Everybody I talk to thinks prices will be high from now on. When the cheap South America beef hits full swing as there is a lot of cattle there and plenty of pasture land it wouldn't surprise me in less than two years calves will be half price of now. They have bout burnt down the Amazon forest and converted into pasture land and the herd rebuilding that is happening in this country cattle prices have no way to go but down. Also I am sure we will sent experts, money and whatever down there to help them with their cattle.
From 1990 to 2009, while the U.S. cattle inventory declined by 5 percent, inventory increased in Brazil (by 33 percent), Uruguay (by 22 percent), and Paraguay (by 39 percent).
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As a continent, South America's cattle inventory increased from being 23 percent of the world's total cattle in 1990 to 30 percent in 2009. South America has been expanding its cattle inventory for decades, but only recently has it been able to capitalize on growing global demand for beef.
If I was smart I would sell every head of cattle I have and buy back in a couple of years.
South American momentum
Looking forward, momentum is on the side of South American cattle producers.
Assuming world cattle inventory doesn't increase dramatically while population continues to grow and wealth is amassed in Asia, cattle operations in South America are likely to benefit more than in the U.S. This is for a variety of reasons, including the following facts.
Beef production is a larger part of South American economies (relatively) than in the U.S., and more of the population is involved in beef production; there is more societal and governmental support for their beef industry to be successful.
The average producer is larger and possibly more profit-driven in South America, possibly leading to more rapid improvement in production efficiencies.
Average slaughter age is decreasing in South America; this will continue to improve end-product palatability (i.e., tenderness) and efficiency, and reduce cost of production (via fewer days of maintaining an animal).
High-accuracy A.I. sires from the U.S. are already readily available in South America, and their use is becoming widespread; over time, much of their genetics will rival those in the U.S.
The percentage of inventory slaughtered annually will increase due to improved genetics, better management and younger slaughter age; more pounds of beef will be produced at a lower cost per pound.
South Americans are already much more export-driven than the U.S.; with improved end product, reduced cost, effective traceability systems and less seasonality of production (versus the U.S.), they will be increasingly competitive in export markets.
Technologies that improve efficiency – growth-promoting implants, fed antibiotics and beta-agonists – are not being embraced in South America as a result of widespread consumer concern, giving them an advantage in export markets including Europe.
Grain finishing in feedlots will continue to increase (currently it is only approximately 24 percent in Argentina, 10 percent in Brazil, and 6 percent in Uruguay), leading to heavier carcass weights, improved production efficiency and enhanced palatability.
Nationwide mandatory traceability (with near-complete producer buy-in) will continue to be implemented based on initial success in Uruguay due to its effect on beef exports.
End-product quality will continue to improve, in part due to a focus on identifying quality defects via national beef quality audits (modeled after the U.S.) that have been in place for almost a decade in places like Uruguay.
South America's forage base and temperate climate is better suited to raising cattle versus the U.S.; cost of production is hard to beat when little or no winter hay feeding is required on most of the continent.
