May 10, 2005

US cattle prices still steady due to strong domestic demand

Domestic consumption in the US is keeping beef prices there relatively strong, say agricultural economists from the University of Nebraska. Beef demand increased by about 8 percent to 10 percent in 2004, even though Americans paid a higher price compared to 2003.

US per capita consumption of beef in 2004 was nearly identical to per capita consumption in 1997 which allows for some direct comparisons of prices. In 1997, the inflation-adjusted price for all fresh beef was $264.51 per hundredweight. In 2004, the inflation-adjusted price was $334.82 per hundredweight - an increase of 26.5 percent.

In 1997, fed cattle in Nebraska sold for $69.45 per hundredweight after adjusted for inflation. In 2004, the average was $78.66 per hundredweight. Without an increase in beef demand, the average price in 2004 was likely to have been $75 per hundredweight.

Forecasts of cattle prices for 2005 are varied but with a possible re-opening of trade with Japan, there should be a nearly five to six percent increase. Cattle inventory has also gone down in the last eight years due to drought but better weather conditions seem likely in 2005, along with growing supplies of cattle.