In 2018, retail beef demand has been strong! While that sounds good, what exactly does it mean? Is it because consumption has continued to increase since the tight supplies of 2015? Consumption has indeed been increasing, but this is only half the story…the other half is price.
Price adds perspective and takes us from consumption to demand. Said another way, understanding consumers’ willingness to pay for the available supply of beef empowers us to go from merely noting consumption to measuring demand. Then, we use demand indices to compare demand across time and products.1 An index tells us how much more (or less) consumers are paying than would have been expected if demand were flat. And, as the latest Beef Demand Index shows, 2018 retail beef demand is 15% higher than in January 2012 (Chart 1), so beef demand is indeed strong.2
Plugging monthly retail sales data into the index enables us to see distinct seasonal trends.3 For example, total beef demand is typically weakest in November (due to Thanksgiving) and strongest through the summer grilling season and the December holidays. Further, we can see that 2018 demand has been particularly robust as index values have averaged 6% higher year-to-date than for January-October of 2017. No doubt a strong economy helps, but consumers have been avidly enjoying all the available beef at a fairly robust price. In other words, beef is worth it for shoppers, and strong retail sales are the result.
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