May 12, 2009

Worldwide economic conditions have decreased beef demand at a time when US cattle inventory are at a 50-year low, according to beef and economic specialists at the University of Nebraska-Lincoln Extension.

 

Total US cattle inventory right now is 94.5 million head, the lowest since 1959, saud Darrell Mark, extension livestock marketing specialist.

 

The overall cattle outlook for 2009 and beyond raises concerns on demand rather than supply, said Mark.

 

While the desire for high-level protein is still there, but the ability to buy it has disappeared for many people, said Brad Lubben, public policy specialist in the Department of Agricultural Economics.

 

Many consumers both domestically and internationally, have either switched to cheaper beef cuts or substituted beef with pork and poultry, said Mark.

 

Feed cattle imports since October 1 have dropped 48 percent on-year and fed cattle imports for slaughter are 38-percent lower, which could be partly attributed to the recently-enacted Country of Origin Labelling law (COOL), Lubben said.

 

Agriculture Secretary Tom Vilsack wants a stronger regulation, which would require more segregation of animals at the processing stage, said Lubben.

 

A stricter label means US farmers will have to deal with more segregation costs at the same time when consumer demand is falling, he said.

 

Because of the potential for added segregation costs, some processing plants have rejected imports, Mark said.

 

While this is being seen more on the pork side than the beef side, it has huge implications for livestock and crop producers in Nebraska, Mark said.

 

It reduces corn demand, reduces the number of livestock able to be fed in a major cattle feeding state and reduces the number of livestock slaughtered, he said.

 

Nebraska is a top red meat slaughter in the US, and its slaughter capacity is built on Canadian livestock, Mark stressed.

 

Economy is also worrying cattle producers, as prices languished in the mid US$80s per hundredweight rather than US$90/cwt or better, which is what many expected before the economic collapse last autumn, Mark said.

 

When the economy will be revived is uncertain, but an improvement will boost cattle markets quickly and dramatically, Mark and Lubben said.