Meat&Poultry - January 2012 - 28

RED MEAT OUTLOOK

Conversely, exports might be larger. The US Meat Export Federation in November forecast that 2012 exports would be up 6 percent on last year. It based its outlook on the US selling more beef to Japan the second half of this year after Japan raises its age limit on US beef from cattle under 21 months to under 31 months. USMEF also expects China to start accepting

all its beef in fiscal 2011 (which ended Oct. 1) was up 16.9 percent from fiscal 2010. Fourth-largest processor National Beef Packing said its average selling price in fiscal 2011 (which ended Aug. 27) was up 16.7 percent. The possibility of higher global prices looks likely for two reasons. Key Asian markets such as Japan and South Korea will experience positive GDP growth, helping an improvement in beef demand. Second, global cattle numbers in 2012 (at 1.018 billion head) will be up only 0.6 percent and global beef production will remain flat at 56.8 million metric tons, according to an October 2011 forecast by USDA. What happens at home, however, will be critical to the beef complex this year, as 88 percent of all beef produced is sold within the US. Retailers and foodservice operators last year worked hard to minimize beef-price increases to consumers. But retail prices continued to rise. USDA’s All Beef price for October was $4.50 per lb., up 9.8 percent from October 2010. A similar increase by October this year would put the average price at $4.94. Such prices might meet considerable buying resistance from consumers unless the economy has improved signifi-

“Half of all Americans ate a hamburger at least once a week in 2011. This was up from 38 percent in 2009.”
more stores over the next two years. Smashburger, founded in 2007, operates 100 stores and says it will expand into Miami and Los Angeles. Such chains use fresh/never-frozen beef patties and cook them to order. They use a combination of trim and end meats. So, their expansion, as well as that of the long-established chains, will keep prices of those meats high. Prices will also keep rising due to smaller overall beef supplies. US cattle slaughter in 2012 might decline as much as 1.5 million head (with 700,000 fewer cows alone) or by 4.5 percent from 2011. USDA bases its disappearance number on US beef production falling this year to 25.070 billion lbs., the lowest number since 2005. USDA also assumes imports will increase only slightly from 2011 (to 2.090 billion lbs. from 2.052 billion lbs.) and that exports will be flat (2.775 billion lbs., vs. 2.779 billion lbs. in 2011). Slight relief might come if the US produces more beef (some analysts have the number at 25.6 billion lbs.) and if imports, notably from Australia, are larger than forecast.

US beef in the second half of 2012.

Rising price of beef
Any growth in exports will also be predicated on whether global buyers are prepared to keep paying more for US beef and on the value of the US dollar against other currencies. They certainly paid more in 2011. JBS SA, the world’s largest beef exporter, reported last year average export pric-

Prices will also keep rising due to smaller overall beef supplies.
es from JBS USA (which includes its Australian operations) were up 22.3 percent in its fi rst quarter on the year earlier quarter. Prices were up 21.9 percent in the second quarter and up 19.3 percent in the third quarter. Tyson Foods, the largest US beef packer by sales, does not break out export prices. But its average selling price for

cantly by then. The decline in per capita beef supplies in 2012 has enormous implications for all in the US beef chain. End users, from further processors to restaurants, will have to compete more for tighter supplies. They will likely have to pay more for all types of beef. Wholesale beef prices are already much higher than a year earlier. The weekly composite cutout the week ended Dec. 3 was $193.92 per cwt, 17.5 percent higher than the same week last year. A similar increase by

• Meat&Poultry • January 2012 • www.MeatPoultry.com

http://www.MeatPoultry.com

Meat&Poultry - January 2012

Table of Contents for the Digital Edition of Meat&Poultry - January 2012