U.S. beef demand is good given the fragile nature of America’s economic recovery but corn prices and La Nińa are seen constraining expansion of the country’s biggest cattle herd in Texas, the head of the state’s cattle raisers association said Dec. 10.
“I think we are very fortunate to have the demand that we have given the economy and the unemployment rate so I think the future looks pretty bright on that side,” Dave Scott, president of the Texas and Southwestern Cattle Raisers Association (TSCRA), told Reuters in an interview.
Texas cattle traded at $104 a head in early December, a seven-year high for the state as beef prices and cattle demand rebound after being waylaid by a number of factors including the recent recession.
But the recovery has been far from robust and the national unemployment rate remains close to 10 per cent.
Scott said obstacles remained in the way of rebuilding the Texas cattle herd to where it stood before the recession and a severe drought that began scorching much of the state in 2007.
According to U.S. government data, the Texas cattle herd as of Jan. 1, 2010, was 13.3 million head, down two per cent from the previous year and well off its pre-drought size of 14 million in early 2007.
“The cost to feed them has gone up significantly because of the price of corn,” said Scott, who also pointed to frothy fuel and fertilizer costs.
Grain prices have been up. Wheat recently rose to its highest level in four months while corn and soybeans rallied to over two-year highs as investors bought each market, banking on dwindling supplies.
Asked how long it would take to rebuild the herd, Scott said a “minimum of five years.”
Scott also highlighted concerns about the La Nińa weather pattern, which forecasters have said could herald a drier-than-usual winter in the U.S. South, including Texas.