Most signs point to continued high cattle and beef prices into next year, Randy Blach, Cattle-Fax chief executive officer, reported at a business summit last week in Denver.

He pointed to the tight corn stocks-to-use ratio, despite USDA’s latest planted acreage report, which boosted estimated corn acreage significantly.

Feeder-cattle prices, meanwhile, have moved higher, and short supplies of calves and yearlings will force cattle feeders to bid higher for replacements. Last summer, USDA reported calves and feeder cattle outside feedlots down by 1 million head from the previous year. When the 2011 mid-year cattle Inventory report hits the wires on July 22, Blach expects it will show calves and feeders outside feedlots down another 1.28 million head.

Placements into feedyards have declined in recent months due to short supplies and high corn prices, and through June were down 15 percent from last year. In spite of shorter cattle numbers and fewer imports of finished cattle from Canada, U.S. beef production is running about even with last year as slaughter weights continue to move higher. Consumer demand, meanwhile, is up, driving retail beef prices about 10 percent higher than one year ago, at an average of about $4.40 per pound.

Other key points from Blach’s presentation include;

  • Beef exports are up 31 percent so far this year, while imports are down 17 percent, largely because of the weak U.S. dollar.
  • Exports currently add about $202 per head to the value of slaughter cattle.
  • U.S. beef exports have gained market share against the main competitor – Australia – in key export markets, including Canada, South Korea, Mexico, Japan and Vietnam, as Australia’s currency is relatively strong.
  • Hog prices in China, a huge pork-consuming country, are nearly double the price for U.S. hogs, suggesting U.S. pork exports to China will continue to grow.
  • Hide and offal values for U.S. cattle are averaging around $13.70 per hundredweight in 2011, compared with $10.69 last year. Gains in hide and offal values have added more than $100 per head to slaughter cattle since 2009.
  • Movement of fed-cattle prices to $120 per hundredweight and higher earlier this year set a new and higher trading range. However, prices reached a high enough level to ration beef demand, causing the market to draw back. Blach does not expect fed-cattle prices to rise much higher than $120 this fall.
  • Price volatility will continue. Since 2010, the week-to-week change in fed cattle prices have been $30 per head or more 27 percent of the time. The change has been at least $20 per had 47 percent of the time. Blach advises producers to have a risk-management plan and stick to it.