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Cattle Industry Hurting in Drought

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USDA’s mid-year cattle inventory report indicated beef cow numbers had dropped by an additional three-percent over the past year – down eight-percent since 2006. The 2012 calf crop is expected to decrease by two-percent – and Purdue University Extension Economist Chris Hurt says this year’s drought could mean more decreases in cow numbers for the next year. Hurt says the impacts of the drought are just starting to show up in some of the national data – and the final magnitude of those impacts is unknown. Since feed prices started rising in mid-June – Hurt says corn prices have increased nearly 60-percent and soybean meal prices by 25-percent. Forage conditions also have been horrible in the Midwest – according to Hurt – who says there have been many reports of producers forced to feed hay intended for this winter’s forage supply. If a late-summer rain doesn’t restore some pastures – he says a deeper cow liquidation can be expected.

Hurt says calf and feeder cattle prices have sharply declined. Oklahoma steer calf prices are down 35-dollars per hundredweight since mid-June – which is a decrease of nearly 200-dollars per head on a 550-pound calf. These reduced values – along with feed uncertainty – will most likely mean more declines in cow numbers this fall and winter – according to Hurt. The message for cow-calf producers – he says – is to hold on to the cows if possible because short-term losses this next year will be replaced by large profits in late 2013, 2014 and 2015. For family feedlot managers – Hurt says risk management. 

Source:  NAFB News Service