From CattleFax.
A severe dry pattern has settled into the Southern Plains of the U.S over the past several months. The current drought encompasses most of Arizona, New Mexico, Texas, Oklahoma and Kansas, home to a significant portion of the U.S. cow herd. Due to the current conditions, beef cow slaughter in the Southern Plains is up over 11 percent compared to a year ago and well above both the three and five-year average.
Total cow slaughter is up only 1 percent year-to-date and total beef cow slaughter is actually down about 4.5 percent compared to last year, as regions of the U.S. excluding the South Plains are harvesting fewer beef cows. Dairy cow slaughter is up about 8 percent which has offset the decline in beef cows. Cow slaughter is still expected to be down for 2011 in total, but the current drought conditions make a significant decline unlikely.
Bottom Line:
Producers have been sent a clear price signal to maintain or grow cow numbers over the past year. Calf prices will likely set new records in spite of record high corn prices. However, Mother Nature isn’t cooperating in much of the South and Southeast. It will take a significant improvement in moisture in order to keep from having a smaller beef cow herd yet again in 2012. The fact that it remains difficult to grow supply should support high calf prices for the foreseeable future.