Demand for beef stronger than expected

With the national beef herd continuing expansion in 2017, there was some uncertainty among beef producers as to what beef prices were going to do, but a stronger than expected demand for beef has generated some optimism. Derrell Peel is a livestock marketing specialist for Oklahoma State University.

“So in 2014 and 2015 when beef supplies were very limited and beef prices were at record levels many consumers did not consume as much beef as they normally would. They got priced out of the market and I think that there’s a residual effect in that now beef is a little bit cheaper, it’s still relatively high, but it’s a little bit cheaper and so we’re kind of making up for lost time. We didn’t eat as many steaks during those days and I think we’re going back and eating more of those higher cuts.”

Peel says that three years of rebuilding the beef herd and continued expansion this year have brought beef prices down.

“Last fall we did get into a situation in the fall of 2016 where the market really over corrected to the down side. I think it was kind of the market coming to grips with the idea that we had more supplies, not only out there in 2016, but coming ahead of us. So it took a little while for the market to kind of adjust to that, and then we’ve kind of rebounded from that over correction to a little more balanced level, something that's a little more sustainable going forward.”

Peel says that this year’s cattle prices for ranchers so far are better than expected.

“Well, in 2017 I would say that the demand has pretty well offset the increase in supplies. We are seeing an increase in beef production in 2017, but as I said we’ve actually seen stronger than expected prices and I think you attribute most of that to demand.”

Peel expects a relatively stable cattle market if beef demand remains strong.

“As we go forward, we’ll see an additional increase in beef production in 2018, and so again that demand is going to be key. All else being equal we would expect somewhat lower prices. Not the dramatic kinds of decreases we’ve seen at times in the past fifteen or eighteen months, but pressure on there probably in the plus or minus five percent range on a year over year basis.”