December 23, 2011


Texas' herd shrinks to push up beef prices


The largest single-year decline in Texas' cow herd due to long-running drought is likely to drive up beef prices, experts said.


Since January, the number of cows in Texas is expected to have decreased by about 600,000, a 12% drop from about five million cows. That's according to David Anderson, a livestock economist in College Station who monitors beef markets for the Texas AgriLife Extension Service.


The trend is likely the largest drop in the number of cows any state has ever seen, Anderson said. Texas only had a larger percentage decline during the Great Depression.


"Every cow they sold this year isn't going to be around to have a calf next year," he said. "It means a smaller industry next year and probably the year after."


Anderson said many cows were temporarily moved to greener pastures out of state, but many others were sold and slaughtered. He said that in Texas, Oklahoma, New Mexico, Louisiana and Arkansas, 20% more cows were slaughtered than last year, about 200,000.


That extra supply could help meet increased beef demand from China and other countries, but will mean fewer calves in the near future, driving up beef prices domestically over time, he said.


Anderson said beef production nationally is expected to decline 4% next year.


The USDA estimates beef prices will increase up to 5.5% next year, partly due to the decreased cattle supply. That follows a 9% increase in beef prices in this year.


Texas ranchers say they were forced to sell cattle, slaughter them or send them to leased land this year as the drought withered pastures and drove up the price of hay and feed.


The epic Texas drought has caused an estimated US$5.2 billion in losses to farmers and livestock producers, experts say, and the figure is expected to rise this winter.


Earlier this year, Dennis Braden, general manager at Swenson Land & Cattle Co. Inc. in the West Texas town of Stamford, sent most of their herd north to leased land in Nebraska and Wyoming.


"Normally in a drought what you would do – [in] the situation we've been in – you would sell your cows and sit on the sideline," Braden said Friday. "The reason we're out the expense of moving cattle to Nebraska is, pre-drought, the cattle inventory numbers were already at 1971 levels."


Braden is optimistic that the drought will end, and when it does, those still holding onto cattle will be sitting pretty, he said.


"When people start looking for cows to put on these ranches, that's just going to create a bigger demand," Braden said. "There's no telling what these cows and calves are going to be worth once Texas greens back up."


Nationally, the number of cows has dropped by an estimated 617,000 this year, a 2% decline from the 30.9 million animals last year.

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