Profitable year ahead for US cattle ranchers

by Meat&Poultry Staff
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NASHVILLE – Profitability for cattle ranchers will continue in the year ahead as cattle supplies remain tight and global demand intensifies, CattleFax analysts told cattlemen at the 2012 Cattle Industry Convention and NCBA Trade Show in Nashville, Tenn.

“The economic signals are in place for restocking to begin this year,” said Randy Blach, CattleFax chief executive officer. “All we need now is a little encouragement from Mother Nature.”

Although there have been three months of near-normal rainfall in parts of Texas, drought will continue to play a role in determining if and when the cowherd expands, relayed Art Douglas of Creighton Univ. Douglas expects much of Texas to return to dry conditions by late-spring or early summer. Drought will spread into southern California, the Northern Plains and coastal areas of the southeast US, he further predicts.

By March, a trough of low pressure should become established in the inland West and this will lower temperatures though precipitation will remain light at 75-90 percent of normal along the coast, Douglas said. “These dry spring conditions will extend from the Pacific Northwest into the northern Plains,” he added. “Dry spring weather is expected to persist in the Southeast where precipitation should run 80 percent of normal in coastal areas. Florida should show some improvement in moisture conditions by late spring.”

Blach expects cattle inventory numbers will decline slightly in 2012 and reach a low point in 2013, before increasing in 2014 and beyond — despite shifting drought conditions. Although herd growth may remain elusive, an increase in average carcass weights will partially offset the decline in inventory numbers, he added. Prices can be expected to move higher in 2012 as cattle numbers decline.

Tight supplies of cattle and beef will be compounded by continued growth in the export markets, with expanded access into Japan and continued increases in the volume and value of beef being sold into export channels, Blach said.

Blach said he anticipates additional good news from Japan, perhaps during the first half of the year, in addressing the effort to expand trade to include beef derived from cattle up to 30 months of age.

Japan won’t be the only export market to see significant growth during 2012, he added. Setting records in 2011, US beef exports are likely to set new highs in 2012 due to strong global demand and continued weakness in the US dollar.

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