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Cattle industry analyst sees positive shift in beef demand

A cattle industry analyst says this spring’s unexpected cattle market turnaround bodes well for the future of the industry.

Dr. Nevil Speer, CEO of Agri-Clear, says the fact that this spring’s cattle market rally was driven by increased consumer demand for beef is a very positive sign.

“What’s exciting about that is, it didn’t just happen. It’s not a fluke,” Speer says. “It really was driven by consumers—consumers continue to come back to beef. They have increased demand for this product, especially at the high end.  We’re ‘de-commoditizing’ the beef industry and it’s paying dividends.

Speer points to two positive indicators that the increase in demand is “real”.

“(One) is what’s gone on with the rib. Wholesale rib was in a very clear downward channel. But it completely changed direction this spring and has been very supportive to the cutout.  So we’re seeing demand at the very high end.”

The other positive indicator, Speer says, is the new record for the choice-select spread, at a higher level of beef production versus last year’s record high.

“That is clearly a very positive sign for demand. We’re moving it up and to the right. That’s means higher prices and more revenue ultimately coming into our business.”

Speer says the challenge is to keep producing high quality beef that’s increasingly consistent.

“That’s how we really get dividends in the business,” he says.

Brownfield spoke with Speer at the Iowa Cattlemen’s Association regional BeefMeet event in Creston, Iowa, where he was the keynote speaker.

AUDIO: Dr. Nevil Speer