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The meat market

Supplies of beef and pork are just starting to rebound, as ranchers and hog farmers slowly ramp up production in step with moderately increased demand. But expect prices to remain elevated through the end of the year; about 10 to 20 percent higher than they were in 2009, says Bill Lapp, commodity expert and president of Advanced Economic Solutions in Omaha, Nebraska. In the first quarter of 2010, wholesale beef prices were up 11 percent and pork prices, 19 percent, Lapp stated in his “Economic and Commodity Review” during the Spring 2010 Hospitality Supply Management conference. “Prices have risen to near record levels for live cattle, hogs and chickens,” he added.

In fact, last May, hog prices zoomed to $63 per hundred weight—a very rare occurrence, according to Purdue University livestock economist Chris Hurt, but they should drop down to the $55 to $59 range. Even so, that’s good news for hog farmers—many of whom have been operating in the red for several years. 

On the cattle front, production is still below par. “Feedlot inventories are off about 4 percent vs. 2009 and cattle weights remain low,” Lapp reports. Tight supplies, coupled with a strong beef export market, mean prices have the potential to reach new heights. Cattlefax, the Englewood, Colorado-based beef industry researcher, thinks the price of 350-pound steer calves will average between $111 and $113 per hundred pounds in 2010, up from the $107 average of 2009. Last December, finished cattle were selling for about $80 a hundred; four months later, they were $100.

Farm level livestock prices

Basis USDA May 2010 forecasts

 
2004
2005
2006
2007
2008
2009
2010
2011
Cattle
$85
$87
$85
$92
$92
$83
$96
$99
Hogs
$53
$50
$47
$47
$48
$47
$56
$55
Broilers
$74
$71
$64
$76
$80
$78
$83
$84
Milk
$16.10
$15.20
$13.00
$19.20
$18.50
$12.80
$15.90
$16.2

Prices have risen to record or near-record prices for live cattle, live hogs and broilers during 2010-11.

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