Beef Spending Sets New Record

August 7, 2000

Cattle producers continue to benefit from increased consumer spending for beef that set a new record during the first half of 2000, according to analysis by Cattle-Fax, an independent market research firm. Consumer spending for beef set a new record during the first half of 2000, with demand averaging 5.2% more than demand during the first half of 1999. The announcement was made during the 2000 Cattle Industry Summer Conference in Denver, CO.

Randy Blach, Cattle-Fax chief operating officer, also anticipates more good news for beef producers and the industry in the year ahead. According to Blach, beef’s share of total meat spending is expected to grow in 2000 by about 0.5% to 40.3% -- the largest share since 1997. Total beef spending in 2000 is expected to grow by more than $2.6 billion and total a record $52 billion, about $6.5 billion larger than 1997. Larger beef production and slightly higher average retail prices have helped increase total spending.

Cattle-Fax analysts estimate that rising consumer demand for beef was responsible for an increase of $4/cwt. in the value of fed cattle in 1999, and another $4/cwt. so far in 2000. It's estimated that fed cattle prices would have averaged in the low $60s over the past year had not beef demand been increased. Wholesale and fed cattle prices have been under pressure recently due to increased supplies of fed cattle.

According to Chuck Lambert, chief economist for the National Cattlemen's Beef Association (NCBA), prices for steer calves averaged a record $112.40/cwt. during April 2000, before declining seasonally to $106.10/cwt. during June. Prices for steer calves have generally ranged above $100/cwt. since November 1999, Lambert says.

Atypically, the increase in cattle prices occurred while beef production was also high. Beef production was up nearly 2.5% during the first half of 2000, while cattle, wholesale and retail beef prices were up, according to NCBA.

Among the factors responsible for increased beef demand are increasing consumer acceptance of beef as a safe, nutritious product, and industry efforts to develop and market new, great-tasting, convenient products that meet the needs of today's consumers. Other factors that have boosted beef demand include a strong U.S. economy, rising wages, low inflation and a low unemployment rate. Exports also contributed to current improvements. On a tonnage basis, year-to-date beef exports are exceeding 1999 levels by about 18%. Imports are up about 9%.