The latest Drought Monitor roughly 70% of the U.S. is in some level of drought and that area encompasses much of cattle country. However, producers and market analysts say this drought is much different than in the recent past. So, while the impact on the cattle market is already being felt, it could intensify in the next few months.
The cumulative effect of the drought over the last few years is finally coming to a head especially for cattle producers and it’s intensified the last few weeks with the extreme heat and dryness. Producers are running out of forage supplies and hay stocks are down 7-percent nationally and facing record high prices. And that’s much different than the drought a decade ago.
Oklahoma State University Extension Livestock Marketing Specialist Darrell Peel, says, “There’s just no place anywhere in the country that’s got any excess hay supplies. And so I think that’s gonna limit what we can do in terms of sourcing hay. Its gonna limit what we can do in terms of relocating some cows compared to the last drought.”
As a result, Peel says female liquidation recently picked up pushing down cull cow prices. Year to date beef cow slaughter is up 14%, while inventory is down 2.4% and well off its high. “And from that 2018 peak we are down about 6.3% on beef cows at this point in time.”
And unfortunately Peel says there’s no relief in sight in the latest 90-day outlook. “We’ll probably lose another million beef cows this year or potentially over a little bit more than that,” he says.
He says heifer slaughter is also up 4% and inventory is down about 3.5% as more are being placed in feedlots verses kept for breeding. Which is key as it indicates the lack of herd rebuilding.
Peel adds that feeder supplies are down 2.7% from 2021. So, he thinks the market hole is coming sometime in the fourth quarter. And all these factors could potentially set up another cattle market similar to the 2013-2016 period.
