By Doug Schmitz
SPRING HILL, Tenn. – According to recently-released USDA cattle reports, while the drought has impacted U.S. cattle markets, the reactions from both farmers and analysts have been mixed.
“The main thing to be said about how drought is influencing cattle markets is related to increased heifer slaughter and beef cow slaughter,” said Andrew P. Griffith, University of Tennessee assistant professor of agricultural economics.
“Heifer slaughter through October was 5 percent higher (385,000 head) than the same time period in 2021,” he added, “while beef cow slaughter year-to-date is 13 percent higher (356,000 head) than 2021.”
Dennis Todey, an agricultural meteorologist and director of the USDA Midwest Climate Hub in Ames, Iowa, said the drought has been affecting cattle differently in different locations.
“In the Plains, there have continued to be sell-offs as the drought has continued,” he said. “With the poor rangeland conditions and feed becoming harder to find, more expensive to purchase and to move, there have been sell-offs from the spring on. That has also happened in Missouri where you also have a decent amount of pasture-fed beef. Missouri has been hit pretty badly by drought also.
“The problems in the Plains are going to be slow recovering,” he said. “We need rains well into the spring (snow would help, too) to help grasslands recover from the multi-year drought. I would not expect livestock numbers to rebound quickly.”
He said water is also a concern for the Plains and parts of Missouri for livestock where people use surface water sources. He said the drought had huge impacts on hay production in Tennessee.
“There will be several cattle producers who do not have enough hay to get animals through the winter,” he said. “Thus, there will be more animals culled in the near term as we approach winter.
“Overall, the stocker calf market is strengthening due to recent rain events and a short supply of cattle, but they could be much higher had wheat grazing country received adequate moisture,” he said. “The typical lull/decline in the slaughter cow market is taking hold, but that is simply due to normal fall culling.”
In the Midwest, he said, “We are starting to hear reports of isolated problems in Iowa where water sources are starting to become limited for livestock. However, he said, “Cattle here are less grass-fed, so other feed sources are available.”
Chris Muegge, of M5 Family Farms in Carthage, Ind., raises about 170 cattle, and plants row crops. He said the western drought is impacting local cattle markets and potential opportunities in the future.
“The western drought reaches far beyond the Mississippi,” said Muegge, who’s also the Hancock County Farm Bureau president. “Here locally in central Indiana, we are seeing forage supplies tighten with more being shipped West. We are also seeing increasing prices in the commodity markets.
“While there are several factors tightening commodity supply, one significant component is western feed mills pulling products like soybean hulls, wheat middlings, and protein meals from further and further East to help feed cow herds with low-hay inventories,” he added.
Tasha Bunting and her husband Jason have been raising cattle and farming together in Livingston County, Ill., since about 2004. They’re currently running about 40 cow/calf pairs of mostly registered Shorthorns with a few commercial cows, and feeding out their own calves to sell directly to consumers. She said they also raise corn, soybeans, hay, and some wheat on about 480 acres.
“Thankfully, we are not in an area with extreme drought,” said Tasha, who is also Illinois Farm Bureau associate director of commodity and livestock programs. “We were a little drier than usual this summer, which kept us from getting the yield off our hay fields. But for our own production, we have reserves for our herd to get us to next spring and summer.
“We are also fortunate that although hay wasn’t a bumper crop, our corn yields have been average to slightly above,” she added. “Our biggest issue from lack of moisture was the need to haul water to our herd. Unfortunately, some wells were not able to keep up and that required us to truck in water to fill pasture tanks.”
Stan Smith runs about 30 SimAngus brood cows and sells some seedstock, then finishes the rest of the calves at home in Fairfield County, southeast of Columbus, Ohio. He also grows about 700 acres of corn and soybeans.
“Frankly, from a cattle production standpoint, drought has not affected us. In fact, quite the opposite,” said Smith, who has also been at Ohio State University Extension since 1968, currently working as program assistant for agriculture and natural resources in Fairfield County.
“We were extremely wet this spring, causing much of the first-cutting hay to be made very late, and many of the crops to be planted past optimum time,” he added. “It was mid-July before we finally dried out, and we’ve now been very dry for the past two months. We have very adequate volumes of feed, but the quality of much of the first-cutting hay is marginal, at best.”
Smith continued, “the impact of the drought out West has actually been a benefit to our markets. Cull values, feeder and fed cattle prices are all very strong. Considering the abundance of corn we produce in Ohio, we may see more of our feeder calves stay in-state this year, and be fed out here in Ohio.”
Brandon Fullenkamp, of Creeksbend Farm in Hillsboro, Ohio, said the drought in the West has caused cows to flood the market, affecting the packer bid on fat cattle.
“On a positive note, it has created opportunities for us to be more competitive with the western feed yards as they have over $1 bushel positive baise for corn in the West versus the East,” he said. “That has made us more competitive feeding cattle.”
Griffith said, “The drought has likely kept cattle prices a little lower than would have been expected had cattle producers been able to hang on to cows and heifers to begin growing the cattle herd.
“Though the drought has resulted in increased slaughter in the near term and thus kept cattle prices from escalating to anticipated levels, it also means cattle prices can be expected to push higher in the coming months and years than what might have been expected if the drought did not occur,” he said.
With the number of cows being culled and heifers placed in feedlots, Muegge said he would have expected to see lower cattle prices due to the increased supply in the short-term.
“However, for all the bad news, this does lead to some possible opportunities in the future,” he said.” A shrinking national cow herd should lead to increased cattle prices in the next few years, barring another COVID-19-like event.
“While we are yet to see replacement female prices come down in our area, that time should come, and allow producers in the Ohio River Valley with extra pasture to purchase females from western dispersal sales to increase local inventories,” he added. “This reignites the conversation to move more cattle feeding operations east, closer to feed resources.
“On our farm, we are looking at ways to increase cow numbers, taking advantage of grazing stalks and cover crops, and the potential to turn some marginal crop ground back into pasture,” he said.
Griffith said cattle supply will be the big story moving through 2023 and 2024.
“If we have more drought issues during those two years, then it could further exacerbate the discussion,” he added.