U.S. Beef Industry to See Tighter Supplies, Record Exports

As U.S. cattle supplies remain tight and global demand intensifies, profitability for cattle ranchers will continue in the year ahead, CattleFax analysts told cattlemen during remarks delivered at the 2012 Cattle Industry Convention and Trade Show in Nashville, TN, earlier this year.

“The economic signals are in place for restocking to begin this year,” said CattleFax Chief Executive Officer Randy Blach. “All we need now is a little encouragement from Mother Nature.”

Art Douglas, Creighton University, set the expectation that, although there have been three months of near-normal rainfall in parts of Texas, drought will continue to play a role in determining if and when the cow herd expands. He expects much of Texas to return to dry conditions by late-spring or early summer and predicted drought will spread into Southern California, the Northern Plains, and coastal areas of the southeast United States.

Despite shifting drought conditions, Blach expects cattle inventory numbers to decline slightly in 2012 and reach a low point in 2013, before increasing in 2014 and beyond. Although herd growth may remain elusive, an increase in average carcass weights will partially offset the decline in inventory numbers, he said. The decline in cattle numbers means prices can be expected to move higher in 2012. Tight supplies of cattle and beef will be compounded by continued growth in the export markets, with expanded access into Japan and continued increases in the volume and value of beef being sold into export channels. 

“We anticipate additional good news from Japan, perhaps during the first half of the year,” Blach said of the effort to expand trade to include beef derived from cattle up to 30 months of age. He added that Japan won’t be the only export market to see significant growth during 2012. In fact, U.S. beef exports, which set records in 2011, will likely set new highs in 2012 due to strong overall global demand and continued weakness in the U.S. dollar.

April 2012 RENDER | back