The USDA Economic Research Service (ERS) is predicting consumer prices for beef and pork will keep falling in 2017 while poultry prices will start to creep up as commodity markets continue to correct following events in 2014 and 2015.
Beef and veal prices are predicted to decrease 1% to 2% year-over-year in 2017, according to the latest USDA ERS forecast from Nov. 23.
Lower feed prices and improving drought conditions in Texas and Oklahoma have allowed ranchers to continue expanding herds, said USDA ERS economist Annemarie Kuhns.
“We’re starting to see more beef on the market. And currently, there are very large supplies of beef even being held in cold storage. So we just see a large supply on the market that’s putting downward pressure on prices,” said Kuhns.
Similarly, 2017 pork prices are expected to be down 0% to 1%. Following the outbreak of the porcine epidemic diarrhea virus (PEDv) in 2014, pork prices jumped 9.1% that year. The industry started to recover in 2015 and 2016, and USDA ERS expects more of the same next year, Kuhns said.
Poultry prices, on the other hand, are set to rise 2% to 3% in 2017.
“Prices were lower as the industry recovered from the highly pathogenic avian influenza [outbreak of 2015]. So there were just more broilers on the market. But that’s kind of expected to even out and not be much of an impact in 2017,” said Kuhns.
The 20-year historical average shows chicken prices up 2.6%, so the 2017 prediction is in line with normal year-to-year fluctuations.
USDA ERS bases its predictions on a number of factors, including wholesale prices and historical consumer prices, as well as retail overhead costs like front-line worker wages, and the price of electricity and oil, which can impact transportation costs. The current strength of the U.S. dollar has also had an impact, as decreases in beef and pork exports to certain markets have increased domestic supply.
The current 2017 predictions also are based on normal weather conditions. A major environmental event, or a disease outbreak, could change the current figures, Kuhns said. USDA ERS updates its forecasts on a monthly basis.
Overall, consumer food prices are predicted to increase 1.5% to 2.5% next year.
