Meat prices are on the rise
November 22, 2011
Beef, pork and turkey prices are up sharply in the fourth quarter and for the year compared with year-ago values, resulting in part from record high retail pork and choice beef prices in September, with firm prices forecast to continue into 2012 due mainly to strong demand, especially on the export front, and reduced supplies of red meat, according to the latest U.S. Department of Agriculture data.
Meanwhile, total per capita red meat and poultry consumption is expected to decline to the lowest level since 1990, largely due to reduced domestic supplies, again largely the result of surging exports. Consumption of red meat and poultry in the United States in 2012 is now estimated to be 199.7 lbs per person, down 9 lbs from the 208.7 lbs recorded in 2010 and the lowest level since 1990, when it was 199 lbs, according to the latest U.S.D.A. World Agricultural Supply and Demand Estimates, which was published Nov. 9.
Beef is projected to take the biggest hit, with per capita consumption dropping from 59.6 lbs per capita in 2010 to 57.6 lbs in 2011 and 54.1 lbs in 2012, the report said. Pork consumption will slip from 47.7 lbs in 2010 to 45.9 lbs in 2011 and rebound to 46.2 lbs in 2012, the WASDE report said. On the poultry side, consumption of broiler meat is predicted to gain about a pound this year, rising from 82.3 lbs in 2010 to 83.2 lbs in 2011 before slipping to 80.4 lbs in 2012. Turkey consumption will hold its own, with 2012 consumption tied with the 2010 level at 16.4 lbs per person.
Soaring demand for U.S. beef and pork from Asian countries and for broiler and turkey meat, especially from Mexico, have supported strong prices and reduced meat supplies domestically, the U.S.D.A. said in its Nov. 16 Livestock, Dairy and Poultry Outlook. Despite the sluggish U.S. economic recovery, stronger recovery in Asia has been a key factor driving demand, as has been continued weakness in the value of the U.S. dollar for U.S. exports in general, the department said.
January-September red meat and poultry export numbers were impressive: beef was up 27%, pork was up 19%, broiler meat was up 5% and turkey meat was up 20%, according to U.S.D.A. data.
"With foreign demand bidding U.S. pork away from domestic markets, lower availability of pork for domestic consumers likely explains the string of record-high retail prices that continued into September," the U.S.D.A. said. Retail pork averaged $3.56 a lb in September, up 8% from the same period in 2010.
Pork wasn’t the only record setter in September. Choice retail beef prices at an average of $4.91 a lb also were record high for the month. After a winter dip in beef prices, the U.S.D.A. expects retail beef values will increase further in 2012.
Cash prices paid for live slaughter cattle in Texas and Kansas were record high at around $125 a cwt in the first week of November, according to the U.S.D.A.’s Market News.
The full effects on beef prices and supplies from this year’s extreme drought across Texas and Oklahoma, along with Kansas (also dry) the largest cattle feeding region in the United States, have yet to be realized. On a short-term basis, the drought resulted in an increase in beef supplies as ranchers liquidated some or all of their herds. The lack of pasture also resulted in more light-weight cattle being moved to feedlots, most of which also were sold for slaughter at lighter weights because of high feed prices. But ultimately, the drought should result in less beef simply because the cattle herd has been reduced and will take several years to rebuild.
The U.S.D.A. forecast U.S. steer prices to average between $117@126 a cwt in 2012, up from $113.98 a cwt in 2011 and $95.38 a cwt in 2010.
Beef production in 2012 was forecast to decline from 2011, but the strong export trend was expected to continue.
"Despite beef production estimates being down 5% for next year, U.S. exports are expected to be fractionally higher," the U.S.D.A. said. "This increase in exports stems from higher global demand for beef, stronger economic recovery in Asian countries and favorable exchange rates for foreign purchasers."
Pork exports for 2012 were forecast to increase 3% from 2011, for much the same reasons as for beef.
Barrow and gilt prices were forecast to average $63@68 a cwt, about even with $66.20 in 2011 but above $55.06 in 2010. Broiler values were projected to average 79@85c a lb in 2012 compared with 78.6c in 2011 and 82.9c in 2010.
The U.S.D.A. projected 2012 total red meat and poultry production at 91,351 million lbs, down 1.6% from 2011, a key factor along with rising exports in lower domestic per capita consumption as the population continues to grow at slightly below 1% a year. Beef output is seen dropping 5%, to 24,960 million lbs in 2012, and broiler production about 2%, to 36,700 million lbs. Pork outturn was projected at 23,055 million lbs in 2012, up about 2% from 2011, and turkey production at 5,845 million lbs, up about 1%.
Concerning this year’s Thanksgiving turkey, retail prices are up sharply from a year ago, according to the American Farm Bureau Federation’s annual cost of Thanksgiving dinner survey. The A.F.B.F. tagged the average retail price for a 16-lb turkey at $1.35 a lb, up 25c a lb, or about 23%, from its 2010 survey.
"Turkey prices are higher this year primarily due to strong consumer demand both here in the U.S. and globally," said John Anderson, senior economist with the A.F.B.F.
The U.S.D.A. forecast fourth-quarter 2011 wholesale average prices for whole hen turkeys at about $1.10 a lb, up 6% from a year earlier and up 35% from two years ago.
Rather have ham for Thanksgiving? That will cost more as well with recent record retail pork prices. The wholesale price of unprocessed 20- to 23-lb hams the first week of November were up about 10% from a year earlier, but prices have declined since then, according to the U.S.D.A. Market News.