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Big drop in beef production predicted

By this time next year, beef production in the United States could be as much as seven percent below current levels.

That’s one of the predictions by ag lender Rabobank in a new report entitled “Where’s the Beef?”  

Rabobank global strategist David Nelson says the drought in the southern U.S. will result in “a dramatic decline” in beef production by mid-2012.

“The drought in Texas and the surrounding area is obviously causing major herd liquidation, which means a lot more beef coming to market over the next six months,” Nelson says, “but after we get through the ‘calf in the python’, there’s going to be an awful lot less beef coming to market.”

Nelson says poultry production will also drop off significantly over the next year as the industry adjusts to higher production costs and record losses.  The report predicts year-over-year declines in broiler production during the third and fourth quarters of 2012 of five percent and six percent respectively.

“It’s an inherent reaction of the livestock and poultry industry to the—we think—structurally higher and more volatile feed input costs.”

And as the number of animals declines in 2012, so will the demand for corn. “With just some very simple ‘what-if’ analysis, we estimate that the decline by the second half of 2012 could be as much as—on an apples to apples basis—150 million bushels.  And potentially on the full calendar 2012—200 million bushels.”

Nelson says swine is the bright spot in the report.  He says the current supply and demand situation for the U.S. pork industry is much more stable than for beef or poultry.

Nelson adds that the sharp declines in meat and poultry supplies in 2012 will have a big impact on foodservice operators and importers of U.S. beef.

AUDIO: David Nelson (6:29 MP3)

 

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