Market Intelligence Update from Canada Beef: U.S. beef demand on track to remain among 20-year highs
It is no secret that Americans like to barbeque and Circana’s May 2023 consumer survey suggests strong grilling activity for the summer of 2023.
U.S. beef demand has been steady so far this year but muted shifts between channels and products are apparent. The current support for beef in the U.S. economy is overshadowed by one big question about the effect that higher interest rates may have on consumer spending in the back half of the year.
Macroeconomic measures show signs of steadiness in the near term compared with the last few years of disruption. As of May 2023, the U.S. Consumer Price Index was up four per cent year-over-year for all items; but up just two per cent when excluding food and energy. U.S. disposable income has been increasing slowly and steadily since January 2023 and was in line with the long-term trendline (since 1990) in April 2023.
Whether current strong signals of U.S. beef demand hold or ease for the rest of 2023, today’s forecasts indicate this year will remain among the highest levels of beef demand in the last 20 years.
Imports and distribution
Total U.S. beef imports in April 2023 were up 0.4 per cent year-over-year. U.S. imports of Canadian beef were softer year-over-year in April but up 15 per cent from the five-year average for April. Fresh beef imports were down three per cent in April 2023 compared with April 2022, but up 14 per cent from the three-year average.
Frozen beef imports were down eight per cent in April 2023 but steady with the three-year average, whereas processed sales were down two per cent in April 2023 but up 31 per cent from the three-year average. In April 2023, US boneless (-17 per cent) and bone-in (-8 per cent) beef cuts in cold storage were lower than in 2022, and the five-year average for April. A drawdown reflects strong product movement but exports to Japan, South Korea, Canada, Taiwan, China, and Vietnam have cooled compared to a year ago. Higher imports appear to be supporting domestic consumption.
Ribeye demand declines in restaurants
The National Restaurant Association notes that spending in restaurants has been driving overall U.S. retail sector spending growth over the last 12 months. Casual dining, fast casual and quick service are the drivers whereas full-service restaurant traffic in May 2023 was down three per cent from May 2022 (Circana).
Willingness to pay for ribeye at restaurants declined from April to May 2023, from US$28.06 per meal to US$27.37 per meal (Kansas State Meat Demand Monitor). The breakfast and lunch spaces are heating up and restaurant expansion is being driven by quick service channels such as Popeyes, Taco Bell and others offering chicken and ham-based wraps and sandwiches. Beef burgers are still big business and willingness to pay for food service beef hamburger increased slightly from US$21.12 per meal to US$21.20 per meal from April to May 2023 (Kansas State Meat Demand Monitor).
Beef remains competitive at retail
The Choice retail beef price increased three per cent from April to May 2023 to US$8.08/lb (US$17.82/kg). This record price was up five per cent from May 2022 and up 18 per cent from the five-year average. The all-fresh retail beef price increased two per cent from April to May 2023 to US$7.50/lb (US$16.54/kg). Retail beef prices have been rising since November 2022 whereas both chicken and pork prices have moved lower from their record highs in 2022.
Despite the trend, beef remains competitive at retail with the beef-to-chicken price ratio at 3.06 in May 2023, slightly below the five-year average for May. The beef-to-pork price ratio at 1.79 was slightly above the five-year average. Analysts believe that retail beef prices will follow the wholesale value and climb higher over the summer. The Kansas State Meat Demand Monitor shows that retail consumers were willing to pay higher prices for ribeye steak and ground beef from April to May 2023. Between April and May 2023, market share for ribeye steak shifted from food service (16 to 14 per cent) to retail (eight to 10 per cent) (Kansas State Meat Demand Monitor).