Cattle prices are poised for a potential record rally over the next year and hogs also hold bullish prospects as global demand grows and meat supplies shrink to a 29-year low, agricultural consultant Dan Basse said.

Worldwide beef, chicken and pork production is expected to rise 1.4 percent this year, to a record 233.3 million metric tons, Basse estimated. But total meat stocks are projected to fall to 1.8 million metric tons at the end of 2010, the lowest since 1981, Basse said.

Meat consumption should remain strong as China’s economy expands, and the U.S. may see additional export demand from Japan following an outbreak of foot-and-mouth disease in the country earlier this year, said Basse, who’s president of Chicago-based AgResource Co.

“We’re optimistic long-term” on cattle and hog prices, Basse said during a June 28 crop and weather seminar hosted by CME Group, the Chicago futures exchange operator. “We think there’s a lot more bullish opportunities in meats than in grains.”

Basse expects prices for slaughter-ready cattle to climb above $1 a pound over the next 12 months and possibly reach records above $1.10 if harsh winter weather in the central U.S. impedes animals’ ability to gain weight.

The direction of the global economy is also a key factor. If worldwide gross domestic product grows at a 3.2-percent pace or greater, “I could be talked into record highs in cattle prices,” Basse said.

Cattle and hog prices rallied this year after high feed costs and recession-weakened meat demand led to widespread herd reductions. Earlier this year, the number of cattle on feed fell to a six-year low.

In April, cattle futures reached $1.002 a pound, a 19-month high. Hog futures have almost doubled after sinking near a seven-year-low of 43.575 cents a pound in August.

At today’s close, August live cattle fell 0.1 cent to 89.925 cents a pound. July lean hog futures fell 0.075 cent to 79.15 cents a pound.

Over the next year, Basse expects further declines in the U.S. cattle herd and “modest” expansion of 0.5 percent to 1 percent in the total hog inventory. Pork producer margins are expected to be profitable for the next 18 months, he said.

Growth in Russia’s poultry flock may undercut further cattle and hog market strength if cheaper chicken grabs export business from the U.S., Basse cautioned.

Ultimately, Russia may be an exporter of poultry at cheap prices as its flock expands at a rate of 16 percent to 17 percent on an annual basis, Basse said.

“Russia is increasing their investment in poultry and pork amid faltering grain prices and their desire to become self sufficient in meats,” Basse said.