The Real Reason Beef Is About To Be So Cheap
If you enjoy a good steak but haven't had one for a while now (because, budget), the ongoing COVID-19 coronavirus pandemic may change that for you. As with the price of lobsters, which dropped because China's appetite for the shellfish fell at the beginning of this year, Mother Jones says it could only be a matter of time before we all see cheaper beef, too.
As with all commodities, beef prices are sensitive to supply and demand. For most of last year, demand for American beef was high, because China's pigs were decimated by another virus — African swine flu (this disease was fatal to the animals, but didn't pass to people). And because their pork prices rose, China relied on American beef imports to satisfy their domestic demand for meat. Then COVID-19 happened, mass quarantines were imposed across the city of Wuhan as well as in other cities in the Hubei province. The mandatory quarantine, which saw the lockdown of about 50 million people, shocked the Chinese economy and cut demand, pushing the price of beef down.
A weaker U.S. economy will hurt steak prices
The demand for beef is also expected to fall within the U.S., where many economists are worried the pandemic could push an already fragile global economy into recession. If that happens, beef demand will fall in the U.S. too, because agricultural economists say that when consumers feel wealthier, they buy more beef, but when they think their pockets are squeezed, they tend to buy less. Mother Jones says those fears could be playing out now, because former U.S. Federal Reserve vice chairman Alan Binder says U.S. consumers aren't buying much except for coronavirus-related or emergency prep goods.
We've seen that beef demand drop before during the recession late last decade when U.S. beef consumption fell 10 percent between 2007 and 2011, and finally recovered in 2015. Beef prices today are already 20 percent cheaper today, thanks to China's diminished demand. If consumers continue to worry about their financial futures, their decision to stop splurging could see beef prices fall even further.