Global Information would like to present a new market research report, "Five year Forecast and Analysis on the United States Cattle Market" by Doane Advisory Service.
The cattle herd is expected to continue to decline into early 2011 with the inventory falling to 93 million head. From that level, the total inventory rebuilds slowly to 94.15 million head by January 1, 2015.
Profitability for cow calf producers has also suffered. Higher calf prices are needed in order to boost profits and incentivize producers to begin to slow cow slaughter, retain heifers and thereby expand the breeding herd. The economic recession has hurt beef demand. Even with beef production down 2 percent this year, average fed cattle prices will be down more than $9 per cwt from a year ago to $83.57 per cwt. We estimate that wholesale beef demand is down 5 percent to 7 percent this year compared to the past few years. Demand from restaurants has been particularly weak reflected in part by the narrow spread between choice and select beef prices. Normally, choice beef is a $9 to $10 per cwt premium to select. This year the premium has averaged only about $5 per cwt.