Beef Production Cuts Slow to Materialize

March 3, 2000

USDA says "clear signs of future beef production cutbacks" have been slow to materialize. Inventories have declined and heifer slaughter has been at near record levels for three years, yet feedlot placements remain large.

Beef supplies will remain large through early summer, USDA said. "Larger beef supplies and seasonal gains in the proportion grading choice and higher will take some of the bloom off the market from the sharp runup in prices last fall when choice supplies were very tight."

Recent declines in retail prices "suggest at least some of the fall price runup in prices may have been due to high expectations on `millennial’ beef movements which certainly won’t provide much help in 2000," the report added.

Prices of choice beef at retail declined to $2.95 in January but likely will remain in the upper $2.90s until fall when prices likely will increase beyond the $3 per pound mark.

Several "important trends" were noted in the report for pork. Less pork was exported to Canada last year, but the United States imported more Canadian pork. As production increases in Canada, Canada will continue to export more and import less.

That has "significant competitive implications for the U.S. pork industry ... Production costs, exchange rates and trade policy will be important factors in a market where the big struggle is going to be over market share, with competitors such as Canada, South Korea, Mexico and Denmark," according to the report.

The entire report is available on the Internet at http://usda.mannlib.cornell.edu/reports/erssor/livestock/ldp_mbb/2000/ldp_m68.pdf