DENVER – CoBank’s latest Knowledge Exchange report indicated that US consumer demand for retail meat remains strong even with higher prices attributed to increased production costs and supply chain issues.
The analysis showed that combined cutout values of beef, pork and chicken climbed 22% year-over-year during the first quarter of 2022 and consumers should expect to see higher prices at the market.
“The sharply higher costs for feed, energy and labor have yet to fully impact wholesale and retail meat prices, but that will soon change,” said Brian Earnest, lead animal protein economist with CoBank. “And as consumers notice their dollar is not going as far as it used to, they may trade down at the meat case, with chicken being the primary beneficiary.”
Earnest added that overall inflation continues to hurt consumer purchasing power and that there might finally be a significant change in willingness to pay more for red meat. CoBank said with those changes the US broiler industry could see modest growth with strong margins.
US beef cattle inventory remains in decline because of the ongoing drought conditions in the West and modest feeder cattle prices. CoBank said the combined cow and replacement heifer inventory has dropped by 12% since 2017.
Sow herds are also contracting nearly 6% over the last three years, starting with losses sustained in 2018-19. Currently, the US Department of Agriculture is forecasting a 2% decline in US beef and pork for 2022.
“Price volatility across the animal protein sector has become a daily headache for procurement teams to manage,” CoBank said. “While prices started 2022 in post-holiday doldrums, wholesale values were still elevated compared with pre-pandemic levels. Volatility in wholesale markets remains an obstacle for promotional planning.”