Beef Buzz News
Broadening and Deepening 2012 Drought is Taking its Toll on Cattle Markets
Tue, 17 Jul 2012 16:11:06 CDT
Jim Robb of the LMIC talks about the 2012 drought.
The drought of 2011 had a lot of impact on the cattle industry in Oklahoma, New Mexico and Texas. The 2012 drought is broader and is having its impact on the cattle industry as well says Jim Robb, executive director of the Livestock Market Information Center in Denver, Colorado.
“This is a drought that is very broad-based and it’s really obviously impacting the corn market and pasture and range conditions to a much broader scope than what happened in last year’s drought.
“So, it’s a more difficult drought impact to figure out than a year ago, but is certainly especially pressuring calf prices. We actually raised our fed cattle prices forecast slightly, but still that industry suffers deep in the red ink.”
The deepening drought threatening the corn crop in the Midwest has sent feed prices skyrocketing and that is pressuring segments of the cattle market, Robb says.
“I think especially on the calf and yearling side the corn crop worries are the dominant factor, and then combining in with pasture and range. It’s kind of the worst-case scenario. You have a declining corn crop and no ability to hold the animals on pasture to try to get through the situation. So, those two clash together and kind of combine the negatives.
“I think on the fed-cattle side the corn crop really hasn’t been a big impact in terms of prices, but we’re certainly seeing consumer demand… very hot weather, et cetera, mid month seem to have dampened consumer interest in beef and other meat products. The summer heat, I think, has had some impact then from that demand-side perspective and that was the large driver behind the softening wholesale beef market this last week.”
As the heat increases and the summer wears on in the Southern Plains, more and more cattle are being pulled off pastures. More young animals are being liquidated. This is happening less so across Oklahoma this year, but is being seen in Missouri.
“Normally when we have a drought we’re really not able to quite get to other feed stuffs yet and so we have lots of animals being early weaned. We have cow-calf pairs going to market. And we have lots of the summer stocker animals being forced into-especially the last several weeks-feed yards. A lot of cattle, especially lightweight calves, that were bought last fall or early this year that people planned to ‘cheapen up’ on forage-based gains, that plan has really not worked out, unfortunately, due to Mother Nature.”
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