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Beef prices on the rise

by Meat&Poultry Staff
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LUBBOCK, Texas – Last month the US Department of Agriculture reported the US cattle herd had declined to 90.8 million cattle, 2 percent less than the previous year and the lowest inventory since 1952, when there were 88.1 million. As a result, consumers should expect higher beef prices for the next two years, reported the Associated Press.

Experts said retail prices for beef could climb as much as 10 percent a year in 2012 and 2013, and the increase could be even greater if demand from other countries increases.

"We're producing less beef so prices are going to go up," Texas AgriLife Extension Service livestock economist David Anderson said.

Ranchers have sold more of their cattle in recent years to meet increased costs for feed, fuel and other expenses. The rising feed costs come alongside increased demand for corn to produce ethanol and to meet a growing export market.

The situation has been worst in Texas, the nation's leading cattle producer, and other parts of the southern plains and southwest, where a record drought caused pastures to wither, leaving ranchers with few options but to sell their cattle or pay top-dollar for feed.

There are 1.4 million fewer cattle — a record 660,000 of those cows — in Texas this year compared with the previous year, accounting for about 74 percent of the drop in numbers nationally.

Texas still leads the nation with 11.9 million head of cattle and calves, an 11 percent drop from last January. Cattle numbers plunged 12 percent in Oklahoma, to 4.5 million head, and in New Mexico by 10 percent, to 1.39 million head.

While cattle numbers dropped in those states, they have climbed elsewhere, especially in the Northern Plains where more rain led to plentiful pastureland. The USDA reports that producers held onto more heifers than some expected. The January report showed a 1 percent increase over last year's number of heifers retained.

Until the cattle supply increases, consumers will see higher prices, said Lane Broadbent, a livestock analyst with KIS Futures in Oklahoma City.

Broadbent said worldwide demand for US beef also could increase in the next couple of years, causing prices to stay steady or rise even if the herd size grows as expected.

"An era of cheap meat might not happen for another two to three years," Broadbent said. "It's basically supply and demand, and this USDA report showed that our supplies are going to increase."

USDA livestock analyst Shayle Shagam said producers who see good prices at auction might still sell off their heifers. Ranchers must weigh whether they'll come out ahead by selling those heifers in coming months or hang onto them and sell the calves from the animals.

"There's potential for increased retention," Shagam said. "How that evolves during the year will depend on these producer decisions."

The USDA projects per capita beef consumption will drop to 55.7 pounds in 2013 before climbing to 58.9 pounds in 2020. Meanwhile per capita consumption of chicken was forecast to increase throughout the decade, with 2020 showing 91.5 pounds.

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