US Beef Demand Yet To Ignite

AUSTRALIA - Beef demand in the US tends to spike in the lead-up to Memorial Day (last Monday of May) and Independence Day (4 July).
calendar icon 9 May 2007
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US retailers and foodservice operators anxiously await sales results from these two holidays as good figures tend to indicate that prices for grinding beef will be strong for much of the US summer and into autumn. A key influencer of sales over the grilling season is the weather with outdoor barbequing a popular activity.

So far this spring, beef sales have failed to exhibit strong growth with wet weather in many regions dampening demand. In an attempt to boost sales, retailers are currently aggressively promoting steaks.

In light of subdued sales, wholesale beef prices (particularly middle meats) have defied normal seasonal patterns and have fallen in recent weeks. In response, processors have reduced slaughter levels in the expectation that cattle prices will retreat. However, tight supplies of fed cattle have meant that live cattle prices have held up. This scenario is seeing processor margins move into the red.

Foodservice sales are also sluggish with the latest survey from the US Restaurant Association (February data) revealing that quick service and quick casual were the only two concepts showing growth in sales. Family dining showed the largest drop in sales followed by fine dining. Subdued sales are likely a result of deteriorating disposable incomes, a slowing economy, declining housing values and high gasoline prices.

Prices for competing meets remain significantly higher this year and should provide some support for beef prices going forward. However, trends in oil prices and disposable incomes are likely to be bigger influencers on demand over the coming months.

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