Record U.S.meat prices to make dining tables leaner:Reuters poll

CHICAGO Fri Feb 4, 2011 11:46am EST

CHICAGO (Reuters) - U.S. cattle and hog futures are expected to hit record highs this year, a Reuters Polls showed, setting the stage for less meat on the dining table.

The expected higher prices could make it harder for many countries to tamp down surging inflation and calm citizens angered by record high food prices. Already, there have been riots and protests in some North African countries.

Grain prices have been forecast to remain stubbornly high as well this year, with two straight years of high prices seen as the latest sign in the end of cheap food.

"There is going to be less meat per person in 2011, quite a bit less," said Ron Plain, an University of Missouri agricultural economist. "That should push up prices."

The smallest U.S. cattle herd in 53 years and the smallest hog herd in four years were behind the forecasts.

The United Nations Food and Agricultural Organization on Thursday said its January global food price index was at the highest ever after increasing for seven straight months.

Meat will contribute to inflation as high feed costs -- U.S. corn prices are at their highest in about 2-1/2 years -- financial stress and aging producers have shrunk U.S. cattle and hog herds at a time when the world is buying U.S. meat. (Graphic: r.reuters.com/sad87r )

A Reuters' livestock price survey shows analysts expect in 2011 record year-end cattle and hog prices.

At the end of 2011, analysts, on average, expect the spot cattle futures price at 113.2 cents per lb and the hog price 82.14 cents, up from 2010's record high closes of 107.9 and 79.75, respectively.

Analyst Dan Vaught, Vaught Futures Insights, is at the low-end of year-end cattle price estimate at 100 cents per lb, on ideas high cattle prices earlier in the year will have producers rushing more into feedlots.

"If that is the case, then I think supplies at the end of the year will be substantially larger than they are now," he said.

As supplies of beef and pork decrease, demand is going up.

"We are feeding three times as many people as were 10 years ago," said Eric Ocrant, vice president of Oak Investment Group.

"China and other Asian economies have improved. They have developed a taste for beef and we expect that to continue," said Ocrant, who forecast end-of-the-year cattle futures at 125 to 130 cents per lb, the highest in the survey.

CONSUMER RESISTANCE SEEN IN WEAK ECONOMY

The smaller beef and pork supplies should dictate higher prices, but a still shaky economy may not have consumers willing to swallow such increases.

"Demand may become a limiting factor," said Elaine Johnson, analyst with CattleHedging.com, whose forecast for 103-cent cattle futures at the end of 2011 was near the low end of estimates.

"The sharp run-up in cattle prices has yet to be passed along to the consumer," she said.

Beef and pork prices are already high. In December, the latest data available, USDA reported supermarket beef averaged nearly $4.44 a pound, up 3.6 percent from a year earlier, while pork averaged nearly $3.19, up 13 percent from a year earlier.

"I still am very concerned about the strength of the economy and whether consumers are going to be willing to pay the kind of record prices it is going to take to make the futures market right," said University of Missouri's Plain.

High beef and pork prices can have consumers shifting to lower-cost protein alternatives, as they did in 2008 when meat prices also sped higher.

Chicken or pasta are such alternatives. Also, consumers may choose to eat smaller portions at restaurants or cook at home where they can better control cost and portion sizes.

(Additional reporting by K.T. Arasu, Michael Hirtzer, Julie Ingwersen, Sam Nelson, Karl Plume, and Mark Weinraub; Editing by David Gregorio)

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