Big Meat Supplies Press Prices, but Consumer Demand Stays Up
Growing supplies of meat and dairy products apply pressure on farm prices through 2017 into 2019. With big supplies, strong consumer demand brings good news for producers.
The offsetting result can be prices near or above last year's prices.
The outlook comes from a "Baseline Update for Livestock and Dairy Markets" from University of Missouri Extension economists.
Scott Brown and Daniel Madison add their midterm livestock outlook to the MU Food and Agricultural Policy Research Institute (FAPRI) annual update.
This is only the fourth year since 1980 that per capita supplies of beef, pork and poultry increase at the same time prices stay strong, Brown says.
While more products are welcome news for today, they may set up future price drops if demand fails to keep pace with growth.
The previous consumer-driven price surge came in 2004 at the peak of the Atkins diet fame. That demand brought both a jump in domestic supply and higher prices.
This time, the current surge may not remain, the economists say. Projected declines in 2019 prices from 2017 include a 12 percent drop for fed steers, 14 percent for feeder steers, 7 percent for barrows and gilts, and 2 percent for chicken.
Now, more exports provide price support. However, risks remain with unknowns in those markets. Other exporting nations also respond to price signals for more supply. The impact of ongoing trade negotiations with major trade partners remains uncertain.
This year, U.S. meat production reached nearly 1.3 billion pounds above a year ago in the first two quarters. Exports took more than 60 percent of that meat out of domestic markets.
A strengthening economy aids domestic demand. One indicator is more meals eaten away from home.
Uncertainties remain in foreign trade deals.
The economists are from the Division of Applied Social Sciences in the MU College of Agriculture, Food and Natural Resources.
The full FAPRI report, which includes crops and biofuel, can be seen at fapri.missouri.edu.
