September 13, 2011

High prices of US beef to continue



Beef farmers in the US can continue to expect high beef prices in the coming years, according to the US Department of Agriculture.


US beef herd has been declining and is at its lowest level in 57 years says Dr Joe Glauber, USDA chief economist to the Agricultural Science Association annual conference in Maynooth, Co Kildare.


Because of drought in major beef producing states such as Texas and higher feed costs, there is no indication of any immediate recovery in the US beef herd, he said.


While the US is a relatively small exporter in the world beef market, accounting for about 15% of world beef trade, Dr Glauber expects world prices to remain high. This is good news for the Irish beef industry, he added.


Dr Glauber said milk output in the US is projected to grow between 1- 2% a year over the coming years.


He also forecasts continuing strong prices for grain but "continuing yield increases and slowing demand for ethanol production from grain crops will lead to some moderation in prices".


He said the growing of corn for ethanol production increased dramatically in the US during the past decade, driven by high oil prices and US government policies for bio-fuels.


Currently, 36 million acres of US corn, or around 40% of total acreage, are grown for ethanol production, he said.


Dr Glauber added that barring large increases in energy prices, the growth in ethanol production is expected to slow down as subsidies are phased out.


Income growth in developing countries, particularly China, is changing diets and driving demand for protein, the economist added, saying China is now the largest trading partner.


It accounts for 60% of world soy imports and there are indications it will become a significant importer of corn.


Dr Glauber said the rapid adoption of GM (genetically modified) crop varieties is continuing in the US.


The emphasis is shifting from GM crops with higher yields and resistance to particular diseases to those who can better tolerate drought, a growing issue in the US and other major producing countries.


Scientists are also concentrating on producing crop varieties that have particular nutritional attributes. There is still no serious US consumer opposition to GM technology, he said.


Dr Glauber said there are no indications of resumption in the short term of the Doha round of the World Trade Organisation talks which floundered in the lead up to the US presidential election in 2008.

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