Shifting buying patterns for meat, poultry on the horizon

KANSAS CITY — In 2023 US customers can anticipate better availability of pork, broiler meat and turkey however much less beef, which they should pay extra for than final yr. Demand for all animal-based proteins will largely depend upon client considerations about inflation and whether or not the US financial system has moved right into a recession.

Beef demand at retail and foodservice is powerful. Beef at present has a bonus over pork and rooster at retail as common retail costs within the second half of 2022 trended beneath year-ago ranges, whereas pork and rooster costs trended larger. Pork costs even hit a document $5.05 per lb in October, up 4.8% from a yr earlier. Beef costs are at present at their best in relation to the competing meats since 2017, however that’s prone to change this yr.

Shopper demand in america for beef, pork and rooster was sturdy earlier than the onset of the COVID-19 pandemic in early 2020. It grew to become even stronger as US customers stayed dwelling and cooked extra. Beef was the largest winner, as customers sought a meat deal with in response to not with the ability to eat out at most dine-in eating places for a lot of months.

Beef retail costs finally reached record-high ranges in October 2021. The US Division of Agriculture’s All Contemporary beef worth averaged $7.55 per lb and its Selection worth averaged $7.90 per lb. The costs started to say no after that and in October 2022 averaged $7.25 per lb and $7.42 per lb, respectively. These have been down 4% and 6.1%, respectively, from October 2021.

Of particular curiosity is retail demand for top of the range beef has remained sturdy. The 2 largest sellers of USDA Prime beef, Costco and Walmart, each reported that gross sales stay sturdy. This pattern is mirrored within the worth unfold between the Prime and Selection beef wholesale cutouts reported by the USDA every week. The unfold hit a record-high $91.46 per cwt the week ended Sept. 23, 2022. The underside line is American customers proceed to pay extra for top of the range beef at each retail and foodservice, with the latter having principally recovered gross sales and foot site visitors after the impression of the COVID-19 pandemic.

Provide and demand

Cattle feeders and beef processors of each fed and non-fed cattle will face tighter cattle provides in 2023. The Jan. 1, 2023, US cattle herd complete could also be down 2.4 million head from Jan. 1 this yr to 89.5 million head. This forecast goes in opposition to the present cyclical peak of 94.8 million head in 2019 and can be the bottom cattle stock since 2015. The decline is generally on account of extreme, widespread drought and excessive enter prices on the ranch and farm ranges. These elements have pressured cattle producers to liquidate a few of their beef cows and put extra heifers in feedlots.

Drought continues to plague the cattle sector, famous analyst Andrew Gottschalk of HedgersEdge.com in early December. This may occasionally result in some further herd liquidation throughout the first quarter of this yr, albeit at a slower tempo than final yr.

Distinctive drought continues to plague a number of main cattle states, Mr. Gottschalk mentioned. The next states have been ranked in late November by the % of cattle stock in distinctive drought severity per the US Drought Monitor: California 61%, Kansas 58%, Nebraska 28% and Oklahoma 27%. The next states additionally have been rated by their complete cattle stock in various levels of drought severity: California 100%, Colorado 96%, Idaho 99%, Kansas 90%, Kentucky 100%, Nebraska 100%, Oklahoma 99%, Oregon 100%, South Dakota 96%, Texas 86% and Utah 100%. Continued widespread drought poses an ongoing danger to the cattle advanced in 2023, Mr. Gottschalk mentioned.

The elevated ranges of feminine slaughter reveal that many cow-calf producers throughout the nation lowered their herds final yr. Weekly beef cow slaughter was larger year-over-year for 70 consecutive weeks, mentioned Derrell Peel, PhD, livestock advertising and marketing specialist at Oklahoma State College. In that interval, on solely 4 events has the year-over-year enhance been lower than 3%. By early December, beef cow slaughter was up 12.3% year-over-year. If slaughter declined to simply equal to year-ago ranges for the remaining weeks of the yr, complete beef cow slaughter for the yr would have been up 10.5% year-over-year. This complete can be a internet beef cow herd culling price of 13.1% for the yr, a brand new document degree, Mr. Peel mentioned.

Heifer slaughter didn’t present any indicators of reducing, although. By a number of relative measures, 2022 heifer slaughter was on the highest degree since 2003. Complete cow plus heifer slaughter was prone to common over 50% for the yr. This complete is the best feminine slaughter share since 1986. With drought persevering with, it isn’t clear what to anticipate for cow and heifer slaughter going ahead, Mr. Peel mentioned. It appears probably many producers have adjusted herd inventories, given hay and feed provides, to have the ability to get by the winter, which can imply cow culling will sluggish by the winter. But when La Niña persists subsequent spring, extra liquidation could be anticipated, he mentioned.

Pork, poultry manufacturing to rise

In distinction to the sharp decline of cattle numbers and decrease beef manufacturing, pork and poultry will see elevated manufacturing. Shoppers nonetheless could have ample protein provides to select from in 2023. Complete pink meat and poultry disappearance (per capita consumption) is projected to be 227.4 lbs, versus an estimated 227.1 lbs in 2022. This complete will mirror the eleventh consecutive yr of document broiler manufacturing and the restoration of turkey manufacturing from the impression of extremely pathogenic avian influenza. The USDA in November forecast 2023 beef manufacturing at 26.27 billion lbs, versus an estimated 28.347 billion lbs in 2022, which implies a 7.3% decline in beef manufacturing year-on-year.

The USDA forecast 2023 pork manufacturing at 27.345 billion lbs, versus an estimated 27.121 billion lbs in 2022. It forecast 2023 broiler manufacturing at 46.825 billion lbs, versus an estimated 45.974 billion lbs in 2022.

Export outlook

Beef exports from america have been one of many high tales within the US beef business lately. Exports topped $1 billion in seven out of eight months to the tip of August final yr. For the primary 9 months, beef exports elevated 4% from a yr in the past to 1.12 million tonnes, valued at $9.12 billion, 20% above final yr’s document tempo. China/Hong Kong was the second largest worth vacation spot for US beef final yr and the US beef business will likely be hoping this continues in 2023.

Pork exports in the meantime gathered momentum final August and September, with each months recording year-on-year features in quantity. However by September, quantity and worth was down 13% and 11%, respectively in 2021. The pork business will likely be hoping exports proceed to recuperate in 2023.