Higher U.S. prices push beef exports to shrink; domestic demand holding steady

Source: Farm Progress. The original article is posted here.

Higher U.S. prices push beef exports to shrink; domestic demand holding steady

There have been several different factors hitting the U.S. cow herd over the last five or six years.

“The U.S. cow calf producer is facing unprecedented risks that have caused them to liquidate 3.5 million head since those cow herd highs back in 2019. We obviously want to talk about drought … but there's been a lot of other factors at play as well," Zimmerman says. "There's been market price risk and volatility. There's been regulatory pressure, there's been geopolitical risks that affect trade, that affect the dynamics of production, that affect cost of production for various inputs. There've been demand volatility factors at play.”

Just as the pandemic shifted demand from restaurants to retail, the industry is seeing that cycle again as restaurants are facing unprecedentedly high labor costs. “We even have restaurants sitting here and making decisions each and every day in terms of what their center of the plate costs are and are they going to use a cheaper alternative like chicken or are they going to use a less affordable option and use beef?” says Zimmerman.

Finally, there are production risks in terms of cost and methods of production, and a variety of other factors.

“What we're seeing is that that long run cyclical pattern, where now those higher retail prices are funneling their way down a higher share of those dollars or funneling their way down all the way to U.S. cow calf producers to incentivize them to go through the next herd rebuild," Zimmerman says.

“But again, the first step is to get those retail prices high enough that we can funnel more of those dollars back down to the ranch level, the pasture gate level, to incentivize those cow/calf producers to stop liquidating cows, retain more heifers and rebuild those cow numbers so that we can ultimately rebuild supply and production going forward.”

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