Meat prices and production

By: Derrell S. Peel, Oklahoma State University Extension Livestock Marketing Specialist

The latest retail meat price data for May shows Choice beef prices at $6.412/lb., up one cent from April and 8.4 percent higher than one year ago.  The All-Fresh retail beef price was 2.2 cents higher than last month at $6.059/lb., up 10.8 percent year over year.  Retail pork price in May was $3.696/lb., down 7.3 cents from April and 9.8 percent lower than one year ago.  The May broiler composite retail price was $1.932/lb., down 6.6 cents from last month and 0.7 percent lower than one year ago.

Higher retail beef prices and lower pork and broiler prices in May follow from decreased beef production and increased pork and broiler production.  Beef production for the year to date through May was 4.7 percent lower than one year ago while pork production for the same period was up 5.6 percent and broiler production was up 3.9 percent.  The underlying supply conditions notwithstanding, there continues to be surprise at the apparent lack of substitution between beef and the other meats, in terms of retail prices.  Retail price ratios in May pushed to higher record levels for beef relative to pork and broilers.  May retail beef prices were 3.14 times retail broiler prices, a new record beef-broiler retail price ratio and the sixth consecutive month with a ratio at 3 or higher.  The beef to pork retail price ratio advanced to 1.64 in May, a new record level and the sixth consecutive month with a ratio of 1.5 or higher.

The latest Hog and Pig report indicates that hog production is near a peak currently and pork supplies will large through the remainder of the year, perhaps tapering off a bit going into 2016.  Pork production is expected to be up roughly 5 percent year over year in 2015 and will likely increase but more modestly in 2016.  Likewise, broiler production is expected to be up 5 percent in 2015 compared to last year and will continue increasing at a slower pace in 2016.  Beef production will likely remain down year over year for the remainder of the year but may begin to increase year over year in 2016.  Beef production may be down roughly 2 percent in 2015 compared to 2014 levels.  In the meantime, it appears that retail beef prices will depend less on pork and poultry supplies than on continued tight beef supplies.

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