Your Reading List

PRIME CUTS – for Sep. 12, 2011

The extreme to exceptional drought in the southern U.S. is rapidly becoming the story of the year for the U.S. beef industry. Since I wrote about the drought in my June-July column, conditions have worsened appreciably. Yet the drought shows no signs of abating. Not only is it altering near-term supply patterns, it is reshaping the U.S. cattle herd in terms of geography and size.

Canadian producers should be watching events closely. No producer wants a market advantage because of another s disadvantage. But the continued liquidation of the U.S. beef herd, when many had hoped for stability this year, provides an even stronger market for Canadian cattle. Furthermore, the market will be just south of the border because that s where the green grass is.

USDA s mid-year cattle inventory report showed that total cattle and calf numbers in the U.S. on July 1 were down one per cent from a year earlier. Beef cow numbers were also down one per cent but more significantly, beef cow replacement numbers were down 4.5 per cent. These heifers, instead of being retained for herd rebuilding, went to feedlots for finishing and then to slaughter. These declines, plus an expected 0.5 per cent decline in the 2011 calf crop and ongoing liquidation due to drought, means the U.S. herd might decline this year by as much as 1.5 million head. This would make the herd the smallest since 1958.

Drought conditions from Arizona to Florida/ Georgia are forcing producers to liquidate their herds. But at the same time, producers in northern and western states are adding numbers because of excellent pasture conditions. This trend first showed up in January s annual inventory report. Texas, by far the largest cow-calf state, saw its beef cow numbers decline 115,000 to 5.025 million on January 1 from a year earlier. Oklahoma, Florida, Arizona, New Mexico and all the southern-tier states also had declining beef cow numbers. Numbers also fell in Minnesota, Iowa, Missouri, Illinois and Kentucky. These declines might have been due to increased pressure on pasture availability, with more acres going to crop production, says Jim Robb, director of the Livestock Marketing Information Center.

Conversely, Washington, Oregon, Idaho, North Dakota, Kansas and Colorado all saw an increase in 2010 in beef cow numbers. Robb expects such increases to continue this year, as well as in California which is having one of its best grass seasons in some years. Beef heifers and young cows have already come to California this year from Texas, he says.

The decline in beef heifer numbers is extremely important as it means the U.S. industry continues to shrink its nursery, says Robb. Cow-calf producers not in the drought zones have an economic incentive to expand their herds but they are still being very cautious. Depending on how much longer the drought persists and cow slaughter continues to run large, the overall herd might decline 1.5 per cent this year to 91.2 million head, he says.

The drought in the southern U.S. and northern Mexico continued to force large numbers of cattle into feedlots in June and July. Yet the drought shows no sign of abating and many ranchers, especially in Texas, have run out of feed and water. So forced cattle movement and herd liquidation continues. This suggests that August feedlot placements were also higher than last year. Market-ready supplies of cattle are therefore likely to remain quite sizeable into early 2012. Feedlot placements this fall might decline sharply, which would have a bearing on market-ready supplies from April next year. But any decline will depend on whether drought leaves any wheat pasture available on the Southern Plains for winter grazing of calves.

CattleBuyersWeeklycoverstheNorthAmericanmeat andlivestockindustry.Forsubscriptioninformation, contactSteveKayatP.O.Box2533,Petaluma, CA94953,orat707-765-1725,orgoto www.cattlebuyersweekly.com.

———

ANorthAmericanviewofthemeatindustry.SteveKayispublisherandeditorofCattleBuyersWeekly

———

The continued liquidation of the U.S. beef herd provides an even stronger market for Canadian cattle

About the author

Contributor

A North American view of the meat industry. Steve Kay is publisher and editor of Cattle Buyers Weekly.

Steve Kay's recent articles

Comments

explore

Stories from our other publications