Washington - As the Century draws to a close next year, financial conditions for beef producers are positioned to improve during 1999 after three years of losses, and consumer prices for beef should remain steady, the National Cattlemen's Beef Association (NCBA) said.
All sectors of the beef industry have endured severe hardship due to record high feed grain prices in 1996, cyclically large cattle numbers, record heavy slaughter weights and record supplies of pork and poultry. In addition, adverse weather conditions and the Asian financial crisis have kept cattle prices low.
However, in 1999 beef producers will experience modestly higher prices due to expected smaller beef production levels from 1999 through 2001, according to NCBA Chief Economist Chuck Lambert.
“After reaching an all-time high of 25.7 billion pounds in 1998, commercial beef production is projected by USDA to decline more than 5 percent or approximately 1.5 billion pounds in 1999,” he said. “Retail beef prices will likely remain steady in 1999 despite the decrease in beef production due to tighter retail margins and continued competition from total meat and poultry supplies. Total pork supplies will increase 1-2 percent in 1999 and total poultry production is projected to increase 4-5 percent during 1999.”
Lambert said smaller domestic beef supplies in 1999 mean that domestic per- capita beef consumption will decline in 1999 to less than 66 pounds from 67.9 pounds in 1998.
After increasing over the last two years, annual increases in beef imports will moderate in 1999. Beef exports are projected to hit record-high levels in 1999 increasing 8 percent to 2.35 billion pounds. Imports are expected to increase approximately 150 million pounds in 1999 to 2.8 billion pounds. However, the increase in beef exports should offset import growth and contribute to lower net domestic beef supplies.
“Loss of equity in 1998 and increasing uncertainty in global markets are escalating the need to add value to beef by moving to a more consumer-driven marketing plan,” Lambert said. “For instance, new heat-and-serve beef entrees, such as microwavable pot roasts ready in 10 minutes, are expected to continue to increase in the retail market in 1999 to meet consumer demands for more convenient beef products. A new $25 million integrated marketing campaign, funded by checkoff dollars, will be launched in January 1999 by NCBA to drive purchases of these innovative dinner options.”
Key Facts:
* Total U.S. cattle inventory is projected at 97.5 million on January 1, 1999, down 2 percent from a year earlier and nearly 6 million below the cycle peak in 1996 of 103.5 million. The U.S. cowherd declined for the third consecutive year in 1998. Total cow numbers on January 1, 1999 are projected to be down 1 percent from a year earlier, at 42.5 million -- and 5 percent smaller than the 1996 peak in cow inventories. Smaller, more modest declines in the cowherd are expected in 1999 and 2000.
* Total cattle slaughter in 1998 declined 2.5 percent from the previous year. Cattle slaughter in 1999 is projected to decline 3-4 percent (one million) from 1998. Three quarters of that decline will be from reduced fed-steer and heifer slaughter, reflecting a smaller calf crop in 1998 and increased heifers held as replacements for the cow herd.
* Record-heavy carcass weights in 1998 inflated beef production nearly 800 million pounds, more than offsetting the year-to-year decline in cattle numbers. Cattle carcass weights (all cattle) have increased at an annual rate of 5.26 pounds since 1975. During 1998, average carcass weights increased nearly 24 pounds over 1997 levels. A sizable cyclical decline in cattle slaughter and moderating cattle weights in 1999 will reduce beef production about 5 percent (1.5 billion pounds) from the 1998 total. After increasing during the last two years, annual beef import growth will moderate in 1999. An additional 8 percent in beef exports will offset any increase in imports and contribute to smaller net domestic beef supplies.
* Imports of feeder cattle and calves from Mexico are expected to total 700,000 head in 1998, a slight increase from 1997 and down significantly compared to the 1985 to 1995 annual totals. Mexican feeder cattle imports are forecast to total 750,000 during 1999.
* U.S. imports of Canadian cattle during 1998 will decline 50,000 to 100,000 head, compared to 1997, and will total about 1.2 to 1.3 million head. The increase in Canadian slaughter capacity, coupled with the reduction in Canadian cattle inventories, will reduce cattle imports from Canada during the next few years.
Meat Industry Insights News Service
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Northport, NY 11768
Phone: 631-757-4010
Fax: 631-757-4060
E-mail: sflanagan@sprintmail.com
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