Drought Could Hit More Than 53% Of Beef Cow Herd

Drought this year could affect more than 53% of the total beef cow herd, or roughly 16 million cows, said Oklahoma State University Extension Livestock Market Specialist, Derrell Peel, in a letter to Extension agents called Cow-Calf Corner.

Significant drought could have more noticeable effects on cow markets, change the timing of feeder cattle placements and feedlot production, Peel said.  It could even have implications for the industry in coming years.

There is potential for the drought to push cattle inventories significantly lower than planned and set up a market reaction similar to 2014-2015 in the next couple of years, he said.




Drought has affected some regions since 2020, Peel said.  Widespread drought in 2022 could result in much more pronounced cow herd liquidation and relocation.

The Climate Prediction Center drought outlook suggested drought may persist in the West and Northern Plains, develop in the Southern Plains and perhaps expand even further into the Central Plains, Peel said.

There will be little flexibility in the worst drought-stricken regions, he said.  Dec. 1 hay stocks in Montana, Wyoming, North and South Dakota were down 40.2% year over year.

By April or May that predominantly spring-born calving region could be faced with significant additional cows or cow-calf pair liquidation on top of the 8.0% since 2020, Peel said.  This region represents 15.1% of the nation’s beef cow herd.

Colorado, New Mexico, Arizona and Utah suffered drought conditions since 2020 and has seen an 11.6% beef cow herd liquidation, he said.  Persistent drought could mean additional liquidation this year.  This region represents 5.3% of the total beef cow herd.

Drought expanded sharply in Texas and Oklahoma over the winter, a region that saw just 1.1% herd liquidation since 2020, Peel said.  However, much of this was general cyclical liquidation rather than drought induced.

Dec. 1 hay stocks in those two states were up 18.7% year over year, he said.  The Southern Plains could emerge from winter with a bit more flexibility, and, with more fall calving, might not face critical herd liquidation decisions as quickly as some other regions.  Nevertheless, cow culling could accelerate sharply by mid-summer.  These two states represent 21.9% of the total beef cow herd.

The Central Plains has been affected by drought the past two years with the beef cow herd down 3.3% since 2020, Peel said.  Dec. 1 hay stocks were up 4.9% year over year.

Should harsh Central Plains drought develop, additional significant cow herd liquidation could follow by summer, he said.  The area represents 10.8% of the beef cow herd.




The USDA reported formula and contract base prices for live FOB steers and heifers this week ranged from $140.55 to $143.00 per cwt, compared with last week’s range of $139.02 to $141.83.  FOB dressed steers and heifers went for $218.70 to $223.00 per cwt, versus $216.43 to $220.53.

The USDA choice cutout Thursday was down $0.03 per cwt at $269.59, while select was off $1.23 at $264.85.  The choice/select spread widened to $4.74 from $3.54 with 133 loads of fabricated product and 28 loads of trimmings and grinds sold into the spot market.

The USDA reported that basis bids for corn from feeders in the Southern Plains were unchanged at $1.20 to $1.30 a bushel over the Mar futures and for southwest Kansas were unchanged at $0.20 over Mar, which settled at $6.50 a bushel, up $0.03.

No contracts were tendered for delivery against Feb on Thursday.

The CME Feeder Cattle Index for the seven days ended Wednesday was $162.14 per cwt down $0.45.  This compares with Thursday’s Mar contract settlement of $166.20 per cwt, down $1.25.