Agricultural News
Cattle Liquidation Increasing from Drought Conditions
Mon, 25 Jul 2011 10:02:46 CDT
The expanding extreme drought in the Southern Plains is causing a significant acceleration of cattle liquidation in the region, according to OSU Extension Livestock Market Economist, Dr. Derrell Peel. In Oklahoma, the combined total for federally reported auctions the past two weeks has shown a 56 percent increase in feeder cattle sales and a 205 percent increase in cow and bull sales compared to the same period one year ago. The auction totals include significant numbers of double-stocked summer stockers from the Osage country that are typically marketed this time of year.
However, there are large numbers of cows and lightweight feeder cattle that are not typically marketed this time of year. Most likely we are seeing a second wave of cow liquidation made up of cows with spring born calves that are just now big enough to early wean and sell. We are receiving many anecdotal stories from auctions, both large and small of excessive numbers of feeder cattle and cows being marketed. Livestock haulers are booked and it is difficult to arrange shipping at this time.
Prices for slaughter cows, bred cows and cow-calf pairs have dropped sharply in the past two weeks. This is likely a temporary situation due, in part, to the bottlenecks of selling and shipping so many animals in a short period of time. Producers are selling because they have no other alternatives but those with the ability to postpone sales for a couple of weeks may find the logistics as well as the price better. It is hard to say how long the current bulge in cow liquidation will last but most likely it will be a matter of no more than another 2-4 weeks.
Unfortunately, many of the cows are going to slaughter, contributing to additional cow herd liquidation. Beef cow slaughter in Federal slaughter Region 6, which overlays the drought area, is 16 percent higher for the year to date compared to last year. In the most recent two weeks of data, beef cow slaughter in Region 6 is up 35 percent compared to the same period last year. Total U.S. beef cow slaughter for the year to date is down 2.7 percent but the gap is closing due to large slaughter totals in the drought area. For most weeks of the year, the national total beef cow slaughter has been down compared to last year. However, in the last four weeks of slaughter data, the week to week totals for beef cow slaughter have exceeded year ago levels.
The drought is not only having devastating impacts for producers in the drought region, but is also impacting the beef cattle industry nationwide and will have impacts for several years. By pushing beef cow slaughter close to last year's record levels, the drought insures additional herd liquidation that deepens the hole from which the industry must start to rebuild. The July Cattle report confirmed that the July 1 beef cow herd was down 1 percent from last year but this survey value likely does not reflect the accelerated liquidation that has occurred so far in the month of July.
Our thanks to Dr. Peel for this latest analysis of the beef cattle marketplace- it's a part of the weekly Cow Calf Corner electronic newsletter that Dr. Peel and Dr. Glenn Selk of OSU produce on most Mondays.
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