BEEF  DEMAND  STRUGGLED  IN  ‘09

      Calculated consumer beef demand index values for calendar year showed that 2009 was a very difficult year and the worst in several years.  Those indicators of consumer demand involve some significant assumptions and are based on relationships between calculated per capita consumption (disappearance) of beef and extrapolation of a retail beef price by USDA-ERS from Federal government data collected to calculate the Consumer Price Index.

      The calculated retail beef demand index value for 2009 was the lowest since 1999 and down a little more than four percent from 2008’s.  Of course, the main factor that hurt beef demand in 2009 was the severe economic recession.  Consumers were especially cautious about buying relatively expensive beef items when they faced job uncertainty, etc.  Since the most recent peak in the retail beef demand index in 2004, the decline in the demand index has been about 14 percent.

      Weakening per capita demand for beef is usually translated into lower cattle prices than would have been the case if demand had been stable.  That situation clearly happened in 2009.  With an improving U.S. economy, further large year-to-year declines in aggregate consumer demand for beef are not currently forecast.  However, consumers will likely remain very selective and price conscious buyers in 2010.  So, in the supply/demand world of economics, the demand side will provide a cap on how high beef and cattle prices can be pulled-up by supply reductions.