Meat prices in the US expected to rise this year
American consumers are going to pay more for their meat, especially for pork and chicken, according to Rabobank analysts Paula Savanti, Christine McCracken and Don Close.
"Beef will be the last to see increases materialize", according to the report. At this point, the trade war with China acts as a shield for the American consumer, according to analysts: " If a trade agreement with China were to be brokered, price increases would be faster and steeper".
Restaurants will be the first to feel the pain but that is to be dispersed to the consumer also.
Even with tariffs of 62% and bans for the use of ractopamine in poultry and growth hormones for cattle, meat from the US will find its way in the Chinese market or in other countries.
"Sizable pork exports to China have been recorded in recent weeks despite restrictive tariffs. Lean hog futures are already trading near contract highs and prices for most pork products are nearly 25% above year-ago levels. Product prices are expected to move even higher in the coming weeks, as direct exports to China begin, but the strongest upward pressure is expected in the second half of the year. Exports would be even higher if US-China trade negotiations were to result in a reduction of the current tariff, although that outcome seems unlikely at present", said Christine McCracken.
Poultry is expected to be the main protein to replace pork in consumption. "While US chicken exports to China continue to be banned (this could change if/when trade negotiations progress), stronger demand from countries no longer being supplied by their traditional trade partners will tighten US chicken supplies".
Also, the report states that beef will be the last protein to see the increases materialize. At present, the US has a record number of cattle on feed, ensuring ample supply for exports and the domestic market. Rabobank expects beef prices to go through a seasonal pre-summer low, with increases to be seen around October.
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