United States-slowdown in demand for beef in 2009.

UNITED STATES-BEEF DEMAND COULD WEAKEN.

The soft economy will outweigh bullish supply-side factors in the beef market through much of 2009. That was the outlook from CattleFax delivered at last week’s Cattle Industry Convention in Phoenix . CattleFax analysts said beef demand was lower in 2008 and will continue to weaken this year due to decreased consumer spending.

Smaller fed cattle and beef cow slaughter will contribute to a 2% decrease in commercial beef production this year, according to CattleFax analyst Kevin Good. Domestic pork and poultry production are expected to decline by similar amounts.

Analyst Brett Stuart said 2009 U.S. beef exports are expected to increase by 469 million pounds compared to last year, with South Korea the key growth area. He suggested if Japan would agree to accept beef from cattle less than 30 months, it would give the U.S. access to 95% of the pre-BSE beef export trade to that country. The current 21 months and younger requirement is limiting U.S. beef exports to about 24% of pre-BSE levels. U.S. beef remains competitively priced in Japan , where domestically produced Wagyu beef continues to sell at a large premium and the yen actually has strengthened against the U.S. dollar.

Executive Vice President Randy Blach said there is reason for some optimism. He believes if the recession would last 18 months, as projected by some, it is now more than half over. Blach forecasts the low in the calf price cycle will be during 2008-09, with a rebound starting in 2010. CattleFax is projecting 550 lb. steers to average $108 to $110/cwt. this year. The price of a 750 lb. feeder steer is expected to average between $98 and $100/cwt. for the year, while fed cattle are projected to average $90 to $92/cwt. for 2009.