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Beef Shortage Means Hold on to the Cows

July 26, 2011
 
 

Source: University of Illinois

The quantity of beef available to consumers in the United States has declined a startling amount in recent years, and that trend is going to continue. Unfortunately, even higher retail beef prices can be expected for consumers, said Chris Hurt, a Purdue University Extension economist.

“The declining supplies are related to continuing liquidation of the cow herd in the past few years due to high feed prices, a weak U.S. dollar that is spurring beef exports, and, of course, drought in the Southwest and Southeast. Declining supplies will support prices across the cattle complex at new record highs in 2011 and again in 2012,” he said.

The USDA estimate of the inventory of beef cows on July 1 showed a further decline of 1 percent in the past year. Since 2007, when feed prices were still moderate, beef cow numbers have dropped 5 percent. More alarming is the decline in beef available to U.S. consumers as cow numbers were dropping and foreign consumers have been buying much more of the U.S. production, he said.

In 2006 and 2007, before feed prices surged, U.S. consumers had over 65 pounds of beef available per person. This year, USDA analysts expect that to be down to 57.9 pounds and to drop again to only 55.6 pounds per person in 2012, he said.

“This represents a 15 percent reduction in available supplies during the high-feed price era. The drought in the Southern Plains and Southeast this year is continuing the herd reduction due to extreme shortages and high prices of forages. In addition, recent heat stress is thought to be causing higher death losses that will also contribute to smaller supplies,” he said.

Beef trade is back as a contributor to beef prices as well. In 2003, beef exports reached a record, representing 9.6 percent of domestic production. The discovery of a BSE cow late that year caused most buyers to shun U.S. beef with exports dropping to just 2.3 percent of production in 2004, Hurt said.

“It has taken a long time, but 2011 is expected to see a record 10 percent of U.S. production heading to foreign consumers,” he said.

There have been several drivers of higher exports. One was the re-opening of the South Korean market in July 2008 after they banned U.S. beef in late 2003. Although South Korea was our fourth largest buyer in 2010, they have jumped to the second largest buyer in 2011 with purchases so far this year more than double the same period in 2010, he said.

“Japanese purchases are up over 50 percent, which is probably also related to the earthquake/tsunami disaster there,” Hurt said.

There is a more fundamental driver of favorable beef trade patterns for U.S. producers, however, and that is the weakness of the U.S. dollar. A weak U.S. dollar implies that some foreign currencies are strengthening and providing incentives for both more beef exports and less beef imports, he noted.

“U.S. beef imports from New Zealand, Australia and Canada are down 6, 25, and 26 percent this year, whereas imports from Australia are off 89 percent. These are the four largest sources of U.S. beef imports,” he said.

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COMMENTS (6 Comments)

Calvin D. Paulson - Harrisonburg, VA
The use of corn to ease our foreign crude demand, was pushed though an unaware group of polititions, that put our nations food supply into our gas tanks!! The fine law makers "jumped into bed" with J.D & the big chemical coumpanies, to reduce thje amount of govt. payments to us farmers! Go to those "town hall meetings and stop the ethenol madness! ps the corn genetics were imediatly bought by the big chem giants, whose chems were then obsolete, lab girl got the shaft too?
2:30 PM Jul 29th
 
Calvin D. Paulson - Harrisonburg, VA
The use of corn to ease our foreign crude demand, was pushed though an unaware group of polititions, that put our nations food supply into our gas tanks!! The fine law makers "jumped into bed" with J.D & the big chemical coumpanies, to reduce thje amount of govt. payments to us farmers! Go to those "town hall meetings and stop the ethenol madness! ps the corn genetics were imediatly bought by the big chem giants, whose chems were then obsolete, lab girl got the shaft too?
2:30 PM Jul 29th
 
mr history - logan, IA
The root of the problem can be traced to the change in what corn is primarily used for because even if you feed hay and grass and never use a bushel of corn. your end product more than likely will end up in the feed yard. As hay acres and pasture acres go to corn which now is primarily used for the other than livestock feed catigory. fences are pushed out and how are you going to dry lot a cow herd.crops have been subsidised for a long time as a cushion against hard times; when has the cattle producer ever had a year to year subsidy?
7:04 PM Jul 28th
 
CLYDE - COLLEGE STATION, TX
What is the average age of the American rancher? The last time I looked, which was years ago, it was over 60. These folks have paid their dues and now want out. Don't blame them. Too many risks they have little or no control over: weather, feed costs, fertilizer, fuel, price they receive for their product.
9:33 PM Jul 27th
 
Jim Sly - Creswell, OR
Declining cow #'s are apparent even in Oregon where therre is no drought at all. There is, in my opinion, a number of families who are quitting the cattle business.
8:01 PM Jul 27th
 
Jim Sly - Creswell, OR
Declining cow #'s are apparent even in Oregon where therre is no drought at all. There is, in my opinion, a number of families who are quitting the cattle business.
8:01 PM Jul 27th
 



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