April 15, 2011
 

US drought dampens hope to stop cattle decline

 

 

In addition to causing anxiety among wheat growers, the drought in the US Great Plains is also affecting cattle farmers' moves to rebuild herds after a decrease which has been taking place since the 1970s, US farm officials said.

 

More than one-third of the American cattle herd held in the southern states has been left parched by a dearth of rain which has reached critical levels in Oklahoma. It has also encouraged bush fires, largely in Texas, and burnt more than 360,000 acres of land in the past week.

 

The harsh conditions are threatening to snuff out an apparent willingness among farmers to restock, encouraged by high cattle prices, which set a record US$122.87/pound in Chicago last week.

 

"A 5% fall in the slaughter of beef cows in the first three months of the year could be an indication that producers may be beginning to consider cow-herd stabilisation or even expansion", a USDA analyst said.

 

"However, continued dryness in the southern tier of US and scattered additional areas will likely dampen expansion plants in those affected areas."

 

"Indeed, the conditions could lead to further cow herd reductions, and reduced regional demand for feeder cattle for fattening up on pasture in spring and summer grazing programmes," the analyst added.

 

A rebound in cattle numbers would end, or at least interrupt, a decline in cattle numbers dating back to 1974, when US herd numbers peaked at 132 million head before beginning a fall which has cut their numbers by 30%.

 

Part of the decline since has been down to breeding improvements which have increased vastly milk yields in dairy cows, whose total nearly halved over the last 50 years.

 

Americans' lower beef consumption rates, per person, have also played a part, along with the efficiency savings, and higher returns, which can be made by switching to arable farming.

 

"Nonetheless, cattle feeders have been in a positive situation this year, with margins not seen since last May", the analyst said.

 

"Despite increasing grain and feed prices, margins in Match were well over US$100 per head."

 

However, she warned that beef values may begin to slip as the rise in cattle placed on feedlots in the winter feeds through into growing supplies of the meat.

 

Separate data showed wholesale beef values falling, after rising on Tuesday (Apr 12) for the first time in week.

 

Broker US Commodities said, "Boxed beef continues to struggle to hold recent strength", adding that it expected that live cattle futures have already set a seasonal high, and seeing rallies as selling opportunities.

 

Another analyst also said "The forecast for cold and wet weather in the northern and central parts of the country for this coming weekend and maybe next weekend does not bode well for a jump start to the higher-demand barbecue season for beef."

 

Nonetheless, live cattle for April stood US$0.004 higher at US$118.68 a pound in late deals in Chicago.

 

The first analyst added that a USDA cattle report on July 1 would provide an insight on prospects for a herd rebuild, revealing the numbers of heifers that farmers are keeping to breed from.