purchasing feed?” Griffith says. “Or, at what price does a producer stop purchasing fertilizer. In many instances, most people continue to purchase feed and fertilizer, but not as much as they would if prices were lower. The main difference is that cattle producers are making a business decision and consumers are making a personal decision.”
Griffith does not expect any dramatic collapse for cattle markets, given that feeder cattle prices remain strong in the historic context.
“There are sure to be some cattle producers who are beginning to worry that the bottom is going to fall out of the calf and feeder cattle market,” he says. “This will be a lot of worry for nothing as these are still strong prices for feeder cattle. As it relates to the futures market, there is going to be considerable volatility in the market the next several months, and this includes livestock, grain and oilseed. This volatility will provide opportunities to hedge a good price on cattle through late summer and fall using the futures market or LRP insurance.”