More than 80% of US cattle herd affected by drought

More than 80% of the US cattle herd was located in areas experiencing abnormally dry conditions or drought by the end of summer. The moisture deficit is increasing pressure on livestock producers, mainly through higher feed costs and deteriorating pasture conditions.

Hay prices in the Central and Northern Plains have risen by around $150–200/t, increasing cattle production costs. High feed expenses are also discouraging farmers from rebuilding herds and retaining more replacement heifers.

The market is also being affected by limited supplies of cattle for feeding and slaughter. Processing capacity has improved somewhat, but daily slaughter remains around 7.8 thsd head below year-ago levels.

Additional supplies could come from renewed cattle imports from Mexico through the Santa Teresa border crossing, which has an estimated capacity of 7.5–8 thsd head per week. Beef imports are also expected to increase following an easing of tariff restrictions.

Against the backdrop of high costs and tight supplies, US fed cattle prices remain elevated at around $230–235/cwt live weight. At the same time, margins for some producers without price protection remain close to break-even or negative.

Tags: weather conditions, drought, USA, cattle herds