Consumers Turn to Ground Beef in Lean Economic Times

With rising unemployment and expected slower economic growth, cattle industry observers are watching for indications of weakness in consumer beef demand.

Cattle prices are near record levels and the choice boxed beef cutout value has been holding above $3 per pound since mid-May. As a result, some consumers are opting for ground beef over pricier steak cuts.

Not an easy call on consumer prices

Demand for higher-value beef cuts may be weakening a bit as some value-conscious consumers replace steak with more ground beef. But it is also true that cow slaughter is down substantially, even with a jump in beef imports.

As usual, the extent to which demand and supply are each influencing the current situation will be tough to know until after the fact.

If supply is the primary driver, expect further upward pressure on cattle and beef prices as herd rebuilding tightens beef availability. If demand is having a bigger impact, we could see prices ease as consumers place a more careful watch on their spending.

EDITOR’S TAKE:

Cattle producers have been experiencing some great prices for their output, but can that be sustained – only time will tell. The higher prices at the ranch gate seem to be compelling more than a few consumers to reconsider that steak in favor of lower priced burgers for dinner. As Scott Brown points out in this article, that shift could ultimately determine whether beef prices ease or go in the opposite direction. In the meantime, make sure beef producers in your area know what inventory you have by keeping it fresh on AgTruckTrader.com®.