January 17, 2008

US beef industry under tight pressure in 2008

The US beef industry is seen to be under tight situation in 2008 as consumers are predicted to favor cheaper options of poultry and pork.

Federal Reserve chairman, Ben Bernanke said that the housing slump, harder-to-get credit and higher energy prices will drive customers to opt for chicken and pork, which in turn will cap retail beef prices.

Derrell Peel, Oklahoma State University livestock marketing specialist, said that the threats to the beef industry from the general economy are much bigger than they were even a few months ago.

Packers were also not able to make up the difference in feedlot margins as small calf crops in 2007 will translate into fewer cattle to slaughter in 2008 and 2009, according to University of Missouri agricultural economist, Ron Plain.

Plain explained that feedlots and packing plants are bidding for a fairly small number of cattle.

Industry analysts expect a few more cattle to kill in the first quarter of 2008, as the ongoing drought in the southeastern part of the US has pushed cattle from pastures to feedlots quicker than normal.

However, the bump will only translate into fewer to slaughter in the second quarter, analysts pointed.

There were more bad news for both feedlots and processors on Friday when USDA's January grain stocks reported inventories of both soy and wheat, boosting their prices along with corn prices, already catapulted by new ethanol-friendly legislation.