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Cycle Trough In 2013? Maybe

Article-Cycle Trough In 2013? Maybe

If analysts at the University of Missouri Food and Agricultural Policy Institute (FAPRI-MU) are correct, the nation’s beef cowherd will continue declining through 2013.

If analysts at the University of Missouri Food and Agricultural Policy Institute (FAPRI-MU) are correct, the nation’s beef cowherd will continue declining through 2013.

The annual FAPRI-MU economic baseline released last month pegs the beef cowherd in 2013 at 30.3 million beef cows, and then growing to 31.9 million head by 2020; that’s 1 million more than at the beginning of 2011. FAPRI-MU provides analyses of markets and policies for Congress and other decision makers. The annual report presents a summary of 10-year baseline projections for the U.S. agricultural and biofuels markets.

The baseline projects an average price of $119.88 for steers (basis Oklahoma 600-650 lbs.), growing to an average of $135.24 in 2014, and then declining to $127.62 by 2020.

FAPRI-MU projections call for fed steers (5-area direct) to average $105.67 this year; growing to $110.54 in 2014, then declining to $105.73 by 2020.

Among the projections in FAPRI’s “U.S. Baseline Briefing Book” are:

*Recent beef cowherd data suggest it will likely take quite a few years for the production declines to come to an end.

*Beef production will be at its lowest level this year since 2005.

*Beef exports are nearly 1.5 billion lbs. higher than five years ago. The combination of more international demand for U.S. beef and less beef production has curtailed the amount of beef available for domestic consumers.

*MU FAPRI projects corn prices at $5.32/bu. for the 2010-11 crop, and $5.03 for the 2011-12 crop. The previous record was $4.20/bu. for the crop harvested in 2007.

*Although crop prices are likely to fall back from the levels prevailing in early 2011, strong international demand for food and fiber, and domestic demand for biofuels, may keep prices well above pre-2007 levels.

*Crop insurance may account for a substantially larger share of total public support to the farm sector than in the past. High prices reduce the likelihood of large expenditures on some traditional farm programs.

*After two years of very subdued U.S. food price inflation, food prices may increase by more than 4% in 2011. Projected food price inflation drops back to levels consistent with the overall rate of inflation after 2012.

The U.S. dollar is expected to remain weak in the next decade, aiding the competitiveness of U.S. products overseas.

Shorter term, the April Livestock, Dairy and Poultry Outlook suggests, “A beginning herd expansion in 2013 will occur only if sufficient heifers are retained during 2011 to be bred in 2011 or 2012 and counted as heifers expected to calve or as cows in the January 1, 2013 inventory report… Prospects for the expected heifer inventory expansion depend on adequate pasture and range conditions during 2011. The continued dryness in the southern tier of states and scattered additional areas – home to more than a third of the beef cow inventory – will likely dampen expansion plans in those affected areas.”

As it is, analysts with USDA’s Economic Research Service explain, “Federally inspected non-dairy cow slaughter this year is about 5% below slaughter through the fourth week in March 2010. However, the first-quarter 2010 estimated commercial beef cow slaughter was the highest first-quarter estimate since 1997. The reduced beef cow slaughter could be an indication that producers may be beginning to consider cowherd stabilization or even expansion. Even if commercial beef cow slaughter in 2011 were to decline by 5%, it would still represent the third-highest commercial beef cow slaughter since 1997, exceeded only in 2008 and 2010.

“With subsequent inventory declines of that magnitude, and based on the lowest Jan. 1 cow inventory since the early 1950s, it is hard to rationalize the reduced cow slaughter as expansion in any real sense. At any rate, beef cow inventories are expected to continue to decline, even if normal slaughter rates occur during the remainder of 2011,” the analysts say.

See the report at

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