Derrell S. Peel -- Oklahoma State University
The question of beef demand for the remainder of this year is an interesting comparison to exceptionally strong wholesale and retail prices in the second half of 2021. In the first quarter of 2022, retail and wholesale beef prices were sharply higher compared to last year. Retail all-fresh beef prices in May were 9.5 percent higher year over year. However, beef prices rose sharply in the second quarter of 2021 and remained high for the remainder of the year. Retail beef prices reached a record high in October 2021 with an all-fresh price of $7.548/lb. The all-fresh retail price has since decreased slightly to a May 2022 level of $7.374/lb.
Despite higher prices for most all products and record gasoline prices, domestic beef demand appears to be holding quite strong thus far. Wholesale and retail beef prices have moderated slightly from the robust domestic demand and record beef exports in 2021. Most beef wholesale prices are currently below last year’s sharply higher prices. The typical May pre-grilling season boost in beef products was more muted or absent this year, but prices have generally increased in June leading to higher Choice boxed beef prices the past several weeks. Prices for major steak products including tenderloin, ribeye, strip loin and top sirloin are lower compared to last year but do not indicate appreciable demand weakness at this point. Brisket prices are significantly lower year over year and steady in the second quarter, but still high compared to recent years. The increasingly popular sirloin tri-tip has increased sharply the past several weeks and is more than 25 percent above the 2021 average price. The ground beef market has remained consistently strong for the last year with prices for 90 percent lean trimmings holding close to the record high levels achieved one year ago.
Broiler product prices have continued to rise and may be helping to support beef prices. Wholesale chicken breast meat prices rose over 69 percent from the beginning of the year to a peak in late May before pulling back slightly. More recently chicken leg and leg quarter prices have jumped sharply. In contrast, chicken wing prices have decreased to the lowest levels in two years. From 2017-2021, wing prices averaged 1.65 times breast meat prices but in 2022 have averaged about one half of breast meat prices. Retail broiler prices have continued to increase in 2022 in absolute levels and relative to retail beef prices. In May the ratio of retail all-fresh beef price to the retail broiler composite price dropped to the lowest level since early 2019; meaning that broilers are relatively more expensive compared to beef.
Retail pork prices have also risen relative to beef prices with the ratio of retail pork to retail beef prices at the lowest level in a year. Prices are generally higher for all major wholesale pork products including loin, ham, and shoulder products (Boston butt and picnic).
Demand for beef and other proteins will continue to be challenged by higher prices for food, gasoline and everything else. Thus far, however, beef prices indicate continued strong demand. Strong prices for broilers and pork mean that beef continues to be a relative value among proteins.