Sponsored By
South West Farm Press Logo

Beef demand expected strong through 2012Beef demand expected strong through 2012

Beef market has largely been supported by exports.Domestic markets have also recovered.The prolonged drought is having an effect on herd numbers.

Ron Smith 1

October 7, 2011

2 Min Read

Anticipated high demand for U.S. beef in both domestic and export markets bodes well for the industry into 2012, says Justin Gleghorn, Brock Thompson Trading, Amarillo.

“The market has largely been supported by exports,” he said at the second annual Beef Financial Management Conference in Amarillo. Export demand increased by 43 percent from 2009 to 2010, and went up another 23 percent in 2011.

Part of the increase comes from a devalued dollar, Gleghorn says. Also, foreign buyers are taking end cuts, products that are not favored as much in the domestic market.

Domestic markets have also recovered, “especially in restaurant sales, including high-end restaurants. They’re bouncing back.”

Future projections indicate more domestic demand for beef in 2011 and into 2012, he says. “The combination of domestic demand and export strength paint a good picture for the cattle market.”

U.S. cattlemen are producing more choice cattle than they were a year ago, Gleghorn says, and “choice and select are both appreciating at a fast pace.

“Also, we are now marketing cattle that are 5 pounds to 7 pounds heavier. Better technology and better management are keys to pulling more performance out of cattle.”

The prolonged drought is having an effect on herd numbers as ranchers move animals onto feed yards because of forage shortage and feed expense. In 2012, he anticipates every month will see “substantially fewer cattle” than the same month in 2011.

The Southwest is not the only region that’s liquidating herds, he notes; the trend for heifer slaughter is down, but spiked in the first and second quarters of 2011.

Gleghorn also discussed volatility in live cattle futures contracts. Outside influences, he says, have an impact — “We see a lot of money coming in that has nothing to do with cattle.”

That situation has become more pronounced since credit position limits were increased after 1993; those limits have increased significantly in recent years. “That creates some volatility, “Gleghorn says. ‘It’s also a factor in the corn market.’

U.S. cattlemen should develop risk management marketing strategies in a volatile market, he says, noting that options can provide a little more flexibility than a straight hedge.

The Beef Financial Management Conference is sponsored by Great Plains Ag Credit; Commodity Risk Management; Brock Thompson Trading, LLC; Frost, PLLC; and CIH.

About the Author(s)

Ron Smith 1

Senior Content Director, Farm Press/Farm Progress

Ron Smith has spent more than 40 years covering Sunbelt agriculture. Ron began his career in agricultural journalism as an Experiment Station and Extension editor at Clemson University, where he earned a Masters Degree in English in 1975. He served as associate editor for Southeast Farm Press from 1978 through 1989. In 1990, Smith helped launch Southern Turf Management Magazine and served as editor. He also helped launch two other regional Turf and Landscape publications and launched and edited Florida Grove and Vegetable Management for the Farm Press Group. Within two years of launch, the turf magazines were well-respected, award-winning publications. Ron has received numerous awards for writing and photography in both agriculture and landscape journalism. He is past president of The Turf and Ornamental Communicators Association and was chosen as the first media representative to the University of Georgia College of Agriculture Advisory Board. He was named Communicator of the Year for the Metropolitan Atlanta Agricultural Communicators Association. More recently, he was awarded the Norman Borlaug Lifetime Achievement Award by the Texas Plant Protection Association. Smith also worked in public relations, specializing in media relations for agricultural companies. Ron lives with his wife Pat in Johnson City, Tenn. They have two grown children, Stacey and Nick, and three grandsons, Aaron, Hunter and Walker.

Subscribe to receive top agriculture news
Be informed daily with these free e-newsletters

You May Also Like