Beef packers face an uncertain year. Their biggest concern is the economic crisis, its continued impact on beef demand and how quickly a recovery in consumer confidence will be.

Both fed and non-fed packers face smaller numbers in 2009. That raises the issue of how to run plants efficiently without closing some. Then there's uncertainty about the future of the largest beef processor (Tyson Fresh Meats) and the fourth largest, National Beef Packing. Add to their concerns the cost of mandatory country of origin labeling (MCOOL) and it's clear packers face a tougher year than in 2008.

The Obama Administration will by now have unveiled much of its economic stimulus package. The hope is this will stabilize the stock market and boost consumer confidence. That, in turn, should encourage Americans to start spending more, hopefully on beef.

The second half of 2008 was notable for the way middle-meat prices lagged relative to the rest of the beef cutout. This showed how consumers traded down in their beef purchases, buying more ground beef and roasts and fewer steaks.

Analysts' consensus is that economic conditions might get worse before they get better; no one wants to predict the pace of recovery. So beef prices may continue to struggle, as consumers may continue to base their meat purchases on how far their food dollar goes.

Packers over Christmas and New Year and into January cut kills much more than expected because of soft beef demand. They're expected to do the same in February and March. I don't expect to see them operating much on Saturdays until May. This leaves the possibility of another plant closure.

That's perhaps what JBS SA was mulling in early January as a way of reaching a deal with the U.S. Justice Department to complete its acquisition of National Beef. Uncertainty about the deal isn't positive for anyone in the industry, from cattle suppliers to National's customers.

Conjecture about Tyson Fresh Meats (beef and pork) arose when president and CEO Dick Bond departed abruptly on Jan. 5. I can't see Tyson selling its fresh-meats business under current economic conditions. But Bond's departure leaves a hole at the top of the world's largest meat and poultry company, and it robs the meat industry of one of its top leaders.

Mexico delivered an unwelcome Christmas gift to the industry by delisting 30 plants (mostly pork) that ship meat to Mexico. It quickly reinstated them, but said it wants to ban the use of combos (bins that can hold 2,000 lbs. of meat) for all imports. A ban would add to the cost of doing business with Mexico because of extra packaging and other costs, which might reduce exports. Yet neither the U.S. beef nor pork industries can afford any reduction in sales to their most valuable export market.

Mexico isn't happy about MCOOL; who can blame it? Imports of feeder cattle from Mexico and Canada dropped by 40% and 38%, respectively, from July 15 to the end of last year. That's a clear reaction to July 15 being the date after which all cattle imported into the U.S. must declare their country of origin.

Packers have also been talking about discounting imported cattle $5/cwt. or more. I'm not surprised Mexico not only joined Canada into taking MCOOL to the World Trade Organization, but has threatened to disrupt our meat trade.

Demand at home and abroad, and not supply, will be the key to cattle prices in 2009. It's in all producers' interests to hope that packers can sell beef at higher prices, get more for hides and other byproducts and run their plants as efficiently as possible. That way, they can pay more for cattle.

I'm going to play my part by eating more beef. I hope you do the same.

Steve Kay is editor and publisher of Cattle Buyers Weekly (www.cattlebuyersweekly.com). See his weekly cattle market roundup each Friday afternoon at beefmagazine.com.