US beef herd to continue declining in 2010

The next US beef cattle inventory report is expected to show another decline in the nation cow herd amid reluctance among beef producers to increase cow numbers.

In the past few years, the weather and limited grazing opportunities in key regions have hindered herd growth. Higher corn prices have also increased production costs, limiting expansion.

External pressures during 2008 and 2009 kept cow numbers at bay. The domestic and global economies have impacted beef consumption and demand, which in turn pressured prices and will likely continue to do so.

According to the 2010 Rabobank North American Outlook, consumer loss of wealth significantly curbed consumer spending in 2009. That has spilled over into food expenditures as there has been a steady deterioration in the food-service sector sales, particularly at high-end establishments such as steak house restaurants. Fast food establishments, however, saw steady sales or even slight increases.

But the low-priced foods at fast food restaurants will not replace the weaker demand on middle meats and will not support the US$1 per pound fed cattle market, said Iowa State University agriculture economist John Lawrence.

Compared to two or three years ago, cowherd costs are up, particularly land and forage cost due to higher corn prices, said Lawrence.

"The higher corn prices are also dampening feeder cattle prices so the cowherd is squeezed from both sides. I think beef cow numbers will be lower in 2010 and each year through 2012,'' said Lawrence.

On a positive note, Gregg Doud, economist with the National Cattlemen's Beef Association, said a better grazing outlook and ample hay supplies are expected this spring and summer, and the export outlook is expected to improve moving forward. He feels that pork prices this summer could be high enough, that it will lead to more movement for beef.