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Drought to shift cattle production

CHICAGO, Illinois ( severe drought in the U.S.-South could change the face of the cattle industry for years, one analyst says. 

With its driest 10 months ever in a century, Texas is the hardest hit state, according to the U.S. Drought Monitor.

Since January, Texas has only received 40 percent of its normal rainfall, the National Weather Service reports. 

Over 1.0 million acres of range and pasture land have been burnt up from this year's drought, according to anecdotal reports. 

Recently, the USDA extended emergency grazing and authorized the use of harvested hay from the expiring Conservation Reserve Program acres to help Southern cattle producers preserve their cattle herds.

However, many cattle producers have already been forced to liquidate their entire herds or send the animals to market earlier than desired. 

Drought impacts

John Ginzel, The Linn Group meat/livestock analyst says there are several layers of affects, due to the worst drought in 50 years in the U.S. Plains states.

To start with, the lack of forage and pasture in Texas, Oklahoma, and surrounding states has forced the movement of many cattle out of the area earlier than usual. Many of the cattle have been moved completely out of the area. Also, the drought has expanded cow slaughter for cow-beef, and sped up the movement of stockers and feeders into feedlots at lighter-than-normal  weights, Ginzel says.

"The carrying capacity on drought-stricken pastures and shortage of water is behind all of this," Ginzel says. "This drought has also forced a lot of stock and feeder cattle out of Mexico into U.S. feedlots."

Misplaced Cattle

Because cattle have been misplaced from the southern Plains to northern states earlier than normal, this year's fall cow slaughter expansion will not occur, Ginzel says. "Plus, the availability of stockers and feeders for placement into feedlots in the coming months and in the first-half of 2012 will be restricted," Ginzel says.

This year's drought is expected to cause a long-term affect on the ability of the U.S. Southern beef-breeding herd to recover. A fundamental shift of cattle to northern Plains states is expected to occur, due to favorable rains that offer much better availability of range and forage supplies.

"North Dakota, South Dakota, Montana, Wyoming and Idaho have had abundant rainfall and have very good forage and range conditions. In fact, there's already talk  that those states are retaining heifers to expand their breeding herd. That is clearly not the case in the South," Ginzel says.

Cattle prices

A very tight beef supply, tightening cattle numbers, and strong export demand will support record-high U.S. beef prices in coming months, Ginzel says.

"At some point, the U.S. consumer will have to ask itself how badly does it want beef. So, the rationing will happen through the domestic sector not the export sector."


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