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Cattle Herds Shrink as Plains Storms Fail to End Drought

March 12, 2013
Drought cattle
  

March 11 (Bloomberg) -- Keith Kisling normally has 1,500 head of cattle on his land near the Oklahoma-Kansas border. Last year’s U.S. drought changed all that. For the first time in four decades as a farmer and rancher, he has none.

"We didn’t have wheat pasture this year," leaving no cheap forage for the young animals to eat before they are sold to feedlots, Kisling, 65, said by telephone from Burlington, Oklahoma. "The ponds and creeks are dry."

Even after storms dumped 22 inches (56 centimeters) of snow over four days in February, water shortages and dirt-dry pastures across the Great Plains are shrinking herds. Cattle grazing in Kansas, Oklahoma and Texas on Jan. 1 fell 16 percent from a year earlier to 1.34 million head, the fewest since the government began collecting the data in 2002. Retail-beef prices jumped to a record in January, the same month a shortage of cattle forced Cargill Inc. to shut a Texas processing plant.

"The water problem has been catastrophic" for ranchers who can’t be profitable without pastures or dormant wheat crops for cheap feed, said Lane Broadbent, a vice president at KIS Futures Inc. in Oklahoma City, who has been a commodity broker for more than two decades and co-owns a 400-acre wheat farm. "When you have such dry weather, you get no grass."

Cattle in the U.S. are raised from birth on pastures for about a year, when they weigh 500 pounds (227 kilograms) to 800 pounds, and then are sold to feedlots. There, the animals consume mostly corn until they are 1,200 pounds to 1,350 pounds and are sold to slaughtering plants.

Feed Costs

Last year’s drought, the worst since the 1930s, cut corn production by 13 percent and sent prices surging to a record in August. Higher feed costs discouraged herd expansion, with calf births dropping last year to 34.3 million head, the lowest since 1949, government data show. The feedlot herd on Feb. 1 totaled 11.073 million, down 6.2 percent from a year earlier. Cattle futures reached $1.35175 a pound in Chicago on Jan. 11, the highest ever for a most-active contract.

In Kansas, the largest U.S. cattle producer behind Texas and Nebraska, 15 percent of rivers and streams were at record- low levels on average in December, the most since June 2006, U.S. Geological Survey data show. By February, the rate of record lows was 13 percent.

About 82 percent of pastures in the state were rated poor or very poor as of March 3, compared with 52 percent a year earlier, the worst conditions since the U.S. Department of Agriculture began keeping the record in 2002. In Oklahoma, 77 percent had the worst ratings, up from 68 percent in 2012.

Drought

Every county in the two states was in some phase of a drought as of March 5, according to the U.S. Drought Monitor. Western Kansas and the Oklahoma panhandle had an "exceptional drought" rating, reflecting long-term crop losses and low-water emergencies. About 26 percent of the High Plains was in that category, compared almost none a year earlier.

The snowfall in the southern Great Plains improved prospects for winter-wheat crops that ranchers use as forage when the plants are dormant. About 24 percent of the wheat in Kansas, the biggest U.S. grower of winter varieties, was rated good or excellent as of March 3, up from 23 percent a week earlier, according to the USDA. In Oklahoma, 16 percent received top ratings, compared with 9 percent a week earlier.

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