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Beef supply to tighten in 2015, while general protein supply rises

A beef analyst predicts beef supply will be tighter next year, but increased pork and poultry production will lead to an overall increase in animal protein production.
John O’Connell

Capital Press

Published on November 26, 2014 12:44PM

Carol Ryan Dumas/Capital Press file
Beef cattle graze on pasture in Twin Falls County, Idaho. A cattle market analyst predicts the U.S. beef supply could reach its tightest point in decades next year.

Carol Ryan Dumas/Capital Press file Beef cattle graze on pasture in Twin Falls County, Idaho. A cattle market analyst predicts the U.S. beef supply could reach its tightest point in decades next year.

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SUN VALLEY, Idaho — A cattle market analyst predicts the U.S. beef supply could reach its tightest point in decades next year.

However, Kevin Good, senior analyst with CattleFax, said pork and poultry producers will also be ramping up production to take advantage of greater profit margins, which should increase the overall supply of animal protein. He anticipates pork and poultry production will both be up about 5 percent next year.

“Even though beef supplies will be thinner in 2015, total meat supplies will be more in 2015,” Good told ranchers during a recent Idaho Cattle Association annual convention. “For protein supplies, the tightest point is actually behind us. It was the third quarter of this year.”

Good explained during 15 of the past 17 years, the nation’s cattle producers have liquidated herds. He said years of declining herds and lower feed costs following consecutive moist seasons have finally contributed to strong profits. The Omaha price for corn is now about $3 per bushel, the lowest price for the commodity since 2006, before the ethanol boom.

As beef producers seek to increase production to capture higher prices, they must save more heifers to build up their herds, further tightening supply in the short term. Good said national cow slaughter this year will be down by about 15 percent, or 940,000 head, with further slaughter reductions of about 230,000 head next year. Heifers now represent about 35 percent of fed cattle for slaughter, down by about 2 percent from the seven-year average, Good added.

Despite higher prices, Good said, consumer demand for beef remains strong. But he warned the price gap between beef and other animal protein sources has grown wide. He said wholesale prices of 90 percent lean hamburger have been about $3 per pound, up from $2 per pound a year ago. Wholesale boneless, skinless chicken breasts, however, have been ranging from $1.50-$2 per pound.

“(Beef) demand is better but the price spread (with pork and poultry) is likely going to be a limiting factor for how far you can push beef prices,” Good said.

Good said the limited beef supply has also driven up foreign beef imports from countries such as Australia, as well as feeder cattle and calf imports from Canada and Mexico. For 2014, Australian beef has averaged 30 cents per pound cheaper than domestic beef, taking transportation costs into account. Combined feeder cattle and calf imports from Canada and Mexico are up 200,000 head, or 20 percent, from last year.



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