December 5, 2011

A leading market analyst informed US livestock producers Thursday (Dec 1) that if the return of wetter weather allows cattle ranchers to begin rebuilding herds rather than sending cows to slaughter, consumers can expect to pay more for beef this coming year.

Cattle prices will likely stay strong for many years, Randy Blach, executive vice president of CattleFax, said at the Kansas Livestock Association's convention in Wichita. Blach said the number of females slaughtered could drop by a million cows in the next two years as the industry goes from liquidating herds to expanding them.

About a third of the nation's livestock herds are in areas that suffered from drought this year, Blach said. The drought led many producers to send breeding cows to slaughter as hay prices skyrocketed. But if forecasts projecting more rain in those regions hold up, ranchers are expected to keep more of those cows for their operations.

"Lean beef prices are going to get higher," Blach said.

Beef prices, already bolstered by a strong export demand, had already risen by 14% between 2010-11. They could reach an average of US$5 a pound in 2012, according to the CattleFax projections.

In addition to higher beef prices for consumers, the impact of taking one million cows out of slaughter will vary depending on the type of livestock operation involved, he said.

So-called seed stock operations, also called breeders, will benefit from the higher prices for their calves. But people who run stocker operations - typically ranchers with a surplus of grass who buy calves in the spring and sell them in the fall as feeder cattle - will likely have to revert into cow-calf operations where they maintain a cow herd.