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The expanding extreme drought in the Southern Plains is causing a significant acceleration of cattle liquidation in the region. In Oklahoma, for instance, the combined total for federally reported auctions the past several weeks has shown a 56% increase in feeder cattle sales and a 205% increase in cow and bull sales.
July 29, 2011
The expanding extreme drought in the Southern Plains is causing a significant acceleration of cattle liquidation in the region. In Oklahoma, for instance, the combined total for federally reported auctions the past several weeks has shown a 56% increase in feeder cattle sales and a 205% increase in cow and bull sales compared with the same period one year ago, says Derrell S. Peel, Oklahoma State University (OSU) Extension livestock marketing specialist. The auction totals include significant numbers of double-stocked summer stockers from the Osage country that are typically marketed this time of year.
However, there are large numbers of cows and lightweight feeder cattle that aren’t typically marketed this time of year.
Most likely we are seeing a second wave of cow liquidation made up of cows with spring-born calves that are just now big enough to early wean and sell. We’re receiving many anecdotal stories from auctions, both large and small, of excessive numbers of feeder cattle and cows being marketed. Livestock haulers are booked and it is difficult to arrange shipping at this time.
Prices for slaughter cows, bred cows and cow-calf pairs have dropped sharply in the past several weeks. This is likely a temporary situation due, in part, to the bottleneck of selling and shipping so many animals in a short period of time. Producers are selling because they have no other alternatives; however, those able to postpone sales for a couple of weeks may find the logistics as well as the price better. It is hard to say how long the current bulge in cow liquidation will last but most likely it will be a matter of no more than another 2-4 weeks.
Unfortunately, many of the cows are going to slaughter, contributing to additional cow herd liquidation. Beef cow slaughter in Federal slaughter Region 6, which overlays the drought area, is 16% higher for the year to date compared to last year. In the most recent two weeks of data, beef cow slaughter in Region 6 is up 35% compared with the same period last year.
Total year-to-date U.S. beef cow slaughter is down 2.7% but the gap is closing due to large slaughter totals in the drought area. For most weeks of the year, the national total beef cow slaughter has been down compared with last year. However, in the last four weeks of slaughter data, the week-to-week totals for beef cow slaughter have exceeded year ago levels.
The drought is not only devastating producers in the drought region, but impacting the beef cattle industry nationwide and will have impacts for several years. By pushing beef-cow slaughter close to last year’s record levels, the drought ensures additional herd liquidation that deepens the hole from which the industry must start to rebuild. The July Cattle Inventory report confirmed that the July 1 beef cow herd was down 1% from last year but this survey value likely doesn’t reflect the accelerated liquidation that has occurred so far in the month of July.
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