Cattle prices expected to be at record highs for next three years

Cattle prices should reach record highs by the fourth quarter this year and continue to set records in 2009 and 2010, according to a report analyzing current cattle trends from Purdue University Extension Economist Chris Hurt.

Beef supplies are expected to be about 2 percent higher in the third quarter, and then drop by 5 percent in the final quarter of this year, he said.

Assuming third quarter live cattle prices average about US$97 per hundredweight, and fourth quarter prices near US$100, Hurt estimates choice steer prices will average US$95 for the whole of 2008, which would be US$3 higher than last year's record.

In 2009, more acres will come out of the conservation reserve programme and return to crop production, this would also free up more land for haying and grazing on CRP acres

The effect of high corn prices due to ethanol demand would also level off.

These two factors would combine to lower feed prices.

According to USDA, 1.1 million CRP acres are scheduled to expire  on Sept. 30, 2008, with an additional 3.8 million acres due on Sept. 30, 2009 and another 4.4 million acres on September 30, 2010.

Meanwhile US beef exports, which rose 34 percent during the first five months of the year, would continue to perform strongly, given the weak dollar.