Meat Supply’s ‘Precipitous’ Drop to Spur Prices to Records, Rabobank Says  

Bloomberg has a report on declining US meat production - Meat Supply’s ‘Precipitous’ Drop to Spur Prices to Records, Rabobank Says.

U.S. meat and poultry production may drop as much as 5 percent next year, sending beef and pork prices to a record amid climbing feed costs and shrinking herds, according to Rabobank International.

Producers are curbing output as tighter feed supplies boost costs, which will lead to a “precipitous fall” in available meat in 2012, David Nelson, a global strategist at Rabobank, said in a report. The drop is compounded by a drought that is forcing ranchers in the Southwest to cull herds and by surging demand for U.S. beef in developing countries, he said.
“There’s going to be less supply, so we’re going to have higher prices,” Nelson said in a telephone interview from Chicago yesterday. “It’s quite a shift.”

By late 2012, U.S. beef production may be running at rate of 7 percent below comparable levels this year, Nelson said. The spot-market price for fed steers sold to slaughterhouses may average a record $1.16 a pound in 2012, up from a projected $1.13 a pound this year, Nelson said in the report. Beef prices also will climb to an all-time high, he said.

U.S. per-capita consumption of beef will continue to drop, so the tightening supply of the meat may impact foreign buyers the most, Nelson said. The “relatively cheap dollar” is boosting demand for U.S. meat, Nelson said. The dollar is down 1.2 percent this year against a basket of six major currencies.