Story by Robyn Scherer, M.Agr. | Staff Reporter

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July 30, 2012
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Cattlemen Forced to Thin Herds

When many people think of those affected by drought, cattle ranchers are not the first people who come to mind. However, drought affects cattle producers in many ways, and unlike crops, which may have insurance, cattle must either be fed or be sold.

That is the point where many Nebraska ranchers are currently. The drought has dried up pastures, and forage is expensive and difficult to find. In times of drought, rancher must make hard decisions in order to stay in the business.

The first thing that many ranchers do is to sell the cattle that are not part of the nucleus herd, and that includes calves and yearlings. “The yearlings that normally sell in August and September are coming now. We have already sold a few spring calves as well. In the next three weeks, we will start getting those calves that don’t usually sell until October. Several ranchers are weaning them now and selling them because they are so short on feed. There will be a lot of calves that are weaned early this year,” said Eugene Cone, owner of the Burwell Livestock Market in Burwell, Neb.

Cone held a sale on July 20, and saw 2,300 cattle go through the ring. “That number was about normal. However, we also had a sale two weeks before that, and we don’t normally have that one. We will have a lot of sales in early August as well to accommodate the expected increase,” said Cone.

Ranchers are getting to the point where they need to start making tough decisions. Smaller producers who may not have the resources to carry cattle over without pasture may end up selling out. Other producers will likely cull harder this year than they have in the past, and wean the calves early so the nutritional demand is not as high on the cows.

“A lot of the ranchers are trying to decide what to do. If we don’t get rain in the next 30 days, there will be a lot more cattle that are coming off grass,” he said.

If the drought continues, ranchers will be forced to downsize their herds. “A lot of producers will sell. But the cattle have to go somewhere. Someone has to buy them. Fat cattle are losing money right now, and with the heat, the demand for meat has gone down. The prices will only get worse.”

He added, “This calf crop is set. We have to find some place to put these, and the rancher needs the money to feed his cows. He wasn’t going to get too much money the way it was, and he will get a lot less now.”

The Monthly Cattle on Feed and Mid-Year Cattle Report were both released on July 20, and both gave critical industry information. “Those reports showed that drought and feedstuff prices are re-shaping the U.S. cattle sector,” said James Robb, director of the Livestock Marketing Information Center.

The cattle report showed that all cattle and calves in the U.S., as of July 1, 2012, totaled 97.8 million head. This is a 2.2 percent decrease from last year at this time, when the count was 100 million.

“Overall, the Cattle report showed more drought-induced whittling away of U.S. cattle numbers had occurred prior to the July 1 than expected,” said Robb.

This number is indicative of a negative trend the last few years. “This is the lowest cattle and calves inventory for July 1 since the series began in 1973. Beef cows, at 30.5 million, were down three percent from last year and this was the sixth straight year of decline. Given the drought situation, and with beef replacement heifers unchanged from last year at 4.2 million head; the beef cow herd will likely be lower again in 2013,” said Tim Petry, Livestock Economist for North Dakota State University Extension Service, in the weekly In the Cattle Markets report by LMIC.

The drought in the South last year forced many operators to liquidate their herds, and that led to a decreased calf crop this year. “The feeder cattle supply at 35.7 million head was down 3.2 percent from last year, reflecting both a smaller calf crop and increased feedlot placements due to the drought,” said Petry.

The Cattle on Feed Report showed an overall increase in the number of cattle placed on feed in the past month. “Cattle and calves on feed for slaughter market in the United States for feedlots with capacity of 1,000 or more head totaled 10.7 million head on July 1, 2012. The inventory was three percent above July 1, 2011. The inventory included 6.74 million steers and steer calves, up four percent from the previous year. This group accounted for 63 percent of the total inventory. Heifers and heifer calves accounted for 3.92 million head, up one percent from 2011,” the report read.

The country-wide drought this year is affecting placements differently than the regional drought last year. “During June, placements this year were 24 percent above a year ago in Nebraska, even with last year in Kansas, and dropped 16 percent in Texas,” Robb said.

Higher placements in Nebraska show that the grass and pastureland is not as available, and cattlemen are weaning early and culling hard in order to make it through the drought.

The placement categories showed what producers are doing to cope with the drought. “The more widespread drought this year affected placements. The under 600 pound placement category showed the same placements as last year’s historically high level. And the 800 pound and over category recorded a 13.6 percent increase, likely showing increased movement of feeder cattle off from drought inflicted pastures,” according to Petry.

This increase in lightweight and heavyweight calves reflects the problems the state is having. Recently, feeder cattle and calf prices have dropped for several reasons. The first is there is a higher number of cattle being marketed right now. The second is the price that feeders are willing to pay, due to their increased costs.

“Feeder cattle and calf prices are currently being negatively affected by sharply higher, drought impacted feed prices; but the smaller numbers of cattle in the Cattle Report will likely be supportive to feeder cattle and calf prices for the next several years,” said Petry.

Cone added, “The cattle are being forced into the market now because of the drought. When this drought breaks, we will see substantially higher prices.”

The Nebraska weather and crops report, released on July 23, showed that pasture and range conditions rated 37 percent very poor, 35 percent poor, 21 percent fair, 7 percent good, and 0 percent excellent, well below 82 percent good to excellent last year and 76 percent average.

This decrease in conditions has necessitated the USDA to open up parts of the Conservation Reserve Program land for haying and grazing. “The haying and grazing in general, it’s an emergency use under the terms of the program, and we work real hard to balance the environmental benefits from that land with the additional forages that can be utilized for livestock producers and for agriculture,” said Dan Steinkruger, Nebraska State FSA Executive Director.

He continued, “I’ve talked to a lot of farmers and ranchers and their forage production is down 50 percent or greater in their pastures and their hay crops and now we are starting to see declines in a lot of our grain production crops too.” ❖

“This is the lowest cattle and calves inventory for July 1 since the series began in 1973. Beef cows, at 30.5 million, were down 3 percent from last year and this was the sixth straight year of decline”
~ Tim Petry

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The Fence Post Updated Aug 22, 2012 09:06AM Published Oct 8, 2012 07:13AM Copyright 2012 The Fence Post. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.