Cattle prices across the board are expected to post year over year increases in 2011. Cattle prices are approaching record levels in several markets at the end of 2010 and will likely take cattle prices into uncharted waters in the coming year. Any number of external factors could impact cattle markets in the coming year but the following market factors are expected to have the biggest impact on market prices.
* Beef Demand: Projected decreases in beef production in 2011 will pressure wholesale and retail beef prices higher. The ability to pass on the impacts of reduced beef supplies will depend on continued recovery in beef demand. Recessionary weakness continues to limit middle meat demand though signs of recovery are evident at the end of 2010. Increased competing meat supplies, mostly increased poultry production, may temper retail beef prices somewhat.
* Herd Expansion. . . or Not? Limited cattle numbers are expected to result in reduced cattle slaughter in 2011. The magnitude of feeder supply squeezing will depend on the extent of heifer retention in the coming year. Though not yet confirmed by data, there are indications at the end of 2010 of limited heifer retention. The question of herd rebuilding will determine just how tight cattle supplies are in 2011 and also the timetable for potential increases in beef production in coming years.
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