2009 CattleFax Outlook: Tough, Volatile and Hard to Come By
PHOENIX, Ariz. (Jan. 29, 2009) — With a slowing economy and consumers keeping a closer eye on their spending, some of the dynamics in the beef industry are shifting in 2009. Cattlemen attending the annual CattleFax Outlook Seminar here heard that cattlemen face softer beef demand to start 2009, but that could change if the financial markets begin to stabilize.
As in previous years, where market volatility was prevalent, risk management will be an important strategy this year. “Know basis,” says Randy Blach, executive vice president for CattleFax. “It needs to become second nature. We’ve got to learn to understand risk.”
Consumer are making more meals at home and eating out less at nicer restaurants. That has lowered the value of the higher-priced middle meats like the rib and loin. At the same time, the chuck and round are claiming a larger share of carcass value (21% vs. 19%) compared to a year ago.
Overall cattle supplies are expected to decline in 2009, following a 1.5% dip in 2008. Beef cow numbers have declined 600,000 head to 31.9 million in response to drought in some areas and marginal profitability elsewhere. Beef cow slaughter is projected to be at a liquidation pace in 2009. As a result, the calf crop for 2009 and 2010 is projected to shrink by 2%.
Editor’s Note: This article is adapted from a release provided by CattleFax. CattleFax is a Denver-based, market analysis and information firm. For more information about CattleFax, call 303-694-0323 or visit the company’s web site, www.cattlefax.com.