Beef Quarterly Q1 2022: Strong demand but cost headwinds prevail
Global beef markets remain tight. Ongoing strong demand and more limited supplies have kept global beef prices high. But cost pressures are flowing into the supply chain.
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Over the past two years, retail beef price movements have been phenomenal, driven largely by strong consumer demand and some supply shocks. In many cases, this increase in prices was caused by demand pull. With supply unable to keep up, the increase in demand has created an imbalance in the market and as a result beef prices have lifted.
Rising inflationary pressures continue to impact the beef supply chain. A number of the cost increases will be permanent and will need to be accommodated within the supply chain. Others are more cyclical and over time we expect them to decline, indeed we may start to see some easing of these costs through 2022. While the demand-led increase in beef prices may have alleviated some of the pressures of the cyclical cost increases, finding a way to maintain beef demand and cover further cost increases may prove a more challenging task.
Further increases in beef prices run the risk of consumers substituting to other proteins or reducing their overall consumption. And we are starting to see signs that they might be reaching their limit. But consumers’ willingness to pay for beef across most markets has been phenomenal, and while there may be signs of weakening demand in some markets, others remain strong. Maybe we have not reached the limit yet.
