Beef quality has improved and so has demand!
Per capita total meat supplies this year are expected to approach 210 pounds primarily driven by a 7 percent increase in pork production as well as 4 percent more chicken. Beef production will be down 1 percent from a year ago. This per capita supply is up nearly 8 pounds from 2014. Low grain prices and profitable production has once again put red meat and poultry supply back on an increasing trend. The per capita meat supply is likely to approach 213 pounds in 2016. How this affects consumer purchases of beef remains to be seen but one thing is certain. Consumers will have greater choices of lower cost items in the supermarket meat case.
As the summer grilling season approaches, beef demand will likely be truly tested. But, at least through March, beef demand performed well. According to USDA, Choice beef prices in the supermarket averaged $6.30 per pound compared to $5.55 a year earlier. Beef prices at the supermarket may stay relatively high into the summer as retailers have plenty of pork and chicken to feature and keep consumers at the meat case. But, I don’t necessarily think this scenario paints a doom and gloom story for 2015 and into 2016 as total meat supplies continue to increase.
Ultimately demand will be a major factor during 2015. But, key to demand is beef quality which has improved significantly during 2015. Through March, over 72 percent of all cattle graded were Choice. That compares to 69 percent for 2014. Even more impressive is the increased quality over time. The 2010 – 2014 five-year average for cattle grading Choice was 66 percent. During 2010, 64 percent of the cattle graded Choice so from 2010 through 2014, there was a 7 percent increase in the percentage of Choice cattle. The healthy increase can be attributed to sharply lower cattle numbers, genetic selection, better feedlot management, and more fed Holsteins in the mix. Holsteins grade well.
The stars were “aligned” for prices to reach record levels during 2014 when both cattle numbers and hog numbers dropped sharply. But, demand also strengthened and part of that growing demand is better beef quality and new product development that best meets consumer tastes, preferences, and lifestyles. Improving quality and consistency of quality will continue to pay dividends to the industry.