U.S. beef production during the 12 months through May was up 6.9 percent compared with the year-ago level. The pace of growth in beef production is significantly higher than the rates of growth for U.S. pork production (2.9 percent) and U.S. poultry production (2.3 percent).
Beef production transitioned to a slowing growth trend in April. The ITR Checking Points system indicates the decelerating growth trend is likely to persist during at least the next two quarters. The Consumer Price Index for beef and veal is recovering, but prices are below year-ago levels, as oversupply keeps prices depressed. Low prices may be enticing consumers to buy more beef, as personal consumption expenditures for beef and veal is accelerating (up 1.4 percent year-over-year). Expanding expenditures may provide a boost to production during the near term.
Japan, however, has announced a plan to increase tariffs on frozen American beef from 38.5 percent to 50 percent. U.S.-based frozen beef producers may have difficulty maintaining competitiveness in the Japanese market as the cost of exporting to Japan rises. NP