High grain costs to lift U.S. beef prices, lo...

High grain costs to lift U.S. beef prices, lower meat supply

The traditional 10-12 year US cattle cycle appears to be a thing of the past, with the US cattle herd hovering between 96-99 million head for the past 10 years.

However, the United States Department of Agriculture (USDA) is predicting numbers to remain in the same range for the next 10 years.

According to the USDA’s Agricultural Projections to 2017, high feed and production costs (in large part due to the use of crops in biofuels) will lead initially, to falling red meat supplies in the US through until 2011 – with lower beef and pork output and only a slow expansion in poultry supplies.

Eventually, however, the high production costs and lower supplies should be passed on in higher retail and farm gate prices for meat and livestock. With steadily rising carcass weights, beef production is projected to increase 6% between 2010 and 2017, to match the record in 2006.

U.S. cattle prices are now expected to fall only slightly from recent record levels in 2008, before again rising gradually through to 2017. Similarly, hog prices are forecast to fall 4% in 2008, before rising 25% by 2017, due to high production costs. Even broiler prices are forecast to rise 14% by 2017.

A gradual return of U.S. beef to Japan and Korea is projected through to 2008, with total U.S. beef exports to all markets increasing 56%. The USDA expects total beef consumption and imports by Japan and Korea to increase steadily over the next 10 years, assisted by the return of U.S. product.

U.S. beef imports are forecast to reach 1.7 million tons cwt by 2017, an increase of 19% on 2007 volumes (1.47 million tons cwt).
Source: Meat and Livestock Australia (MLA)