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Cattle Prices Could Move Higher Due to Short Supply

04 September 2009

US - Drought across Texas causes beef cow numbers to fall, which livestock economist, Dr Anderson believes could push up cattle prices.

A livestock economist for Texas AgriLife Extension Service believes that an improved economy will encourage consumers to spend more money on eating out in the coming months and into 2010, which would be good news for cattle producers.

Cattle prices are expected to come to their usual seasonal lows towards the end of this summer as calf crops are sold off. With the drought across Austin and Texas, the markets have seen an influx of cattle at auction.

Dr Anderson, reported that the US Drought Monitor has recorded extreme drought in the southern region of the country. This area accounts for six per cent of the nations total beef supply (with two million beef cows in the area).

AgriLife Extension economists have estimated $3.6 billion in losses, and that number could eclipse the $4.1 billion mark set in 2006. The only alternatives for ranchers who don’t have grass is either to move animals to rented pasture where forage is sufficient or sell herds that have taken years to assemble.

The fall in herd numbers in this area is causing the US beef herd inventory to decrease and with less cows there will be less beef.

With the dairy industry also struggling to break even, supply does not look strong.

With the recession, consumers have been purchasing lower-priced beef and eating at home more. With an improvement in the economy, encouraging consumers to eat out more, purchase more beef and the current supply shortage, Dr Anderson expects beef prices to move upwards in 2010.

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