Washington - Retail beef prices should remain steady through the end of 1998, according to Chuck Lambert, chief economist for the National Cattlemen's Beef Association. Record supplies of competing meats and declining exports will limit price increases for beef and fed cattle during 1998, but with declining cattle numbers and decreasing beef production during the next few years, cattle prices will generally rise, improving returns for cattlemen.
According to an industry report, "A Prospectus for the U.S. Beef Industry," released this week by NCBA, the U.S. beef industry could reduce production by 2 percent or 3 percent from 1997 levels during 1998 and still see per capita consumption remain at, or even increase slightly, from 1997 levels due to declining beef exports and increasing imports.
Typically, average retail prices tend to increase when supplies of cattle decline. However, this year several factors, including an increase in competing meat supplies and decline in exports, will limit any increases in retail prices for beef and could basically force beef prices to be about the same as they were in 1997, Lambert says.
Retail beef prices are expected to remain relatively low through the first quarter of 1998 compared to the same time in 1996 as supplies of fed cattle remain large and weights increase. Through the turn of the century as beef supplies decline, retail beef prices will likely begin to increase gradually.
The U.S Department of Agriculture (USDA) projects that total meat supplies will increase by 6.5 pounds per capita (3 percent) to a record 230 pounds per capita during 1998. U.S. per capita beef supplies are projected to decline by 0.4 pounds (0.6 percent), while pork supplies are projected to increase by 4.4 percent, broiler (young chickens) supplies are projected to increase by 5 percent and turkey supplies are projected to be 1.7 percent larger during 1998 compared to 1997.
However, meat products sold at retail contain bones and do not reflect actual consumption. Converting per capita retail supplies to a boneless measure projects 1998 per capita beef consumption to be 63 pounds (63.3 pounds in 1997) followed by chicken at 51.5 pounds (49.5 pounds in 1997), pork at 46.7 pounds (45.7 pounds in 1997) and turkey at 14.5 pounds (14.1 pounds in 1997). Beef will remain the number one meat of choice in 1998.
A trend to more open trade and growing demand for quality grain-fed U.S. beef in foreign countries has fostered growth in beef exports since the early 1980s, which in 1996 accounted for 8 percent of total U.S. beef production and more than 12 percent of beef's wholesale value. The United States has been a net exporter in beef and beef variety meats on a value basis since 1991.
During 1996, beef and variety meat exports totaled $3.05 billion and generated a trade surplus of $1.27 billion. When cattle and by-products values are included, the value of beef-related exports totaled $4.8 billion with a trade surplus of more than $1.8 billion.
During 1996, approximately 75 percent of all U.S. beef exports were sold to Asian markets that are currently in various stages of currency devaluation, economic reforms and recession. In addition to the Asian consumers' reduced ability to purchase U.S. beef, the Australian and Canadian currency has also devaluated. This creates an increased price advantage for beef from U.S. competitors. This could cause Asian markets to increase beef exports from Australia, New Zealand and Canada. Since these countries are also primary suppliers of U.S. beef imports, product that would have been sold to the Asian markets will likely be exported to the United States, impacting U.S. supplies and keeping consumer prices down.
Lambert points to improvements in longer-term prospects for the U.S. beef business. "Expected improvements in beef quality and new beef products, greater recognition of beef's positive role in healthful diets, along with recovery of the Asian markets and expanding global markets should help strengthen beef demand in coming years."
Initiated in 1898, the National Cattlemen's Beef Association is the marketing organization and trade association for the America's one million cattle farmers and ranchers. With offices in Denver, Chicago and Washington, D.C., NCBA is a consumer-focused, producer-directed organization representing the largest segment of the nation's food and fiber industry.
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