Veronica Nigh – Farm Bureau Senior Economist
Over the last few weeks, USDA has released a host of data on the beef and pork markets, which helps provide some insight into a question we’ve all been asking for a while: When will beef and pork markets return to some semblance of “normal”? Production estimates in the form of the Hogs and Pigs Report provide a detailed inventory of breeding and marketing hogs as of Sept. 1, while the Cattle on Feed Report provides monthly estimates of the number of cattle being fed for slaughter. USDA also gave us the Cold Storage Report, which shows the volume of commodities, including beef and pork, in freezer storage throughout the U.S. as of Aug. 31
In addition, USDA’s Economic Research Service updated the Food Price Outlook, which analyzes the consumer price index level for food, examines changes in the CPI for food, and constructs forecasts of the CPI for food for the next 12-18 months. In the same report, ERS also analyzes and models forecasts for the producer price index, which measures the average change in prices paid to domestic producers. Finally, the Crop Progress Report continues to illuminate the incredibly dry rangeland conditions facing many ranchers. All of these reports have been discussed individually, but put together they give important context to the meat case, both today and into the future.
Conclusion
ERS estimates that increases in both the CPI and PPI will remain high through 2021, but will return to the range of 20-year estimates in 2022. Despite these estimates, production numbers are all down - the inventory of breeding and marketing hogs is lower than both 2019 and 2020; the number of cattle on feed is lower than 2020, but above the 2017-2019 three-year average; and a quarter of the national beef cattle inventory is on pastureland considered to be in poor-to-very-poor condition. And with stocks of beef and pork in cold storage both below 2020 and the 2017-2019 average, there is less cushion in frozen reserves. At this point, most signals indicate the market for beef and pork will continue to be tight, likely for some time.
