Japan's tsunami and nuclear reactor scare have put up to 20% of its meat production at risk, Goldman Sachs said, forecasting that high US livestock prices are here to stay.
Comparing the map of Japanese livestock production with that of damage from tsunami, and the area most at risk of radiation contamination from the stricken Fukushima nuclear plant, shows that some areas of major output are under threat.
Iwate, for instance, one of the sites damaged most by the flood, is Japan's third-biggest prefecture by dairy herd, and a major beef and pork producing centre.
"The tsunami and possible radiation put up to 20% of domestic meat production at risk," Goldman Sachs said, in an analysis based on beef, dairy, pig and poultry.
'Growth in already-strong demand'
The analysis contrasts with the limited impact expected by the US Department of Agriculture on Japan's rice output.
"Increased planting elsewhere in the country could offset any production loss in the impacted area," the department said.
And in global meat terms, Japan ranks as notable producer only of pork, where it ranks eighth in output.
However, any dent in output looks set to whet Japan's appetite for meat imports, of which it ranks first in chicken and pork, and second in beef.
"With Japan and South Korea among the largest importers of both US pork and beef last year, this points to further growth in already-strong import demand for US meat," the bank said.
Price outlook
Meanwhile, US meat supplies would be limited by the high feed prices squeezing margins, and which "will likely spur farmers to limit cattle and hog herd expansion".
Goldman forecast prices of live cattle ?those ready for slaughter tanding at 120 cents a pound in Chicago in a year's time, around the price that futures are factoring in.
Live cattle for April hit 118.65 cents a pound on Friday, a record for a near-term contract, in part on thoughts of buoyant Japanese demand.
Lean hogs will reach 105 cents a pound in six months' time, significantly higher than the 91.90 cents a pound that October futures are factoring in, or the 93.20 cents a pound at which the near-term, April lot was trading on Tuesday.
'Very solid position'
Separately, National Australia Bank forecast a bright outlook for cattle prices in Australia, another big meat exporter to Japan, where processors are competing for limited supplies of cattle with farmers restocking after rain revived pasture.
"Falling herd numbers and rising export demand are expected to support cattle prices through the year," NAB analyst Michael Creed said.
"With high prices on offer and good [pasture] conditions for many regions, the Australian cattle industry has entered the year in a very solid position."
The bank forecast the benchmark eastern young cattle price indicator averaging 5% more this year than in 2010.
