California Cattlemen Likely To Continue Liquidating

Farmers in California’s Central Valley will go without reservoir water for the second straight year this year, likely forcing more cattle producers to liquidate more of their herds.

The January USDA Cattle Inventory Report showed an overall rise in US cattle numbers as of Jan. 1, but the California herd, at 5.150 million head, was 100,000 head, or 1.90%, fewer than the previous year’s 5.250 million.  The Jan. 1, 2014, total was itself down 50,000 head, or 0.94%, below the 2013’s 5.300 million.

Last week’s National Oceanic and Atmospheric Administration Drought Monitor shows all of California, Nevada and Utah encased in dryness patterns that run from “abnormally dry” to the most extreme “exceptional drought.”

Most of Arizona and New Mexico also are at least abnormally dry, according to the Drought Monitor.  There are a few locations in these states that are rated normal, but normal for these locations is desert.

California farmers and ranchers have been under siege from extreme of exceptional drought for the last several years, causing many farmers to switch their focus of production into something more drought tolerant.

Cattle producers also have taken steps to cope, either by weaning early and selling the calves or even by cutting down on the number of cows.  A large percentage of these calves have gone to pasture and feedlots in other states.




Better rain in other states is improving pasture and grassland conditions enough that cow/calf producers are expanding their herds, even taking on some of California’s calves.

However, it’s touch-and-go for producers in parts of the Plains states.  The Drought Monitor shows parts of Oklahoma and Texas are dealing with their own exceptional drought conditions, which may limit their desire to pasture calves.

That dryness also may limit local feed production for the feedlots to augment imports from the Midwest.




Cash cattle markets Tuesday were quiet with no bids from packer buyers reported.  Asking prices from feedlots held around $162 per cwt on a live basis and $260 in Nebraska’s dressed market.

Cattle traded last week in a range from $157 to $159 live, down $1 from the previous week, and at $250 to $254 on a dressed basis, down $4 for the week.

Feedlot showlists this week were steady to slightly lower overall, with more in Texas and fewer in Nebraska.  Price negotiations could be tough with feedlots and packers losing money on every head currently.

Boxed beef prices Tuesday were mixed, with the USDA’s choice cutout up $0.94 per cwt at $249.61 and select down $0.17 at $245.28.  The choice/select spread widened to $4.33 from $3.22 on Monday.

Volume, however, was light with only 58 loads of fabricated product being sold into the spot market.

The CME Feeder Cattle Index for the seven days ended Monday was up $0.14 per cwt to $206.38, compared with the Mar futures contract, which settled Tuesday down $1.37 per cwt at $202.72.