CattleFax 2012 outlook: Hold on tight U.S. cattle producers
February 12, 2012
2012 promises to be quite a year for the U.S. beef business, with the cow-calf sector poised for record returns and incentive for growth, analysts told a standing-room crowd at the CattleFax annual outlook conference during the National Cattlemen’s Beef Association (NCBA) cattle industry convention held last week.
The team of analysts outlined trends in weather, grains, energy, international trade and U.S. cattle numbers, with all the signs pointing to good, although volatile times for U.S. beef producers. Following are some highlights from the conference:
• Brett Stuart said we exported a record $4.7 billion in beef value during 2011, adding an average of $261 per head to fed-steer prices.
• Global beef demand will continue to increase. From 2002-2006, global beef production was increasing and prices were rising at the same time, suggesting strong demand. Since 2006, global production has declined, pushing prices even higher.
• Brazil, one of the U.S.’s top competitors in the export market, is in a herd-expansion phase. However, economic growth in Brazil has improved domestic beef demand, leading to a trend toward lower beef exports.
• U.S. beef exports probably will increase by about 11 percent during 2012, following a 22 percent increase in 2011.
Recommended Stories For You
• U.S. cow slaughter is likely to decline by 600,000 head in 2012 and 800,000 head in 2013.
• More heifers entering breeding herds, coupled with lower cow slaughter will reduce U.S. per-capita beef supplies from 57.3 pounds in 2011 to 55.8 pounds in 2012 and 53.7 pounds in 2013.
• Cattle prices were up by 20 percent during 2011, while wholesale beef prices increased by 15 percent and retail beef by 10 percent, as retailers resisted passing too much of the increase on to consumers. Highest retail price increases were for 90 percent lean grind up 20 percent, and chuck, up 26 percent. Rib prices declined by 3 percent during 2011.
• If demand remains stable, Good says fed steer prices will average around $122 per hundredweight during 2012. Assuming a typical 20 percent spread between the year’s high and low prices, fed steers could range from about $110 to the mid $130s per hundred weight. That’s a $300 per-head risk.
• 2012 will bring record-high prices for all classes of cattle, with calves averaging as high as $175 per hundredweight and some selling at significantly higher levels. Yearlings will average about $150 per hundredweight.
• Overall, though, Randy Blach said U.S. beef herds need to expand to meet demand and retain market share. Currently, he said, U.S. beef, pork and poultry account for about 28 percent of global meat trade. With global populations growing by 700 million over the next decade and global economies expanding, U.S. producers must bring another 3-4 million cows into production over the next 10 years just to maintain the current market share.
– Experts from John Maday, Drover’s Cattle Network/Livestock Marketing Association