Cattle Outlook Suggests Tight Global Supplies, Higher Prices

February 6, 2011 04:36 AM

Beef industry economists reported on the 2011 beef industry outlook to more than 5,000 cattlemen and women during the Cattle Industry Convention in Denver. Brett Stuart, CattleFax market analyst, said global beef demand is increasing alongside tighter world beef supplies.

“2011 will be the fourth consecutive year of global beef production declines,” said Stuart. “This will not correct quickly. We will see very tight supplies moving forward.”

A major contributing factor to increasing demand comes from outside the borders of the United States. Stuart said business in the international marketplace is growing quickly as improvements to infrastructure and logistics are made. Beef exports are witnessing substantial growth with 75% of all U.S. beef exports going to Mexico, Canada, South Korea, Japan and Vietnam.

 “Korea is very aggressively buying beef from the United States,” said Stuart, adding that the foot and mouth disease issue is causing substantial reductions in Korea’s domestic meat supplies. “Last week we had outstanding sales to Korea at 24,000 tons, which is up from 9,000 tons a year ago.”

 Stuart projects the increasing demand from outside the United States will continue the upward trend. He suggested an 8 percent to 10 percent increase in U.S. beef exports in 2011 compared to last year. He said it could even surpass his expectation.

 “I am not saying exports will be up 18 percent (from 2010), but I'm not saying they won't be,” he said.

 Kevin Good, market analyst for CattleFax, said 2011 will be another year of tighter supplies and a “very mild” cow herd reduction. He added that stabilization is also in sight, projecting the early half of the year will bring continued reduction but suggested the decline will simmer in the latter half of 2011. The smaller herd is a “double edged sword,” according to Good. 

“Demand will be a notch better this year. Total domestic supplies will be lower this year than last. I am very bullish on price, which is good. But we have to start retaining heifers and rebuilding the cowherd to meet this demand and compete globally,” said Good.

The industry experts offered a sense of cautious optimism. Basically, supplies are tight, global demand is up, live cattle prices are good for U.S. cattlemen and women, and 2011 will be the year of stabilizing the cowherd.  

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