The beef balance sheet
By : Derrell S. Peel, Oklahoma State University Extension Livestock Marketing Specialist
Supply and demand flows for most agricultural markets are commonly summarized in the form of supply and utilization tables, often called the balance sheet. The balance sheet generally includes supply components as: Beginning Stocks + Imports + Production = Total Supply. Utilization includes demand components as: Exports + Total Use + Ending Stocks = Total Utilization. For some commodities, use may be disaggregated into several use categories. For beef, total use is not directly measured and thus is calculated as Total Disappearance from other balance sheet categories. The Livestock Marketing Information Center (LMIC) provides supply and utilization tables for meat commodities along with feedgrain and hay markets which include current and recent balance sheet values as well as forecasts for the next couple of years. All values reported below are annual totals.
The current LMIC beef balance sheet projects beef total supply for 2018 at 30.763 billion pounds including Beginning Stocks of 649 million pounds; Total Production of 27.102 billion pounds and Imports of 3.012 billion pounds. In contrast to grain markets, beginning and ending stocks of beef are minor (2018 beginning stocks are 2.1 percent of total supply) because the perishable nature of meat precludes large carryover from year to year. Beginning and ending stocks consist of cold storage holdings plus short term pipeline supplies of beef in wholesale and retail markets.
Beef utilization in 2018 is estimated as: Exports, 3.149 billion pounds; Total Disappearance of 26.824 billion pounds; and Ending Stocks of 790 million pounds. This level of total disappearance is equivalent to domestic per capita beef consumption of 57.2 pounds (retail basis). The balance sheet accounts for all supply among the various demand categories.
Compared to the 2017 beef balance sheet, projected 2018 values show beginning stocks down by 14.3 percent; total production which includes commercial production plus a minor amount of farm production, up by 3.2 percent; and imports up fractionally by 0.6 percent, all leading to total supply up 2.5 percent year over year. On the demand side, exports are projected up 10.1 percent; total disappearance, up 1.2 percent; and ending stocks up 21.7 percent. Per capita consumption in 2018 is projected to be up 0.5 percent from 2017.
Current forecasts for 2019 include beginning stocks up 21.7 percent year over year; total production up 1.7 percent; and imports down 4.5 percent leading to a total supply up 1.6 percent year over year. Exports are forecast to increase 2.7 percent in 2019; total disappearance is projected to increase 1.5 percent and ending stocks to decrease by 0.6 percent. Per capita consumption in 2019 is forecast to increase to 57.6 pounds, up 0.7 percent year over year.
The current balance sheet estimates will change. Balance sheet projections and forecasts are revised regularly to reflect new information and changing market conditions. Beef production is relatively easier to forecast given that animal numbers which will factor into beef supply are already on the ground, but total supply will reflect less certain impacts of changing carcass weights and dairy sector contributions to beef supply. Of course, supply or demand shocks such as major drought impacts, disease outbreaks or other factors may appear unexpectedly at any time. Beef exports and imports are particularly difficult to forecast given the volatility and uncertainty of the current global market situation.