I love Texas and Texans. I love their love of football, independence, pride, their manners, barbecue and a whole host of things that make Texas especially unique. And, of course, when you talk about horses and cattle, the conversation has to begin with Texas.
So, while Oklahoma, Arizona, New Mexico and southern Colorado are also undergoing drought these days, the discussion still seems to center on Texas. The other states just don’t have the cow numbers that Texas boasts.
According to the experts, this drought is as bad as any in the last 50 years, and the weather pattern isn’t expected to change in the short term. Producers have been holding on, hauling hay and hoping for deliverance. Yet, feeding expensive hay in July doesn’t pencil, even with good cattle prices.
The cows are starting to come to town. Cow slaughter in those areas hit by drought was already up 15%, but now the pairs are starting to move out of the country. We all hope and pray those folks get some rain soon, but management decisions have to be made right now.
The good news is that above-average moisture in Nebraska and the Northern Plains should help bolster demand as liquidation picks up in the drought areas. Even though we’re seeing new records in the feeder market, bred-cow prices have dropped significantly in the drought areas.
Typically, in times of severe drought, it makes sense to sell the cows and go on vacation until the drought ends, as the vacation usually costs a whole lot less than feeding all those cows. Yet, this situation is especially challenging – as bred and pair prices fall, producers are trying to ascertain how much they will have to spend to get back in when the drought breaks. Given the tightness of numbers, they may be looking at buying back cows at prices that could be two or even three times higher than today.
Nothing is tougher than drought management because options are usually limited and dictated to us. And the drought in the Southern Plains will almost assuredly mean that supplies will grow even tighter.