Post by Glenn on Nov 18, 2013 11:09:39 GMT -6
To some outsiders, a look at beef consumption in the U.S. and abroad, paints a picture of a meat out of favor with the public. The decline in beef consumption is unquestioned. It is a simple fact. We are eating less because we are producing less, not because beef has fallen in popularity but primarily because of two factors -- extended drought in parts of the country combined with an idiotic ethanol policy that has driven up the price of corn.
Record breaking prices in all segments of the beef production pipeline have signaled the need for more cattle. The market is responding and there will be more cattle in the future and with more cattle, a resumption of higher beef consumption. Cow culling is declining this fall and cow slaughter running 10-15% under last year. Replacement heifers are being held back for breeding and the herd is rebuilding but it is a slow process.
In the meantime, changes in the marketplace are occurring and some are not good for the beef industry. Globally, some of the largest beef producing nations are grabbing market share from our customers. Australia has captured a larger share of the Asian beef markets, especially Korea. Brazil is shipping lots of beef to the EU at a time when we have just recently redrafted trade agreements with the EU to facilitate beef sales in that direction. Mexican cattle breeders have decided to finish a lot of their cattle in Mexico rather than take the discount brought about on Mexican cattle from the COOL program.
Domestically, food service businesses are changing their menus. All food services business want to grow their food sales. You can't grow food sales with a declining supply of beef so many restaurants are adding new pork and poultry options to their menu. The highly popular steakhouses now feature pork, lamb, fish and poultry options -- not just steaks. And by the way, if you want a good steak, plan on spending at least $50.
Fast food restaurants are no different. Chicken sandwiches have been added to almost all the chain's menus. Who hasn't heard of the McRib sandwich? Eating healthy is an important theme at many chains and offerings include dishes with no meat such as salads and veggie options. Everywhere the objective is the same, to keep the sales up with more options.
Beef can't turn on a dime like poultry. It can and is responding to the need for a larger herd. It also holds the position of still remaining the preferred meat by most -- but it must be affordable. Making beef affordable requires reasonably priced feed cost. The price of cattle will come down as more are produced. The price of feed also will come down providing mother nature resumes a more normalized course and legislatures undo the wrongheaded corn based ethanol policy.
Record breaking prices in all segments of the beef production pipeline have signaled the need for more cattle. The market is responding and there will be more cattle in the future and with more cattle, a resumption of higher beef consumption. Cow culling is declining this fall and cow slaughter running 10-15% under last year. Replacement heifers are being held back for breeding and the herd is rebuilding but it is a slow process.
In the meantime, changes in the marketplace are occurring and some are not good for the beef industry. Globally, some of the largest beef producing nations are grabbing market share from our customers. Australia has captured a larger share of the Asian beef markets, especially Korea. Brazil is shipping lots of beef to the EU at a time when we have just recently redrafted trade agreements with the EU to facilitate beef sales in that direction. Mexican cattle breeders have decided to finish a lot of their cattle in Mexico rather than take the discount brought about on Mexican cattle from the COOL program.
Domestically, food service businesses are changing their menus. All food services business want to grow their food sales. You can't grow food sales with a declining supply of beef so many restaurants are adding new pork and poultry options to their menu. The highly popular steakhouses now feature pork, lamb, fish and poultry options -- not just steaks. And by the way, if you want a good steak, plan on spending at least $50.
Fast food restaurants are no different. Chicken sandwiches have been added to almost all the chain's menus. Who hasn't heard of the McRib sandwich? Eating healthy is an important theme at many chains and offerings include dishes with no meat such as salads and veggie options. Everywhere the objective is the same, to keep the sales up with more options.
Beef can't turn on a dime like poultry. It can and is responding to the need for a larger herd. It also holds the position of still remaining the preferred meat by most -- but it must be affordable. Making beef affordable requires reasonably priced feed cost. The price of cattle will come down as more are produced. The price of feed also will come down providing mother nature resumes a more normalized course and legislatures undo the wrongheaded corn based ethanol policy.
