This audio was auto-generated. Please let us know if you have any feedback.
Dive Briefing:
A meat analyst said home cooks will continue to buy beef this grilling season, despite rising prices due to strong demand and limited domestic beef supplies.
Lance Zimmerman, senior protein analyst at Dutch bank Rabobank, said beef prices were being held high by market uncertainty as retailers faced a temporary surplus of beef due to increased imports and higher domestic carcass weights.
He noted that while barbecue groceries are more expensive today, consumers are spending more on ground beef and steaks than they did 10 years ago.
Dive Insight:
According to Rabobank, beef prices rose more than any other animal protein or retail item commonly purchased for barbecue last year, second only to beer. But sticker shock didn’t convince shoppers to trade in chicken, pork and other cheaper options for the Fourth of July.
“This grilling season basket is relatively expensive overall, but it’s worth it,” Zimmerman said of beef during Rabobank’s annual BBQ Index webinar last week.
There are signs of economic stress in the beef market as prices continue to rise amid strong consumer demand and a shrinking cattle supply, but there is also room for buyers to spend more. Zimmerman said wage increases have outpaced retail beef price increases over the past decade.
In general, grocery shoppers today work more hours to buy a pound of beef than they did in recent years, but not as much as they did in 2014 and 2015. That means the market can afford to essentially absorb price increases of $1 to $1.50 per pound over the next two years, Zimmerman said.
“In the short term, beef is unlikely to be a major stressor for consumers,” he said.
At the rancher level, U.S. producers have been selling off cattle over the past five years due to drought and market pressures, creating a cattle shortage. Geopolitical tensions have also impacted trade, increased production costs, and the COVID-19 pandemic has shifted demand from restaurants to retail.
“As a result, they liquidated their cows,” Zimmerman said. But today, a greater share of retail dollars are flowing to the farm level. As prices rise, producers will have a greater incentive to keep cows and rebuild their herds, Zimmerman said.
“Over the next few years, we expect to rebuild that herd slowly, gradually and consistently,” he said.
