(Resource News International) — Slaughter and feeder cattle values in the U.S. should see some improvement over the next two years, although strong feed grain prices and competition from other protein sources may limit the profitability.
That’s according to analyst James Robb of the Colorado-based Livestock Marketing Information Center (LMIC) in his presentation Tuesday at the Canadian Wheat Board’s annual GrainWorld conference in Winnipeg.
Reductions in U.S. beef production were the largest factor behind the expected increase in prices, according to data presented by Robb.
Cattle feeders may actually be able to break even in 2010, after losing money the past few years, he said.
Robb said declining cow herds in North America and around the world, and the resulting reduction in feeder cattle, were unlikely to see much of an increase until at least 2013 or 2014.
The smaller cattle herds and reduced beef production should be supportive for prices, with the slaughter animals closest to the end consumer seeing the most upside price potential.
Robb forecast a 5.1 per cent increase in slaughter cattle prices in 2010 and a further 6.3 per cent increase the following year, with the best values expected in the second and fourth quarters of those years.
While he saw prices improving, Robb also cautioned that there will be volatility within that general rise.
He also noted there was always the possibility of more shocks to the market, such as the BSE crisis in 2003 or the economic collapse in 2008.
Corn prices were also expected to remain historically strong, he said.