CHICAGO, Ill. (Reuters) – U.S. cattle futures bounded to record highs on the final day of 2010 as optimistic investors bet that strong domestic and export beef sales will continue in 2011.
Cattle futures were expected to finish 2010 with a 25 percent gain, the biggest one-year rise since 1978.
Cattle’s gains have been driven by the smallest herd in decades, robust beef exports and optimism that a better economy will increase consumer spending on beef in 2011.
“Everybody is bullish for 2011,” said Rich Nelson, analyst with Allendale Inc.
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Cash cattle traded at seven-year highs of $106 to $107 per hundredweight in the last week of December and prospects are for even higher prices in 2011 because an improving economy should increase beef sales.
The December cattle contract peaked early Dec. 31 at 107.950 cents in electronic trading, the highest ever for a lead contract. In pit trading, it reached $107.70, up 0.7 cents for the day.
“There are tight global beef supplies and there is renewed hope for sales to China,” said Nelson.
China, with more than one billion people, has said it needs to buy farm commodities to rebuild food supplies and slow inflation. Analysts in Beijing said beef and pork are items China will need to import.
In addition, Nelson said the recently signed free trade agreement with South Korea could increase meat sales there.
Beef exports were strong in 2010 and will remain that way as 2011 begins, based on recent sales already on the books.
The U.S. Department of Agriculture reported that 10,900 tonnes of beef were sold in late December for 2011. Nelson said that is up 73 percent from a year earlier.
The USDA is predicting 2011 beef exports to be unchanged from 2010 at 2.3 billion pounds and pork exports to be up about 10 percent at 4.675 billion.
