Cattle ranchers are increasingly selling off their herds, including breeding stock, as widespread drought and heat waves challenge operations. The impacts of the summer conditions could have long-lasting effects on beef prices, which are already high.
In June, a heatwave in Kansas killed thousands of cattle, overwhelming producers, who disposed many of the carcasses in landfills, according to Reuters. Now, the Department of Agriculture is reporting U.S. cattle inventory has already declined 2% in the past year to levels not seen since around 2015.
“Right now, we’re seeing a greater cow slaughter, the cow slaughter has been elevated for greater than 14 to 16 months now,” said Chris Swift, commodities broker and founder of Swift Trading Company. “We see the drought having moved on in the Texas area, Oklahoma and Kansas and the extreme heats there. What it’s really doing is it’s moving a lot of the cows off of those areas there and bringing in a lot more heifers into the slaughter mix.”
Heifers are young female cows that could potentially contribute to breeding operations, but pasture conditions from drought and heat are causing ranchers to cull down herds, including heifers. In July, a USDA analyst said the agency is seeing a lot more female stock in feedlots.
“As we see that heifer number increase, we know that we’re slaughtering our breeding capacity for future production,” Swift said, noting it’ll take years to build back up herds, given the level of culling occurring this year and how long it takes to raise new crop.
“First, we have to get the pastures healed back up again, ability to cut hay so we can have forage throughout the winters,” he said. “Then let those cows grow up enough.”
The last major drought to impact herds to this level happened around 2012. Swift said herd expansion began around 2013 and it wasn’t until 2016 that the industry began to see the real impacts of greater herds.
With beef prices already around 12% higher than one year ago, cattle shortages are likely to keep prices high, if not surging. Swift said without a significant increase in beef production “anytime soon,” they don’t expect prices to go down this year.
Inflation is also putting pressure on cattle producers, who are paying more on input costs for diesel, fertilizer and feed. Coupled with drought conditions, Swift said the country is seeing some producers sell off entire herds, but most are culling to keep the herd together as much as possible. Cutting back too much would make it difficult to reestablish the herd in better times.
“I think all they’re doing is just culling down to levels that they can maintain until we see if it rains and right now, unfortunately, there’s not much rain into the forecast,” he said. “So in another month, if we haven’t seen any changes there, more likely you’ll see another increase in the cow slaughter.”
