Drought Is Aiding Beef Industry

US - Good times in the cattle industry are likely to continue for at least one more year and maybe two.
calendar icon 26 July 2007
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That's the way American Farm Bureau market analyst Jim Sartwelle sees the future as indicated by the this week's U.S. Department of Agriculture cattle inventory report.

And it's good news for Kansas, where beef is a $6 billion-a-year industry.

"In a single word, the reason prices are remaining high is drought," Sartwelle said. "We had several years of drought in the High Plains and now the Southeast is getting hit."

Drought translates to a selloff of cows and a trend of sending heifers to the feedlots instead of retaining them for breeding. That results in short supplies of beef and higher prices.

Sartwelle said he sees the fact that the number of heifers in the feedlots is up 11 percent over last year as a sign that the tight supplies will continue for at least another year and a half.

"All the price signals are there for cattlemen to start rebuilding herds," he said. "But when the pasture is dry and hay is expensive and in short supply, you can't do that."

It takes almost three years from the time a rancher makes a decision to breed a heifer until the resulting calf is ready for market, so even if a rebuilding begins, it will take a long time to see a change in beef supply.

Source: The Wichita Eagle
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