Industry News – AM
Cattle, beef prices seen breaking records, supply won’t grow until 2014
By Rita Jane Gabbett on 10/22/2010
The cattle industry is ready to set records for high prices this year and next as higher feed costs stall herd expansion and push increased beef supplies out to 2014, according to Purdue University Extension Economist Chris Hurt.
In an outlook report, Hurt said the most recent surge in feed prices will likely keep producers from expanding until feed prices moderate, which won’t be until the 2011 U.S. crops are assured, 10 months from now. That means cow umbers will not likely expand until 2012 and beef supplies won’t start to grow until 2014.
Meanwhile, USDA predicts an 18 percent increase in beef exports and five percent decrease in imports this year. Hurt said that will result in a 500-million-pound decrease in beef available in the United States compared to last year, which will push finished cattle prices up by $2 to $3 per hundredweight.
Smaller supplies of competitive meats will also support beef prices. Hurt predicted the average Nebraska finished steer price for 2010 will reach a new record of $94.80. He further predicted that record will be broken next year with Nebraska finished steers averaging in the low $100’s.
Hurt expects prices in the low $100 during the first quarter of 2011, reaching yearly highs around $105 in the second quarter, and then dropping by $2 to $4 per hundredweight in the third quarter, finishing the fourth quarter in the very low $100s.
As for meat prices, Hurt said consumers are in for many years of much higher retail beef costs. Retail beef prices so far this year have averaged $4.37 per pound, exceeding the previous record of $4.29 for the same period in 2008.
Early forecasts of retail beef prices in 2011 are $4.60 to $4.65 per pound, an increase of about 6 percent over the 2010 record price and compared to an average retail beef price of $3.84 per pound for the five years from 2002 to 2006.