U.S. cattle prices, basis nearest Chicago futures, have basically traversed a tight 20 cent/lb range since the late 1990's, pivoting about 70 cents, plus or minus 10 cents. The first quarter of calendar 2002 witnessed a moderate rally, but it evaporated during the second quarter as prices slipped to 60 cents in midyear, their lowest level since 1999. However, the second half of 2002 was moderately bullish, percentage-wise futures rising about 25% into yearend from the summer lows. Adverse weather in late 2002 coupled with lower placements onto feed heightened awareness of tightening beef supplies in the short run that may carry into 2004. Meanwhile, both domestic and export demand for beef is expected to remain strong.

The world cattle inventory has shown little growth during the past decade: the January 1, 2002 total of slightly more than 1 billion head is almost the same as ten years earlier. However, some large changes have occurred since the early 1990's: notably the sharp decline in cattle numbers in the former USSR and increases in China. Russia's and the Ukraine's cattle inventory in early 2002 was estimated at about half of the nearly 80 million head a decade earlier. In contrast, China's January 1, 2002 inventory has passed more than 150 million vs. about 105 million a decade earlier. India, who holds almost a third of the world's total appears to be slowly increasing its inventory following little expansion in the first half of the 1990's. Brazil had the second largest inventory in 2002 with over 150 million head. World beef production in 2002 of a record large 50.2 million metric tons compares with 48.9 million in 2001 and forecast at 48.8 million in 2003. The U.S. is the largest beef producer with about a quarter of the world's total with Brazil a distant second with about 7.2 million tons. However, while U.S. beef production has been flat for some time, other nations, notably Brazil and China have increased production. The U.S. cattle inventory totaled around 110 million head in the 1980's, then cyclically declined to 96 million by early 1990 which was followed by an expansionary phase that peaked in the mid-1990's at around 104 million head. The January 1, 2002 inventory totaled less than 100 million head vs. 97 million head a year earlier. The three largest cattle inventory states are generally Texas, Kansas and Nebraska.

World beef consumption in 2001 dipped to 47.8 million metric tons vs. 49.4 million in 1999 and 2000. Usage, however, increased to 49.4 million tons in 2002, but expected to dip again to 48.1 million in 2003. European Union use in 2002 of 7.3 million tons compares with 6.5 million in 2001 and 7.6 million in 2000; the "V" shape change reflecting the entrance and passage of the Mad Cow disease that affected the continent's demand for beef. China beef consumption in 2002 of a record high 5.6 million tons compares with 5.5 million in 2001 and estimated at 5.7 million in 2003. In the former USSR, consumption in 2002 of about 2.4 million tons about equals 2001 as well as the forecast for 2003.

U.S. commercial cattle slaughter in 2002 of 35.7 million head compares with 35.4 million in 2001 of which steers comprised about half of the slaughter mix and heifers about a third. Dressed slaughter weights in late 2002 averaged about 765 pounds. U.S. beef production in 2002 of 27 billion pounds compares with 26.1 billion in 2001. U.S. per capita beef consumption has shown little growth in recent years as consumers opt for less red meat in their diet; per capita use in 2002 of 67.5 pounds (retail weight) compares with 66.2 pounds in 2001 and a 2003 estimate of 64.3 pounds, the contraction in demand taking hold despite the industry's aggressive advertising stressing beef's high protein nutritional value and ease to prepare for the evening meal.

U.S. beef (and veal) exports in 2002 of 2.5 billion pounds compares with 2.35 billion in 2001 and forecast around 2.5 billion in 2003. U.S. beef imports in 2002 of 3.2 billion pounds is marginally above 2001 and forecast at 3.3 billion forecast for 2003; Australia, New Zealand and Canada are the largest beef suppliers to the U.S. Live cattle is imported from Canada and Mexico.

Choice steer prices, basis Nebraska, in 2002 averaged $67.14 per cwt vs. $70.19 in 2001. Prices are forecast between $72-77/cwt in 2003. On the retail level, choice beef prices in mid-2002 averaged around $3.30/lb, about 10 cents under a year earlier.

Futures Markets

Live Cattle futures and options are traded on the Chicago Mercantile Exchange (CME), and the Bolsa de Mercadorias & Futuros (BM&F). Feeder Cattle futures are traded on the CME and the BM&F, and Feeder Cattle options are traded on the CME.

Excerpted from the CRB Commodity Yearbook. For more information on CRB products click here

Related Links

Seasonal Chart

World Supply/Demand Summary

• World S/D Table

Government Reports

[Report Descriptions]

Cattle On Feed

Cold Storage

Livestock Slaughter