CullmanTimes.com - Cullman, Alabama

Agriculture

December 11, 2012

NATION: Steak price rising as cattle seen 20 percent higher at JBS

The world's top beef producer expects U.S. cattle prices will jump 20 percent to a record next year as rain on grazing fields and corn crops prompts ranchers from Texas to Nebraska to feed animals instead of sending them to slaughter.

Beef output in the world's biggest producing country will slide as much as 6 percent in 2013 because of reduced processing, JBS SA Chief Executive Officer Wesley Batista said in a Nov. 30 interview from his Sao Paulo, Brazil, headquarters. That compares with a 4.2 percent drop to 24.6 billion pounds (11.2 million metric tons) forecast by the U.S. Department of Agriculture last month.

Record corn and soybean prices that followed the worst U.S. drought since 1956 boosted the cost of raising cattle sold to JBS and other major meatpackers, leading ranchers to cull animals. Next year, ranchers probably will rebuild herds and send fewer head to meatpacking plants, creating a shortage of slaughter-ready animals that will boost prices, Batista said.

"Lower grain prices mean ranchers will be able to retain cattle for a longer period, reducing the availability of animals for slaughtering," said Batista, 42, whose family's abattoir in western Brazil grew over six decades into a $37 billion operation spanning 10 countries including the U.S. "We believe prices will keep going higher."

The U.S. cattle herd shrank to the smallest since at least 1973 as of July 1 as ranchers culled herds after the dry spell in the Midwest boosted feed costs. Cattle reached a record $1.32925 a pound on Nov. 23 on the Chicago Mercantile Exchange. Futures are down 1.5 percent from the record at $1.31 a pound at 10:24 a.m. on the CME.

Retail beef prices in the U.S. rose to $4.772 a pound in October, according to the USDA. Wholesale choice beef, high-end cuts that include most steaks, rose to a record $1.9938 a pound on Oct. 24. The price has gained 19 percent in the past two years as droughts in 2011 and this year scorched grasslands in Texas, the biggest producer of cattle in the U.S.

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