Agricultural News
Higher Beef Prices Create Pressure at Home and Abroad
Thu, 04 Apr 2013 11:04:33 CDT
Selling beef with expensive price tags sets retailers up with a hard task. CattleFax Market Analyst Mike Murphy says U.S. beef sellers find themselves in that spot both domestically and in the export market.
"Today, we're sitting here, basically, at record high prices when you look at it from a live cattle perspective or a cut-out perspective. And as you rank that across the globe, we are the third highest when you look at things. The Japanese Wagyu product is higher. We don't really compare with that because it's a different type of a product. But, yeah, we're third in the globe and that concerns us from an export standpoint as we look at our trade forecast for 2013."
Record-high beef prices come at a time when consumers may have less disposable income, too.
"Well, relative to the economic situation, and as we look at it related to beef demand, we're looking at GDP growth that's going to be one to two percent growth which is not super positive to beef demand as we look at 2013. So, that's something we've got to be conscious of as we look forward here."
That's true overseas as well. Mature markets will pose more challenging than emerging ones like China, India, and Vietnam. Across the globe, U.S. beef commands a premium because trading partners crave the grain-fed flavor that sets the product above beef from other regions of the world.
Murphy says that at some price point, people will turn away from even the best beef, but the promise of premium brands allow that level to be relatively high.
"Branding is very important and, obviously, if we're looking at Certified Angus Beef as an example, that branding is really critical. You've got higher pricing points there and that's going to continue to be the situation as we go forward. You'll certainly see those higher pricing points. But the bottom line is you still have to get the consumer to buy it and, at some point, they will find a resistance from a price standpoint. It just may be at a higher level than commodity beef. But branding is very important for the industry, for sure."
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