Cattle supply decline to continue in 2010, according to CattleFax

News
Feb 5, 2010
by WLJ

—Beef exports expected to increase; decline in beef demand to slow.

Cattle supplies in 2010 should decline another 1 to 1.5 percent in 2010, Randy Blach, chief executive officer for CattleFax, told attendees of the 2010 Cattle Industry Convention in San Antonio, TX, last month. At the same time, beef demand will continue to be impacted by a weak economy and high unemployment.

Nevertheless, 2010 overall “should be a better year for the beef industry,” said Blach, 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,” said Blach.

“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 percent in 2010, and cow slaughter totals should decline by nearly 9 percent.

Average carcass weights are forecast to increase slightly and beef production is projected to be down 2.8 percent. Per capita net beef supplies are expected to be down 4 percent due to an expected increase in beef exports and smaller beef production.

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

In terms of feedgrains, total U.S. corn production could decrease, as U.S. corn supplies are recordlarge at an estimated 14.83 billion bushels for the 2009/10 marketing year. U.S. soybean supplies are up over 10 percent 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/bushel 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. — WLJ

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