AFBF livestock economist sees flat cattle prices for next year
November 30, 2009
The national recession and its impact on people’s eating habits will continue to hold cattle prices flat in 2010, according to James Sartwelle, a livestock economist with the American Farm Bureau Federation. Sartwelle spoke last Friday at the annual convention of the South Dakota Farm Bureau.
When gas prices hit nearly $4 per gallon last year, per capita miles driven dropped, and continued to drop month after month for the first time since the 1950s, he said. When fewer miles are driven, restaurant traffic, particularly for “high-end” restaurants, also shrank. “That’s deathly bad news for the beef sector,” he said. The only element of the restaurant business that hasn’t seen business drop has been fast-food outlets. However, restaurant owners surveyed predict less business next year. “I think if there’s one habit we’ve broken in this country, it’s eating out at restaurants,” Sartwelle said. With worries about their jobs and mortgage payments, people are eating more meals at home.
Americans today are on average saving seven percent of what they earn, a figure not seen since 1980. As a result of lower consumer spending, cattle prices are staying flat despite the lowest herd numbers since the 1950s and early 1960s. The number of mother cows, at 42 million in the mid-1970s, has dropped to 31.5 million and is probably headed for 29 million, he told his Rapid City audience.
However, the same amount of beef is produced now as in 1975, due to increased efficiency and productivity. He said the cattle market could improve in the second half of next year, depending on the amount of competing pork that comes to market, as independent hog farmers liquidate their herds. “We’re going to have to fight our way through a lot of cheap pork,” he predicted.