You are here: Home / Users / / Retail prices for U.S. beef dependent on a host of economic factors

Division of Agricultural Sciences and Natural Resources

Retail prices for U.S. beef dependent on a host of economic factors

STILLWATER, Oklahoma – Retail beef prices are expected to decrease in 2018 given additional supplies, putting additional pressure on wholesale beef prices as well as fed and feeder cattle prices.
Retail prices for U.S. beef dependent on a host of economic factors

Various economic factors will play role in beef demand and retail prices. (Open Access Photo)

“Still, if demand continues strong, the retail price pressure may be rather modest with less negative impact on wholesale beef and cattle markets,” said Derrell Peel, Oklahoma State University Cooperative Extension livestock marketing specialist. “Strong demand will depend on a continuation of generally strong macroeconomic conditions such as decreased unemployment and income growth.”

Any change in the overall conditions is a threat. Factors to watch include rising interest rates and inflationary pressures. Shocks external to the beef industry – for example, a sudden jump in gasoline prices – could sharply affect consumer spending and beef demand.

U.S. domestic beef consumption is projected to be 56.6 pounds per capita for 2017, up from 55.4 pounds in 2016, based on retail weight. That is a 2.2 percent year-over-year increase.

“Beef consumption is higher because beef production is increasing; it is projected to be up 3.8 percent year over year from 2016,” Peel said. “Domestic consumption increased as well, though not as much in percentage terms than beef production for a couple of reasons.”

Peel added growth in beef exports in 2017, projected to be up 12 percent to 13 percent over 2016, moves some of the additional production off-shore. That, along with minor adjustments in ending stocks, will result in a total domestic supply that is up roughly 2.8 percent year over year.

“Also, though U.S. population grows slowly it does grow, so per capita consumption will increase even more slowly when the total domestic supply is spread across a larger U.S. population,” he said.

Per capita beef consumption bottomed out in 2015 at 54 pounds, so the 2017 level represents a 2.6 pounds per capita increase in beef consumption the past two years. Analysts expect beef production and consumption to increase again in 2018, with a forecast increase in beef production of 4.5 percent resulting in per capita consumption of 57.8 pounds, a 2.1 percent additional increase in per capita beef consumption.

However, increased beef consumption does not by itself indicate anything about beef demand. Americans are consuming more beef because the U.S. cattle industry is producing more beef.

“Beef demand revolves around the price at which consumers will eat this additional beef,” Peel said. “In general, we expect that increasing supplies will result in lower prices; however, how much lower will be the key.”

Demand has been a pleasant surprise for the beef industry in 2017. Retail beef prices are currently higher than 2016 despite the increase in beef supplies year over year.

“Beef demand is all the more impressive given total meat supplies are higher, not only because of more beef but also increased pork and poultry production,” Peel said.

November retail Choice beef prices were $5.81 per pound, up from 5.76 per pound in October and above that same level of $5.76 per pound one year ago. The all-fresh retail beef price was $5.64 per pound in November, up from $5.62 per pound in October and above the November 2016 price of $5.59 per pound.

The ratio of retail beef prices relative to pork and poultry remains very strong, holding near to record levels achieved during the record high prices in 2015. The calculated beef demand index, which accounts for pork and poultry effects as well as increased beef production, showed a slight increase for the third quarter of 2017.

Peel said continued improvement in beef trade also will be a crucial factor to minimizing price pressure in 2018.

“Continued strong exports to current major beef destinations such as Japan, South Korea, Mexico, Canada and Hong Kong will be essential,” he said. “New export growth to China is likely to remain a small market in 2018 but holds significant potential over time.”

Oklahoma is the nation’s fifth-leading producer of cattle, bringing in more than $3.7 billion in cash receipts, according to USDA National Agricultural Statistics Service data.

The Oklahoma Cooperative Extension Service is one of two state agencies administered by OSU’s Division of Agricultural Sciences and Natural Resources, and a key part of the university’s state and federally mandated teaching, research and Extension land-grant mission.


Donald Stotts
DASNR News and Media Relations
Agricultural Communications Services
132 Agriculture North
Oklahoma State University
Stillwater, OK 74078
Phone: 405-744-4079
Fax: 405-744-5739

Oklahoma State University - Stillwater, OK 74078