Beef Outlook Continues Good If... 


Georgia beef cattle producers continue to benefit from a strong demand for beef, low cattle numbers, and even a little rain. The only thing that may derail the US beef market would seem to be some sort of disease outbreak such as experienced in Europe.

Despite very high calf prices, producers seem only modestly interested in herd rebuilding currently. Good bred cow prices are barely $200 higher than cull cow prices and not indicative of a strong drive to rebuilt the beef factory that has been continuously reduced since 1996. Mature beef cow slaughter is about 10% higher than last year through the first of May. Unless heifers are being held in record numbers, the increased cow slaughter will not allow an increase in the cow herd. So beef supplies will not be growing over the next 3 to 4 years as it takes at least 3 years after herd growth for more beef to show up on the market and herd growth has apparently not yet started .

Beef demand continues to grow as consumers are willing to pay more for more beef! Retail beef prices set another new record high in April at $3.438 per pound of choice beef. These prices were nearly 3% above a month earlier and up a 13% from 12 months earlier. All segments of the industry benefitted from the nearly 12% higher retail prices for the first 4 months of 2001 than a year earlier. The processor retailer margins were up over 13%, the packers' margin was up over 10% and the live price to producers was up 12%. The producers' gains were at least partially offset by increased production costs due to undesirable feeding weather last winter and early spring.

Perhaps some of the reluctance for producers to increase numbers stems from the uncertainty of a foot and mouth disease outbreak in the US. Such an outbreak would immediately shut off US beef exports which represent about 10% of our production. Since each 1% increase in supply will reduce a 500 lb. calf prices in Georgia by about $2.00/cwt., the suspension of exports alone would reduce prices by about $100/head! It is also unlikely that the current strong US demand for beef could hold even though FM infected animals hold no risk for consumers. In light of the economic consequences of an FM outbreak, all preventive precautions make sense. Baring such an outbreak, the Georgia Beef business fortunes look promising now and for several more years to come. (John McKissick)

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