There are not enough cattle in U.S. herds to support the packing capacity of slaughterhouses or the feeding capacity of feedlots.
Consumers can expect to pay more for their beef this coming year if the return of wetter weather allows cattle ranchers to begin rebuilding herds rather than sending cows to slaughter, says Randy Blach, CattleFax executive vice president.
Blach says the number of females slaughtered could drop by a million cows during the next two years as the industry goes from liquidating herds to expanding them.
About a third of the nation's livestock herds are located in areas that suffered from drought this year. 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," says Blach.
Beef prices — already bolstered by a strong export demand — had already risen by 14% between 2010 and 2011. They could reach an average of $5/lb. in 2012, according to the CattleFax projections.