US cattle supply to continue decline

During 2010, cattle supplies are expected to decline another 1% to 1.5% amid falling beef demand caused by a weak economy and high unemployment rates.

Despite so, this year should serve the beef industry better, said cattle expert Randy Blach.

Beef exports expected to rise and fed cattle slaughters are expected to decrease. Demand will remain as the biggest challenge for the beef industry this year, he said. Though the supply situation is bullish, demand must stabilise in order for prices to become significantly higher, according to Blach.

Fed cattle slaughters are expected to drop 2% in 2010, and cow slaughter should decline by nearly 9%. Average carcass weights are forecast to increase slightly and beef production is projected to be down 2.8%. Per capita net beef supplies are expected to be down 4% due to an projected increase in beef exports and smaller beef production.

US beef exports in 2010 are expected to rise by about 8% from 2009. US beef exports to South Korea this year are forecast to increase, and to a lesser extent to Japan and Vietnam.

Total US corn production could decrease, as US corn supplies are estimated at a record 14.83 billion bushels for the 2009-10 marketing year. US soy supplies are up over 10% compared to last year - the second highest level on record - while soy acreage is expected to be near 79 million acres.

Spot corn futures prices are forecast to average near US$3.75 per bushel in 2010, nearly on par with 2009. The combination of bumper corn and soy crops, as well as the sharp decline in winter wheat acreage, is seen to have lessen the need for an acreage battle this spring.