Lance Zimmerman on ‘demand nuance’ in beef pricing
It’s an exciting time to be in the beef industry, according to beef analyst Lance Zimmerman. He recently shared his insights into the beef market with High Plains Journal, in the wake of RaboBank’s annual BBQ Index, which used the Memorial Day barbecue to analyze price movements of the various commodities that make up the treasured feast.
As a senior beef analyst for the North American market, Zimmerman leverages his experience in animal protein to create synergies with other sector experts across RaboResearch.
Zimmerman sees the beef herd at the beginning of a 10-year replenishment cycle. “It takes about 10 years for the beef industry to course correct,” he said. “2024 saw the highest beef demand since 1986. We may see 2025 retail demand at the highest level since 1984.”
Americans have a love for beef that they don’t feel for any other protein, he said. In the 1990s, beef producers doubled down on producing quality in beef cows. Beef is a profit center, and those prices will allow for rebuilding herds, reducing supply pressure. Foreign markets, too, crave American beef. South Korea is a growing protein market, and China is “struggling with protein supply right now,” Zimmerman said.
Domestically, demand for beef has nuances, he said. “Demand nuance is the missing piece in analyzing beef demand.” The American beef consumer is increasingly bifurcating. Higher-income consumers continue to buy more expensive cuts and splurge on the occasional night out at a steakhouse. Record volumes of prime and choice beef are being sold.
More stressed lower-income consumers rely on ground beef for home cooking while cutting back on meals out. Fast-food outlets are adjusting their menus and pricing strategies, but the middle tier of sit-down fast casual restaurants, like Applebee’s, is shrinking even as demand for quality beef is rising. Another factor in the decline of mid-tier beef restaurants is the growth of home smokers and other gadgets, which exploded especially during the COVID lockdowns as more Americans cooked at home.
“We lost the middle,” Zimmerman said. “White-tablecloth restaurants leaned into quality. Quality or value—how to do both? This is where they struggle.”
About 18% of American beef consumption is tied to imports, but much of that imported beef goes to frozen entrees and quick service outlets. Then there’s the “Yellowstone effect” on demand and the beef renaissance, which brought the cowboy lifestyle into focus for a new generation of consumers. Zimmerman joked that younger generations of beef consumers no longer get John Wayne references, but they know who the Duttons are.
Diets, too, seem to run in 10-year cycles, said Zimmerman. “There was the keto diet craze of 2014. In recent years, the introduction of the GLP-1 diet drugs, which were introduced to control blood sugar but also have a weight loss effect, has also driven more beef consumption.”
The popularity of these drugs has fueled a rise in protein consumption. Zimmerman cites a recent study by Glynn Tonsor, a professor in the department of agricultural economics at Kansas State University, in which he found that 15% of his respondents were using them. Almost all study participants, when asked, said they had eaten beef the day before. The same study found a 42% increase in beef consumption among GLP-1 users.
One effect of rising beef prices is a growth in heifer retention, which holds back heifers to bring them to finished weight. This reduces supplies in the short term while laying the foundations for future herd growth.
Cheaper grain prices “put American growers in the driver’s seat” for grain-fed beef.
Getting to know Lance
Before joining Rabobank, Zimmerman worked for nearly 12 years at CattleFax, where he served most recently as the director of research and protein market analysis. Before joining CattleFax, Zimmerman spent more than six years at Certified Angus Beef, where he played an important role in producer marketing and education.
Zimmerman has served as the chairperson of the National Cattlemen’s Beef Association Young Producers Council and was selected as the National Cattlemen’s Foundation and Chicago Mercantile Exchange Beef Industry Scholar in 2003. He has a master’s degree in agricultural economics and a bachelor’s in agricultural communications from Kansas State University.
David Murray can be reached at [email protected].
