Page 6 - MWC 8-20-20s
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The Midwest Cattleman · August 20, 2020 · P6

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

         The U.S. economy was  food service demand and all  beef consists of a couple of
      wracked like never before in  obscured by temporary sup- components.                      Underlying
      the first half of the year. The  ply  shortages  that reduced  consumer preferences deter-
      Bureau  of Economic  Analy- overall  beef  availability.  Re- mine overall demand for beef.
      sis (BEA)  released  prelimi- cord overall wholesale and  Tastes  and preferences  tend
      nary  estimates  showing  that  retail beef prices masked a  to be relatively stable, evolv-
      U.S. Gross Domestic Product  variety of impacts in various  ing over longer periods and
      (GDP) declined by an unprec- beef product  markets  relat- generally appear strong, i.e.
      edented 32.9 percent year  ed to the type of demand for  beef is popular. In the short
      over year in the second quar- the product and the ability to  run, willingness to purchase
      ter of 2020. This follows a five  shift product from food ser- beef will depend on the rela-
      percent first quarter decrease  vice to retail grocery supply  tive prices of other products,
      compared to last year.  This  chains.                                 particularly substitute prod- phasize this impact going for-
      highlights questions about            Beef    supply     conditions ucts that may be consumed  ward.
      the impact of the pandemic on  have stabilized, albeit at high- in place of a particular prod-             Ability to purchase a prod-
      beef demand in the first half  er levels of production year  uct. For specific beef products,  uct  is  related  to  the  level  of
      of the year and, more impor- over year in the second half  this is a complicated consid- consumers’ discretionary in-
      tantly, beef demand for the  of 2020. Beef demand will be  eration,  including  other  pro- come. Consumers must have
      remainder of the year.             critical in determining overall  teins such as pork and poul- income to purchase a product
         The first half of 2020 was a  beef prices and, subsequently,  try,  as  well  as the  multitude  regardless of how much they
      confusing mix of beef demand  cattle  prices  going  forward.  of other beef products that  desire the product. General-
      and supply dynamics, compli- Beef demand, as for any prod- may be chosen by consumers.  ly, macroeconomic conditions
      cated by dramatic disruption  uct, is generally a function of  In periods of low income, beef  including overall GDP levels
      of beef supply chains. Overall  consumers’ willingness and  consumers may “trade down”  along with unemployment
      beef demand was difficult to  ability to purchase specific  from high cost beef products  are indicative  of income lev-
      judge accurately as surging  quantities of the product at  to  lower valued  products.  els.  The U.S. economy is in
      retail grocery demand was  various prices of the product.             Food service demand, which                      continued on page 24
      offset by sharply diminished          Willingness to purchase  remains diminished, will em-

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