Despite the steady stream of news about the fluctuating global economy, consumers are still consuming beef and pork, and, among U.S. consumers, the appetite for nicer cuts seems particularly strong. U.S. exports of beef and pork are on pace to set records this year, and domestic demand is rebounding with surprising strength, indicating that slower growth world-wide and high U.S. unemployment have not curbed the consumption of everyday luxuries.
In recent months the difference has increased between prices for choice cuts of beef typically sold in restaurants and for less costly select beef, which usually is purchased in supermarkets, said Glynn Tonsor, assistant professor of agricultural economics at Kansas State University. Consumers who cannot afford the rising prices are simply moving to cheaper cuts, he said.
According to an index that Tonsor compiles, U.S. beef demand has risen for five consecutive quarters on a year-over-year basis through the third quarter. Pork is up four quarters in a row.
Consumer demand has helped keep livestock futures consistently high this year, even as other commodity prices have swung wildly. Demand has also pushed up domestic retail prices for many beef and pork products in recent years. The average price for bacon in September was $4.82 a pound up 34 percent from two years earlier, while uncooked beef roasts cost $4.52 a pound, up 15 percent over the same period.
Live cattle prices are up 13 percent his year in Chicago futures trading, making cattle among the few widely traded commodities besides gold to be up double digits. Lean hogs futures are up 9 percent this year. Both meat contracts also jumped in 2010, climbing 26 percent and 23 percent, respectively.
“So far, we’re not seeing U.S. demand or export demand soften,” said Ron Plain, a professor of agricultural economics at the University of Missouri. U.S. beef exports are on track to top the all-time high of 2.5 billion pounds set in 2003 by roughly 10 percent, according to USDA. Pork exports also are poised to top the 2008 record of 4.7 billion pounds. A cheaper dollar is also giving a significant boost to exports, making U.S. meat cheaper abroad, particularly among major customers in Asia.
