Most sectors of the nation's beef industry are losing money, which has caused production forecasts for next year to be reduced. Usually a decrease in production would provide a boost of cattle prices for producers and feedlot operators, but USDA livestock analyst Shayle Shagam says while that might happen, it might not due to offsetting factors including the economy.
"You do have expectations of declining production in 2009 which would tend to be price supportive," Shagam says. "But the economic situation, the macro economy in the U.S., is a real wild card. If there is a retrenchment by consumers you would tend to see some pressuring on prices as consumers either slide toward lower value cuts of meat or slide toward other meat products which may be perceived as being cheaper or cut back on the amount of dining out that they would normally do."
Those moves would all have a negative impact on the cattle sector. Shagam does think that cattle prices may improve in 2009, but says it all still depends on how the macro economy shapes up in the coming year.