CattleFax Expects Record US Beef Demand

U.S. consumer demand for beef is expected to pick up in 2022 and supplies will shrink, according to research by CattleFax.

The beef cattle industry is recovering from the pandemic and further progress is expected next year. Beef prices are near record highs and consumer and wholesale demand for beef is at a 30-year high as the US and global economies recover.

While drought remains a major problem due to threatening weather conditions for pastures in the northern plains and west, strong demand combined with higher cattle prices signal an optimistic future for the MEAT industry, according to CattleFax.

According to CattleFax CEO Randy Blaha, the cattle market is still dealing with onerous supplies of cattle ready for slaughter. The impact of this supply will decrease as the three-year liquidation of the herd will lead to a reduction in supply. As this happens, the cost of calves, cows, and cattle to slaughter will rise by several hundred dollars per HEAD over the next few years.

Kevin Good, vice president of industry relations and analysis at CattleFax, said the cattle population peaked at 94.8 million during the latest herd recovery cycle.

“As drought, market volatility and processing capacity problems have unnerved producers over the past 24 months, the industry is phasing out beef cows, which are expected to drop by 400,000 by January 1 to 30.7 million,” said Goode. .

“While slaughter is almost equal to the 2019 high of 26.5 million head this year, we expect it to decline by 500,000 head in 2022,” said Good. “This, combined with plans to build new meat processing plants and expand existing ones, could result in an increase in slaughtering capacity of around 25,000 heads per week over the next few years.”

Good predicts the average price of steers in 2022 at $135 per hundredweight, up $14 from 2021. As expected, the price will fluctuate in the range from 120 to 150 dollars per centner during the year. All cattle classes are expected to trade higher and prices will rise even more over the next three years.  

Consumer demand for beef remains strong in 2021 and this trend will continue into 2022, especially as tight global supplies will boost U.S. beef exports.

The effects of the pandemic continue to keep domestic demand at levels not seen since 1988. Government stimulus and unemployment benefits are fueling the economy, with demand outpacing available supply as restaurants and entertainment segments reopen.

In June, the price of packaged beef peaked at $336 per quintal, while retail beef prices reached a yearly high of $7.11 per pound, according to CattleFax. “Customer flow remained strong in restaurants and retail, proving that consumers are willing to pay more for beef,” experts say.

Wholesale demand will be weaker in 2022 as a stronger cut in beef supplies offsets a smaller rise in beef prices, with beef prices expected to rise $5 to $265 per quintal. Retailers and restaurants continue to raise prices to cover costs. Goode added that retail beef prices are expected to average $6.80 per pound in 2021 and rise to $6.85 per pound in 2022.

Global demand for protein has increased and US beef exports are hitting new record highs for two straight months, even at high wholesale prices. The growth was driven by a significant increase - compared to last year - in shipments to CHINA , as well as Japan and SOUTH KOREA. “Declining global protein supplies will support growth in US red meat exports in 2022. U.S. beef exports are expected to grow by 15% in 2021 and another 5% in 2022,” said Good.

And this fact will be taken into account when preparing the monthly analytical report Meatinfo.ru