Fed cattle prices at ‘unprecedented’ highs as drought continues

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COLLEGE STATION – Fueled by declining beef production due to the drought and booming exports, fed-cattle prices soared to “unprecedented” levels, according to a Texas AgriLife Extension Service expert.

Fed cattle prices were $127 per hundredweight last week, said Dr. David Anderson, AgriLife Extension livestock economist. In comparison, they were $113 per hundredweight two months ago.

“Fed-cattle prices” typically refers to the price of live cattle coming out of feedlots after being fattened on rations consisting largely of grain.

Last year at this time, the price per hundredweight was about $98, with an average of about $95 for 2010, Anderson said.

“The seasonal price pattern usually peaks in the springtime, but with another peak late in the year, and that’s exactly the kind of seasonal pattern we’ve seen this year,” Anderson said. “Prices were more than $120 for fed cattle in April, and now were back up over $120 again, after hitting a summertime low of about $104.”

Though the seasonal ups-and-downs are to be expected, the prices are being driven to unprecedented levels by several factors, he said.

First, though the Texas corn crop was largely a failure due to the drought, the harvest was good in the corn belt, which cheapened feed, Anderson said. Another factor is increased demands in overseas markets.

But the big factor is the drought, and the effect it had as livestock producers were forced to aggressively cull herds, send calves to market early or, in many cases, liquidate entire herds because of lack of grazing, hay or water – or a combination of all three, he said.

“Earlier in the year, as we really pushed large numbers of cattle through as the drought got worse and worse, we forced a lot of calves to market early, and we did see price declines across the board,” Anderson said.

This means the calves that would have been normally held and sold in Texas and Oklahoma this fall are already long gone because they were moved out earlier in the summer, which makes supplies weak and drives prices up, he said.

“If you had to sell a few months ago, that’s not much consolation, but I think it is a positive thing overall,” Anderson said.

More information on the current Texas drought and wildfire alerts can be found on the AgriLife Extension Agricultural Drought Task Force website at http://agrilife.tamu.edu/drought/ .

AgriLife Extension district reporters compiled the following summaries:

Central: The region did not receive rain, and more producers were taking cattle to auction due to a shortage of water and forages. Winter wheat pastures were in dire need of rain, and the outlook was grim, with a shortened growing season due to early frost and dry conditions.

Coastal Bend: Dry, windy and warmer-than-normal temperatures prevailed throughout the region. Some areas reported traces of rain, but nothing significant. Pastures were in poor condition, and ranchers were forced to cull herds down more and to continue to supplement remaining cattle.

East: Parts of the region received up to 2 inches of rain while others only got sprinkles. Winter forages began to emerge where there was rain, but much more was needed to keep grasses growing. Producers continued to buy hay from out of the region. Armyworms were reported. Feral hog activity increased.

Far West: The region did not receive rain, and conditions were extremely dry, raising the risk of wildfires. Burn bans remained in effect. Temperatures were average but then dropped as a cold front came through. Trees and greasewood were succumbing to the dry conditions. Rangeland conditions were causing ranchers to reevaluate stocking rates and nutritional requirements of cattle. Downsizing herds, shipping out early to feedlots and sell-outs were common. Growers reported pecan nuts were smaller than average but that yields were adequate. However, some trees had already started dropping nuts and this may affect the yield estimates. Winter wheat was struggling. Alfalfa and fall-planted onions were going dormant, and cotton was being defoliated and harvested.

North: Much of the region received from 0.2 inch to 1.5 inches of rain. Parts of Van Zandt County received as much as 3 inches. Soil-moisture levels were still very short, and stock ponds were extremely low. Small grains emerged where there was enough soil moisture. Winter wheat was in fair condition. Producers continued to plant winter pastures in hopes of getting enough rain to make a crop. Most cattle were in fair condition, but many producers continued to cull or sell out. Feral hogs remained a major problem in some areas.

Panhandle: Temperatures were near average during most of the reporting period but then rose to slightly above average, a change accompanied by high winds. Some parts of the region reported receiving moisture, but soil-moisture levels continued to be short to very short, with most counties reporting very short. The corn harvest was nearly completed, while the cotton harvest was ongoing. Wheat growers continued planting. Rangeland and pastures were in fair to very poor condition, with most counties reporting very poor. Livestock producers continued supplemental feeding of cattle.

Rolling Plains: The region received from 1 inch to 4 inches of rain, which temporarily stopped wheat planting. Earlier-planted wheat was already producing good forage while later wheat was catching up with the rain and warm temperatures. The cotton harvest was under way. Some producers continued to sell off herds, but most were weaning and selling calves at an earlier age than usual. Some producers cut herds down to the bare minimum and were trying to hold on as feed prices continued to rise. Hay and supplemental feeds were being fed regularly. Generally, more rain was needed for rangeland to recover and to replenish stock tanks. Some counties, however, reported that earlier rains had filled streams and stock tanks.

South: Cool nighttime and mild daytime temperatures continued, but there was no rain reported. Soil-moisture levels were short to very short in the eastern and western parts of the region, and very short in the northern and eastern counties. Perennial grasses were maturing and going dormant. Rangeland and pastures were in fair to poor condition, which caused great concern to livestock producers as winter approached. Producers continued to increase supplemental feeding of cattle, even as the cost of hay and feed rose further. Cattle body-condition scores remained fair on most ranches as a result of supplemental feeding, but many ranchers were still culling extensively. In Atascosa and Frio counties, the peanut harvest was ongoing, earlier-planted oats and wheat stands were thin and with lots of skips, and new wheat and oat plantings slowed down. In Zavala County, the cabbage harvest began in some early-planted fields, the fresh-market baby-leaf spinach harvest was active, and irrigators were very actively applying water. In Cameron County, corn was in its tasseling stage, row crops and vegetable fields were under irrigation, and the sugarcane harvesting began in some parts of the county. Producers in that area were also busy working on spring-crop planting preparations. In Starr County, fall row crops were progressing well, and producers began preparing to harvest corn.

South Plains: Generally, the region had windy and extremely dry weather. However there was from a trace to 0.5 inch of rain reported in some areas, mostly in the southeastern counties. Temperatures were cooler, with highs most days in the 60s and lows in the 30s and 40s. Most counties had a hard freeze. Most cotton and sorghum fields were nearly or completely harvested. Irrigated cotton yields were lower than expected. Some producers were still planting winter wheat. Pasture and range were still in poor condition. Most cattle were still being supplemented while others were being culled.

Southeast: Cold fronts moved through the area and brought some isolated showers to some areas, with amounts varying from a trace to as much as 1.25 inches. Parts of Liberty County got 4.5 inches. Other areas did not receive any rain at all. Those who seeded winter pastures earlier benefited from the rain. Soil temperatures dropped, and the chance of warm-season grasses responding to the rains was slight. The ratoon rice crop harvest began, with about 25 percent of the crop harvested. The soybean yields were reported being fairly good in some areas despite the lack of rain during the growing season. Pastures were still suffering, and livestock producers continued to reduce herds and provide supplemental feed. Producers were baling ratoon rice stubble for hay.

Southwest: Temperatures were mild with windy weather. Extreme drought conditions persisted.

West Central: Daytime temperatures were mild, and most nights cold. Some areas had their first freeze warnings. A few counties reported scattered showers. Field activity was ongoing, and wheat planting was expected to be completed in a few weeks, with all used for grazing. Rangeland and pastures continued to decline. Hay was in very short supply and extremely expensive. Livestock producers had to further increase supplemental feeding of livestock as grazing became even scarcer. Fly problems decreased with the cooler weather. The pecan harvest was under way.

 


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