February 4, 2005

 

 

US beef production projected to grow in the next 5 years

 

Beef production in the United States is forecast to increase each year through 2009 as US producers expand cattle herds.

 

According to Cattle-Fax, a private cattle-consulting firm, beef exports should improve in 2005 as Japan and other countries end bans on US beef. But those exports are not expected to offset increases in US production and in imports.

 

For 2005, this increased beef supply may mean slightly lower cattle prices with producers on average losing about $20 per head of cattle for the year. In 2004, producers averaged a profit of about $20 per steer and heifer and in 2003 nearly $150.

 

The outlook also assumes beef exports will resume to Asia during the second quarter and that imports of Canadian cattle will begin about March 7.

 

"The cattle inventory numbers are on the rise and we expect that to continue over the next two to three years," said Randy Blach, Cattle-Fax executive vice president.

 

A US Agriculture Department report released this past Friday showed US producers are expanding herds after nearly eight years of liquidation, said Blach. A key sign of expansion was the report showing a 4 percent increase in the number of heifers kept for breeding.

 

Blach expects beef exports to resume to key markets such as Japan and South Korea. Those two countries, as well as many others, have banned US beef since December 2003, when the United States reported its sole case of mad cow disease.

 

Washington has been negotiating with Japan to restart beef shipments. But even if shipments do resume, cattle and beef industry sources have said it will take more than a year before sales return to pre-ban levels.

 

"We expect some resumption of exports in the next 30 to 60 days," said Blach.

 

US slaughter cattle prices should be down slightly in 2005, averaging from $82 to $84 per cwt. However, high prices for young replacement cattle has Cattle-Fax expecting fed cattle producers will lose on average $20 per head for the year.

 

"You are going to see a lot of competition for feeder cattle and calves," said Blach.

 

Much of that competition will be due to the profits fed cattle producers have reaped the past two years.

 

Also on Wednesday a team of US cattle producers that toured Canada told a NCBA convention gathering that Canada has about 900,000 head of cattle available for export once the US lift its ban on Canadian cattle.

 

The 900,000 head is much less than the two million that USDA had estimated could be imported.

 

Washington expects to lift the ban about March 7, but a lawsuit filed by R-Calf, a cattle industry group, could delay that. The ban has been in place since May 2003, when Canada reported its first homegrown case of mad cow disease.