The nation's cowherd is at an all-time low according to the latest reports. How has this impacted supply and demand? What is the outlook for cattle producers?
A recent U. S. Department of Agriculture report revealed the smallest cattle inventory in the last 50 years, said Darrell Mark, extension livestock marketing specialist.
Beef cow slaughter has been high for the last several years and that, combined with lower heifer retention in the last year or two has led to a contracting cattle cycle that's well into the second year of liquidations, Mark said.
The longest cattle cycle in history ended a few years ago, followed by a couple years of moderate growth and now we've seen an accelerating decline in cattle numbers again. Overall numbers present a fairly bullish picture, he said.
Mark expects 2009 through 2012 to be good for beef producers on the supply side, but he sees short run demand issues that will remain challenging.
A world-wide recession has affected both domestic and international demand, he said. On the international side, in addition to lower demand is a credit crunch that makes it difficult for importers to get the cash they need to make purchases. In addition, the dollar has rallied significantly compared to all other currency but the Japanese yen.
"That makes our products more expensive to import and that affects not just beef, but a whole range of by-products," Mark said.
Domestically, beef producers had become dependent upon the hotel, restaurant and institution trade, but there's been a large drop-off in dining out. The fine dining and fast casual restaurants have experienced sales declines. In grocery stores, customers have "traded down" from high end products to less expensive ones.
Per capita consumption of beef was down about 3.8 percent, so people are eating a little less beef, even though prices have remained quite steady - although well above where they were just ten years ago.
"We've grown beef demand, but relative to the high we saw in 2004, we've declined from those numbers," Mark said.
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