Domestic Demand Key to 2006 Beef Prices

Acceptance of beef in Asian markets and expansion also play into prices.

Published on: Jan 9, 2006

The livestock industry is coming off of record prices with things in 2005 overall looking very good, says Scott Brown, economist from the University of Missouri's Food and Agricultural Policy Research Institute. But with 90% of U.S. production consumed domestically, those levels will need to keep up to maintain the past years' high prices. In 2004, prices resulted from phenomenal demand. That demand was down slightly in 2005, and Brown expects domestic demand to stabilize a little in 2006.  

Brown shared his views at the American Farm Bureau Federation annual convention Sunday in Nashville, Tenn.

In cattle, other factors in play include the reopening of the Japanese market and growing cattle inventories. Brown forecasts only a short billion pounds of beef to Japan for 2006, only 35% of total pre-BSE levels. Mexico is close to pre-BSE levels currently.

Cattle inventories are expected to grow in 2006 to over 97 million head. Additional supplies of domestic beef from a growing cow herd will work to pressure prices as the industry continues to move through the expansion phase of the cattle cycle.

Brown says feeder cattle prices are forecast lower ($115) and fed cattle at $83.50. "Prices have been at record highs and encouraged additional supplies," he says. "Expect a downward slide on costs unless exports are much higher than I think we'll see."