Received this today from a purveyor...not good
High beef prices 'here to stay', says Tyson boss
High beef prices "are here to stay", boosted by the squeeze on US cattle numbers which may take until the end of the decade to return to 2013 levels – and will provide an "umbrella" protecting chicken sector fortunes.
Donnie Smith, the chief executive of Tyson Foods, the top beef packer in the US ahead of JBS and Cargill, said that domestic supplies of the meat, which fell 5% on the group's estimates this year, will fall 4% next year too as producers attempt to rebuild herds.
The US cattle herd entered this year at its smallest in 61 years - in part a reflection of higher productivity levels, allowing more beef to be produced from fewer animals, but with the trend accelerated in recent years by drought and high feed prices which have encouraged higher slaughter rates.
However, ranchers this year have begun rebuilding herds, encouraging by the reversal in grain prices, and recovery in pasture in most areas from the 2012 drought, but also by elevated cattle and beef values as the flow of animals for slaughter has dwindled.
The number of cows being slaughtered has fallen particularly far, by 17.9% in the first 10 months of 2014, thanks to the quest to retain animals for breeding.
'High beef prices'
Even so, "it would take us several years, maybe out to 2020, to be able to grow the supply of cattle back to a 2013 number", Mr Smith told investors.
"So we are going to have high beef prices for a while."
The US Department of Agriculture has forecast beef prices rising by 5% next year, on top of an 11.5% increase in 2014.
The so-called beef cutout, the wholesale price, was $249.95 per hundredweight for the more expensive choice grade on Wednesday, down $0.56 on the day, but remaining within sight of the summer's record high above $260 per hundredweight.
"We've got a $250 of hundredweight choice cutout right now. You go back a year ago it was at $199," said Steve Stouffer, Tyson's head of fresh meats.
'We need more chicken'
The increase in beef prices will "provide an umbrella" for price of other meats, Mr Smith said, highlighting in particular the impact in diverting consumers to chicken.
"Chicken consumption is up. We see chicken consumption up at least 3% or so for the next few years out in the future.
"We need more chicken," he said, flagging a drive by Tyson to raise capacity, with the impact likely to be felt particularly in the fourth quarter of the group's current financial year, which ends in September 2015.
"We are literally holding foodservice customers off," he said, also noting a "production problem this fall".
Extra chicken supply "is coming" and is "going to be great".
"We will buy it and add value to it and fill customer demand with it."