Meat consumption statistics show the low carb diet craze has burned out.
The timing is bad because supplies of all major meat types are rising, putting downward pressure on livestock prices.
Glenn Grimes and Ron Plain of the University of Missouri note that in the United States in the first quarter of this year compared to the same time last year, demand at the consumer level was down 3.5 percent for pork, two percent down for beef and 0.5 percent down for chicken.
At the same time, pork production was up 3.6 percent, beef 6.2 percent, chicken 4.6 percent and turkey 3.6 percent.
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The low carb, high protein prescriptions like the Atkins and South Beach diets had their heyday two years ago.
Let’s look at the impact on beef demand, which is a combined measurement of consumption and price. U.S. beef demand fell steadily from the early 1980s until 2000. Kansas State University maintains a beef demand index with 1980 as the benchmark at an index of 100. At the start of 1999, that fell to a low of 47.8, but then demand recovered, slowly at first, but jumping to 59.1 at the start of 2004 as the low carb, high protein craze peaked.
It dipped to 58.4 at the start of 2005 and to 55.8 this year as the diet focus shifted and as fuel costs rose, making consumers think twice about their meat-heavy grocery bills.
This mid-decade demand boost helped keep U.S. cattle prices high despite a large beef supply and closed borders because of BSE.
Beef supply is expected to be even bigger in 2006, rising by about five percent over 2005 and with weaker demand, lots of competing meat and only limited export options, cattle prices are being pressured lower.
Also weighing on prices is the large number of cattle on feed in U.S. feedlots, the largest since records began in 1996. The drought in the southern U.S., which slashed the winter wheat crop, also dried up pastures, forcing more cattle into feedlots. They will reach market weight this summer and analysts expect U.S. fed cattle prices will fall to the low $70s US.
Feedlot supply in Canada is tighter, supporting prices here, but Canfax has noted that the weak U.S. market will eventually drag
Canadian prices down.
Also adding to the meat glut is poultry. Stocks are growing because U.S. exports fell when people in other countries began avoiding the meat because of fears about avian flu.
Some analysts worry that unless there is unusually strong cattle slaughter and beef disappearance, the backup of market-ready cattle could a big problem by late summer.
The wild cards in the picture are consumer reaction to falling meat prices and Japan. Meat is getting cheaper and consumers might find their taste buds won’t let them pass up a trip to the meat counter, despite high gas costs.
Also, there is pressure on Japan and South Korea to resume limited imports of U.S. beef. Asian meat inspectors are auditing American plants. Trade might resume this summer, but it will be tough to recover Asian consumer confidence.
