U.S. cattle supply should continue decline

by Bryan Salvage
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SAN ANTONIO – During 2010, cattle supplies should decline another 1% to 1.5%, Randy Blach, chief executive officer for Cattle-Fax, told attendees of the 2010 Cattle Industry Convention in San Antonio, Texas, on Jan. 29. Beef demand will continue to be impacted by a weak economy and high unemployment, he added.

However, 2010 “should be a better year for the beef industry,” he added, with beef exports expected to rise and fed cattle slaughter totals expected to decrease. “Demand remains the biggest challenge for the beef industry in 2010,” Mr. Blach said. “Though the supply situation is very bullish, demand must stabilize in order for prices to turn significantly higher.”

Fed cattle slaughter totals are expected to be down 2% in 2010, and cow slaughter totals should decline by almost 9%. Average carcass weights are forecast to increase slightly and beef production is projected to be down 2.8%. Per capita net beef supplies are expected to be down 4% due to an expected increase in beef exports and smaller beef production.

U.S. beef exports in 2010 are expected to rise by about 8% over 2009. U.S. beef exports are forecast to increase this year to South Korea, and to a lesser extent to Japan and Vietnam.

Total U.S. corn production could decrease, as U.S. corn supplies are record large at an estimated 14.83 billion bushels for the 2009/10 marketing year. U.S. soybean supplies are up over 10% compared to last year – the second highest level on record – while soybean acreage is expected to be near 79 million acres.

Spot corn futures prices are forecast to average near $3.75/bu in 2010, near steady with 2009. And the combination of bumper corn and soybean crops, as well as the sharp decline in winter wheat acreage, has lessened the need for an acreage battle this spring.

Cattle-Fax is a Denver-based market analysis and information organization.

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