Cattle supplies in 2010 should decline another 1 to 1.5 percent, said Randy Blach, Chief Executive Officer for Cattle-Fax, Friday in San Antonio, Texas, at National Cattlemen Beef Association annual convention.

Blach also said  beef demand will continue to be impacted by a weak economy and high unemployment.

Nevertheless, Blach said 2010 overall “should be a better year for the beef industry.” 

The reason for his optimism is that Blach said beef exports expected to rise and fed cattle slaughter totals are expected to decrease.

“Demand remains the biggest challenge for the beef industry in 2010,” said Blach. “Though the supply situation is very bullish, demand must stabilize in order for prices to turn significantly higher.”

Blach said fed cattle slaughter totals are expected to be down 2 percent in 2010, and cow slaughter totals should decline by nearly 9 percent. Average carcass weights, he said, are forecast to increase slightly and beef production is projected to be down 2.8 percent. Per capita net beef supplies are expected to be down 4 percent due to an expected increase in beef exports and smaller beef production.

 On Friday, all cattle and calves on hand January 1, 2010, in Nebraska totaled 6.25 million head, down 2 percent from a year ago according toStatistics Service, Nebraska Field Office.

The USDA announced that all cows on hand January 1, at 1.84 million head, were 4 percent below last year in Nebraska. The 2009 calf crop totaled 1.68 million head, down 3 percent from 2008. Cattle and calves on feed for slaughter in all Nebraska feedlots on January 1 totaled 2.5 million head, the same as last year.

Nationwide, all cattle and calves in the United States as of January 1, 2010, totaled 93.7 million head, 1 percent below the 94.5 million on January 1, 2009.

All cows and heifers that have calved, at 40.5 million, were down 1 percent from the 41.0 million on January 1, 2009. The 2009 calf crop was estimated at 35.8 million head, down 1 percent from 2008.

Cattle and calves on feed for slaughter in all feedlots on January 1 were 13.6 million, down 2 percent.

 In 2010, Blach said U.S. beef exports are forecast to increase to South Korea, and to a lesser extent Japan and Vietnam.  U.S. beef exports in 2010 are expected to rise by about 8 percent over 2009.

 In terms of feedgrains, he said total U.S. corn production could decrease, as U.S. corn supplies are record large at an estimated 14.83 billion bushels for the 2009/10 marketing year. U.S. soybean supplies are up over 10 percent compared to last year – the second highest level on record – while soybean acreage is expected to be near 79 million acres, according to Blach. 

Spot corn futures prices, he said, are forecast to average near $3.75/bu in 2010, near steady with 2009, and the combination of bumper corn and soybean crops, as well as the sharp decline in winter wheat acreage, has lessened the need for an acreage battle this spring.

 CattleFax is a Denver-based market analysis and information organization. For more information on the outlook for the cattle industry or for information about CattleFax services call 303-694-0323.