Higher Prices, Plentiful Feed Buoy U.S. Ranchers

12:34AM Nov 27, 2014
BT Rotator Feeding Hay 3
( )

Hay is plentiful and readily for sale again out in cattle country as another winter looms. Herds are contently munching on crop residue left over after the bountiful fall harvest, and ranchers marketing their calves are bringing home record prices for their animals.

Life is good again — or at least far better — for those cattle producers who survived the long, devastating drought that decimated the nation's beef cow herd and shriveled pastures across a wide swath of the country. The summer rains have eased the dry conditions and helped rangeland recover some, even if it's not yet entirely healed.

For 15 of the past 17 years, the size of the nation's cattle herd has shrunk, said Kevin Good, a market analyst for CattleFax, a group that tracks the industry. Producers are now beginning to rebuild it, he said Tuesday. That is further tightening beef supplies as more ranchers hold on replacement calves to rebuild their herds, rather than fatten them for slaughter.

Calf prices are running 40 percent higher this year— the result of a "perfect storm" of years of herd liquidation combined with tight supplies not only for beef, but also for pork and poultry, he said.

Prices for fed cattle are up 23 percent. Retail beef prices for consumers are up 14 percent.

And while consumers are seeing the effects with higher prices at their grocery store's meat counter, ranchers aren't "gouging" them and consumers need to understand that it has been "a long haul" for the cattle producer, Good said.

"He has paid his due," Good said. "It is time to make some money so he can expand."

Near Brewster in northwest Kansas, rancher Mike Schultz said the drought and feed shortage forced him to cut the size of his cow herd in half, now down to 75 cows. However, he has no immediate plans to expand.

Last winter, Schultz ran out of feed by February and sold off his the 125 replacement heifers. At the time, "things didn't look very good" — alfalfa hay was fetching $200 a ton where available, and the drought showed no signs of letting up. He said he figured at the time that he was just "dumping money" into livestock that would never pay off.

"I wish I had them back," Schultz said Tuesday.

The National Agricultural Statistics Service reported this week that 35 percent of the pastures and ranges in Kansas were in good to excellent condition, with 42 percent rated as fair. Stock water supplies are adequate to surplus in 72 percent of the state.

Schultz readily acknowledges that his attitude is much better now as another winter nears. He has some good feed supplies stocked up for his animals. The wheat harvest was good as was the bountiful harvest of fall crops. Forages for livestock have been good.

Even the price of hay to feed his livestock this winter has moderated some, with alfalfa hay selling for around $130 a ton in his area. That is still a little high, he said, but with the high prices cattle are bringing, most folks don't mind paying it.

"Everybody can share in the wealth, and that helps," Schultz said.