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US retail prices set to maintain record levels

Beef Central, 25/09/2013

Expectations for a change in the mix of cattle going for slaughter in the US, as well as a large drop in the number of cattle in feedlots, suggest that the retail price of beef in the US should remain at or near record levels over the next year.

Beef production in the September quarter of 2013 is forecast by the United States Department of Agriculture (USDA) to be 1% higher than last year, at 6.64 billion lbs, but for the next three quarters, and 2014 as a whole, production is expected to ease 5-6% year-on-year.

The recent USDA Cattle on Feed report supports the expectation for lower production, with the 1 September inventory of cattle in feedlots (capacity over 1,000 head) down 7.2% compared with last year. There was also a 10.9% decline in the number of cattle placed in feedlots during August. In some cases this is a reflection of the availability of feed, which has encouraged some producers to retain stock until they reach heavier weights, before sending to feed.

On the trade side, US beef exports are forecast to drop markedly in 2014, particularly in the lead-up to summer, while imports of beef are set to grow through the year. In spite of this trade imbalance, overall per capita availability of beef is set to decline 2.7 lbs next year, to 54 lbs.

Countering the drop in beef availability is an expected increase in per capita pork (up 1 lb), chicken (up 1.5 lbs) and turkey (up 0.5 lbs) availability. This suggests that beef will be less competitive at the consumer end, meaning that ongoing improvements in consumer sentiment and willingness to spend will be crucial in maintaining returns to beef production in 2014.

Source: MLA

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