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Beef prices, already near record highs, going up again this year

AarSmith separates second year calving cows from third year calving cows while working The Hogan Ranch Boulder Colo. Jan. 23

Aaron Smith separates second year calving cows from third year calving cows while working on The Hogan Ranch in Boulder, Colo. on Jan. 23, 2012. The City of Boulder is exploring creating a brand of natural beef for cattle raised on open space property. (AP Photo/The Daily Camera, Mark Leffingwell ) NO SALES

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Updated: March 1, 2012 8:44AM

Beef prices, already at near-record-high prices, are expected to be driven up for the second year in a row this year because of a limited supply of cattle.

There were about 91 million head of cattle in the United States as of Jan. 1, according to the U.S. Department of Agriculture. That’s down 2 percent from a year ago — and the lowest level since 1952. Retail beef prices, now near record levels, will likely rise 4 percent to 5 percent this year following a 10 percent increase in 2011, the Agriculture Department predicts.

John Nalivka, owner of the consulting firm Sterling Marketing, estimates prices could rise as much as another 10 percent — more than double the inflation rate for all food.

Why the cattle shortage? The most severe drought in more than half a century last year left ranchers in Texas, Oklahoma and other states with meager supplies of grass and water to feed their cattle. Many animals were sold to feedlots or slaughterhouses.

That’s in addition to higher foreign demand and a long-term trend of ranchers thinning their herds because of the soaring price of corn — a primary feed for cattle. Other factors: rising property costs and increased competition for land with corn, soybeans and other crops, says Kevin Good, a senior analyst with the research firm CattleFax.

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