CattleFax Exec Cites Market Drivers
by Troy Smith for Angus Productions Inc.
SAN ANTONIO, TEXAS (Jan. 29, 2010) — There were few surprises to influence cattle markets in 2009, according to CattleFax Executive Vice President Randy Blach. During the Cattle Industry Annual Convention in San Antonio, Blach prefaced the CattleFax Outlook Seminar with comments regarding events and issues that have been driving markets during the last 12 to 18 months. Noting the effects of economic recession, decline in beef demand and increased competition from alternative proteins, Blach said the same drivers are expected to influence markets in 2010.
While discussing the recession’s influence, Blach said the stock market is experiencing correction and consumers are feeling a little less pinched, but they remain cautious about spending. Unemployment remains fairly high, though, and indicators suggest it will range from 8% to 10% during 2010.
“Because of continued weakness in the economy, we won’t see beef demand rebound quickly to the levels of 2007 or ’08,” Blach stated. “Consumers are saving a higher percentage of their incomes and trying to pay down debt.”
Blach explained how the erosion of demand started in fall 2008, continued in 2009, and contributed to a loss, by the industry, of about $140 per head.
“But the demand trend appears to have flat-lined, and we don’t expect to see significant further decline in 2010,” he added.
The recession has been hard on the restaurant business, Blach noted, citing the steepest decline in total foodservice traffic seen in 28 years. Movement of beef through casual-dining restaurants has declined by about 8%, but dropped by 30% in high-end steak houses. More beef moved at retail (grocery stores), however, increasing by about 7% despite stiff competition from pork and poultry. Soft demand for beef is expected to be offset by smaller beef production and improving exports.
According to Blach, total U.S. cattle numbers are expected to decline by up to 1.5% in 2010. Fed-cattle slaughter totals are predicted to be down by 2%. U.S. cow slaughter is expected to decline by nearly 9%, with an increase in imports to make up reduced availability of domestic cow beef.
Blach’s forecast calls for a slight increase in average fed-cattle carcass weights, but beef production is expected to decline by nearly 3%. Smaller beef production and an expected increase in U.S. beef exports should lead to a 4% decline in per capita net beef supplies.
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