Increased grocery store sales that resulted as consumers began cooking more at home offset decline in restaurant trade
The wild rodeo of beef demand in 2020 appears to be over, at least in the United States.
While many table-service restaurants have closed or offer limited service due to pandemic restrictions, the total impact on beef demand has been minor because supermarkets increased their sales based on consumers’ need to buy food and cook more at home.
“In total, the impact appears to have been practically zero, believe it or not. That’s what the statistics are telling us,” said Kevin Bost, an analyst with U.S.-based Procurement Strategies Inc.
The impact of market changes due to COVID were most severe in the early days of the pandemic up to July, Bost told a Jan. 27 webinar organized by J.S. Ferraro, a meat and livestock market analysis firm.
That’s when slaughter plant closures and slowdowns affected supply. But by the second half of the year, U.S. demand for some beef cuts has increased to more than cover loss in demand from the restaurant sector.
Various choice steaks proved popular at the meat counter, said Bost. The big market loser was ground beef, a staple in many restaurant offerings. Though fast-food franchises use a lot of hamburger, demand overall remains weak compared to pre-COVID numbers, Bost said.
That has implications for the price outlook, he added. Retail margins on beef remain high in the U.S., but that could be reversed if and when the food service industry recovers.
In Canada, livestock and meat analyst Kevin Grier provided data showing supermarket sales of all foods, including meats, saw a 10 to 15 percent boost in 2020 compared to the previous year based on figures from January to November.
“Probably when we look back, you’ll find that the dollar sales of meat and poultry in Canada for the year probably up about 15 percent; tonnage probably up about 10ish,” said Grier.
Canadian beef demand was “phenomenal” in 2020, he said, though he wouldn’t have predicted that. Pork demand was also strong.
Grier noted that American grocery retailers increased their prices when the pandemic hit, while Canadian stores did the opposite.
As for Canadian cattle slaughter, Grier said he thinks there are plenty of cattle available, although Alberta prices seem to indicate packers don’t share that view.
“The price in Alberta is skyrocketing relative to Texas…. I don’t see the rationale behind it, frankly. I don’t see it lasting because I think there’s plenty of cattle in Alberta and I think that buyers should recognize that.”