“Beef demand is expected to be further tested during 2011 as consumers continue to experience rising prices for most goods and services. If consumer disposable income does not rise proportionally, shopping habits and choices will shift as prices rise forcing consumers to substitute and/or reduce the bundle of goods and services they consume. The weak U.S. economy during 2010 resulted in a decrease in domestic beef demand. Fortunately, world beef demand increased as world economies recovered from the recession and a weaker U.S. dollar contributed to increased exports.”

Per capita consumption of beef is expected to decline during 2010 and 2011. Beef production during 2010 is expected to be 25.7 billion pounds, down 0.3 billion pounds or 1 percent from a year ago.

Beef imports for 2010 are estimated to be 2.6 billion pounds or down about 78 million pounds more (2.9 percent) from 2010. Beef exports for 2010 are expected to be 2.3 billion pounds, up about 394 million pounds (21 percent) compared with 2009.

“The combination of lower domestic beef production, lower imports, and higher exports are expected to decrease domestic disappearance. As a result, overall domestic disappearance should decline somewhere around 727 million pounds. This reduction in domestic disappearance will result in a decrease in beef per capita consumption to around 59 pounds per person in 2010. Per capita consumption for 2011 is estimated to be about 57.8 pounds per person. Also, as the U.S. population increases in the future, per capita beef consumption will likely be lower unless U.S. beef production increases and/or imports increase.”

It is very important, says Prevatt, that the United States continues to grow beef export markets. These export markets could be worth $5 to $10 per hundredweight on the value of fed slaughter cattle. Growth in beef export markets will also help to moderate the price impacts of any weaknesses in U.S. broiler and pork exports.

The 2011 cattle market, he says, will continue to operate with a great deal of uncertainty. Cattle farmers should monitor several factors including changes in domestic beef demand (future strength/weakness of U.S. economic recovery), supplies of broilers and pork, export and import sales (beef, broilers, and pork), feedstuff prices, monetary exchange rates, and adverse weather impacts (the length, extent, and severity of the droughts, floods, extreme temperatures, etc.).

“The cattle markets could experience some volatile movements with abrupt changes in any of these factors and/or combinations of factors.”

phollis@farmpress.com