USDA released its 10-year ag projections this week and it anticipates a drop in production of all meats for the next few years as more and more corn is diverted to ethanol.

USDA releases the 10-year prognostications every year for use in preparing federal budget estimates. Here's what USDA economists see coming down the pike for cattle producers:

• The cattle inventory will remain in a range of 96-99 million head throughout the projection period. From 2008-2010, higher grain prices as well as drought will hold down cattle inventories, pushing beef production downward. Production then rises in the remainder of the projection period as returns improve and herds rebuild. Beyond 2010, rising slaughter weights will contribute to a moderate expansion in beef production.
  
• As the beef industry adjusts to higher feed costs brought on by ethanol production, per-capita beef consumption will decline. The pressure on domestic consumption will be further intensified by an increase in beef exports, assuming a gradual rebuilding of exports to Japan and South Korea.
  
• This will mean that strong demand for consistent, high-quality beef will continue both domestically and in overseas market. Domestically, foodservice demand for high-quality beef will remain constant and will increase in the retail market.
  
• As U.S. beef production declines in the next several years, imports of processing beef from Australia and New Zealand increase. The U.S. will be a net beef importer throughout the 10-year projection period as the recovery of high-quality fed-beef exports doesn't reach the 2000-2003 levels until the last several years of the projection period.