Report expects continued high prices as production slides
By CAROL RYAN DUMAS
Already decreased U.S. beef production in 2012 is expected to drop even lower in 2013 and 2014 and then trend upward through 2021, according to the USDA Long-term Projections released in February.
USDA expects 2012 production to drop to 25.1 billion pounds from 26.4 billion pounds in 2011. Production is expected to drop to 23.6 billion pounds in 2013 and 2014 before increasing to 25 billion pounds in 2015. Slow but steady increases are expected to bring production to 28.4 billion pounds in 2021.
Despite higher returns for cow-calf operators, strong demand for feeder cattle and cows for slaughter has led to continued declines in beef cow inventories through the start of 2012, the report stated.
Reduced beef cow inventories and expected heifer retention are expected to lead to further declines in production in 2013.
Beef cow inventory and total beef cattle inventory are expected to decline from 2012 to 2014 and then build through 2021. Beef cow numbers are expected to rise from 30.2 million head in 2012 to 34.4 million in 2021. The total beef herd is expected to go from 91 million head in 2012 to 97 million head in 2021.
Record high prices for beef cattle are expected to continue and even increase through 2013 but are expected to decline after that as beef production expands.
The on-farm cattle price is expected to be $119.35 per hundredweight in 2012, falling to a low of $109.07 in 2017 and returning to current levels in 2021. Fed steers are expected to be $121.75 per hundredweight in 2012, falling to a low of $111.27 in 2017 and also returning to current levels in 2021.
Per capita beef consumption is also expected to drop and rebuild. That consumption was at 59.6 pounds in 2010 and is expected to be 54.1 pounds in 2012. It is expected to drop to 51.3 pounds in 2013 and go not much higher in 2014 before returning to current levels in 2015. From there, it is expected to build to a high of 59.1 pounds in 2019 and decreasing slightly to 58.7 pounds in 2021.
On the feed side, corn and soybean prices are projected to decline from their current high levels but are expected to remain at historically high levels.
Corn, at $6.70 a bushel in 2011-12, is expected to decrease to $5 a bushel in 2012-13 and $4.30 a bushel in 2013-14. The slowly increasing trend thereafter has the price at $4.65 a bushel in the last two years of the projected period.
Soybeans, at $12.60 for 2011-12 are expected to drop to $11 a bushel the following year and drop another 70 cents in 2013-14. Soybeans are also expected to rise moderately through the rest of the projected period to $11.35 a bushel in 2021-22.
USDA's projections are based on specific assumptions about the economy, agricultural and trade policies, the weather, and international developments and assume no shocks that would affect agricultural markets.