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Cattle prices climb as U.S. supply shrinks

In this weekly Commodities Watch column, John T. Barone, president and commodities analyst for Market Vision Inc., offers a snapshot of the state of commodities for restaurants.

Cattle futures prices have been climbing, from $125/cwt in mid-September to $132.58 Friday.

Shrinking domestic cattle supplies have been compounded by declining imports and stronger exports. Live cattle imports from our biggest trading partners — Canada and Mexico — could decrease 15 percent in 2013. China and Hong Kong have become major beef buyers, competing with the U.S. for Australian and Uruguayan exports. Aussie exports to Asian countries, not counting Taiwan, have risen 127 percent year-over-year in 2013.

Meanwhile, U.S. beef exports in August rose 5 percent above a year ago. Fundamentals are strongly bullish for beef prices in 2014. Producers will eventually begin retaining heifers for breeding, sending fewer to slaughter and further tightening beef supplies. When that process starts, it will be another two to three years before we see a turnaround in supplies.

Contact John T. Barone at [email protected].

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