Canadian beef demand is holding up, but economic factors and changing diet fads have reduced American demand in recent months.
With a record number of cattle on feed in the U.S., the weaker American demand for beef is putting negative pressure on cattle prices on both sides of the border.
While the first three quarters of this year show Canadian beef use is down one percent, there remains strong demand for the domestic product.
“We definitely are not experiencing the kind of decline the Americans are,” said Glenn Brand, chief executive officer of the Beef Information Centre.
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Surveys from the centre reveal 82 percent of Canadian customers prefer the domestic product to imported beef if they have an option. Since BSE was discovered in Canada in 2003, consumer demand and beef consumption have remained strong.
Canada has seen a 34 percent increase in the amount of domestically produced beef consumed at home. Restaurants and retailers continue to ask for Canadian product.
Brand said domestic supply is sustainable depending on how much packing plants deliver given strong competition from the Americans, who have increased exports, especially to Eastern Canada.
“With the Canadian kill running at a lower level, U.S. plants are actually shipping more product, particularly into Eastern Canada where there is a trade advantage,” he said.
There are several factors behind the lessening demand in the United States including how much people are willing to pay for beef, said Ted Schroeder, agriculture economist at Kansas State University.
“It is still stronger than it was three years ago but it has slowed down its growth and probably declined a little in the last quarter and is probably not going to strengthen for a while again,” he said.
“We haven’t had any sort of fallout. We have just had a slowing down in some of the growth that was there,” Schroeder said.
Part of the decline is the fading trend among dieters who were increasing their protein consumption and reducing carbohydrates to lose weight.
At the same time, people have had to spend more on energy and had less disposable income in the last six months for luxuries. So they bought cheaper poultry and pork when beef prices rose.
On the export side, rebuilding confidence in Asia will take time.
“They believe beef is very unsafe relative to other products and they are very risk averse in their food purchase and consumption habits,” Schroeder said.
There are also ample supplies so prices are held down. High calf prices last year encouraged people to put more animals on feed, where they were finished to heavier than average weights. The result was more beef for sale.
Cattlefax reports U.S. beef produ-ction in 2006 is up 5.5 percent compared to last year.
Overall, the demand story is not that bad, said Kevin Good of Cattlefax.
Live markets in the U.S. are current and he sees no cause for alarm.
“Demand is a little bit misleading because retail is a little bit softer but the other sectors are a bit stronger,” he said.
Retail demand is slowing but about half the meals in the U.S. are eaten away from home and Good does not see a decline at that end. Fast food and high end restaurants are doing well although middle level outlets have suffered somewhat.
“The hard part of demand to quantify is the food service and exports that are expanding for us. We know there are a few more dollars coming back in from that area,” he said.
