Economist sees strong cattle prices for three to five years

Consumers may be eating less beef, but there is still good news in the cattle business, says Chris Hurt, an extension economist at Purdue University.

In a Purdue release, Hurt says that after several years of financial difficulty, producers show no interest in rebuilding the herd. As a result, beef supplies will continue to decline and prices will remain strong for several years to come. On the downside, beef consumption per person will lag and other animal species will gain larger market share in coming years, especially chicken.
 
“The great news is that beef supplies will remain limited in 2010 and 2011,” Hurt says. Per-capita beef supplies will be down about two percent this year and will fall an additional one percent next year. “Smaller available supplies mean that consumers will have to pay more for beef and that cattle prices should remain strong well into the future — perhaps for three to five years.”

Hurt also noted that in order to pass higher feed prices on to consumers, the animal industry had to suffer large losses and eventually reduce the size of their herds.  Once supplies are cut sufficiently, consumers have to pay higher prices, which means they will eat less meat and poultry, Hurt says.

He also said the U.S. market will have limited growth potential in coming years, so future growth will have to come from exports.

But, “For the next several years, beef supplies will be small and many people still love beef,” Hurt said. “This likely means that beef cow ownership will be financially rewarded.”

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