TheBeefSite Newsletter - 11 January 2012

TheBeefSite Weekly Newsletter

Wednesday 11th January 2012

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Welcome to this week's newsletter

Editorial: Little Relief in Beef Prices Expected

With soaring feed prices, a weak economy and a drought still affecting parts of the US and the Southern hemisphere, it is unlikely that the price of beef in the US will come down, as producers continue to liquidate cattle herds.

The question is how long will the demand for high priced beef hold up?

These concerns over the state of demand have been reflected in the US market, with live cattle futures modestly lower this week. Choice beef values also fell, however, there is a case for this being the norm after the Christmas period.

Supply of cattle is still surprisingly strong, considering the large numbers slaughtered in the second half of 2011. There are some concerns about the ability of the market to absorb higher supplies at current price levels.

Already in Argentina, upward pressure on beef prices has caused beef consumption in the country to fall. Domestic beef consumption fell to 53.8 kg per capita, the lowest levels in 91 years.

Brazil has reported increased consumption of poultry, possibly because people are finding an alternative for high priced beef.

Despite these trends in South America, Australia and the US are still benefitting from strong export markets, which analysts claim are the saviour of the beef industry.

New virus alert

A new virus, schmallenberg, has been found in cattle, sheep and goats in the Netherlands and Germany. Farmers in North Europe are urged to be vigilant and take caution when importing animals from affected areas.

Clinical symptoms include fever, reduced milk yield, loss of appetite, loss of condition and diarrhoea.

Charlotte Johnston

This Week's Feature Articles

We have 4 new features this week:

Beef Demand Is Key To Cattle Prices
US - Beef and cattle prices increased to new record levels in 2011 and are expected to push even higher in 2012, writes Derrell Peel, Oklahoma State University.

Changing Farming Practices Accompany Major Shifts in Farm Structure
Changing production practices, including adoption of labour-saving innovations, have contributed to and been affected by increases in both agricultural productivity and the concentration of production, write Erik O'Donoghue, James MacDonald, Utpal Vasavada and Patrick Sullivan of USDA Economic Research service in the latest issue of Amber Waves.

Hedging Using Futures - Price Protection for Cattle Producers
Hedging with futures is one of the marketing tools that can be used to forward price a commodity to protect against a price movement.

NAB Rural Commodities Wrap - December 2011
Agricultural commodities are weakening as the result of the Euro sovereign debt crisis and rising production prospects, according to Michael Creed, Agribusiness Economist at the National Australia Bank in the Economic Report for December 2011.