Wednesday, August 8, 2012

"Cloud of Dust"

Courtesy of
Some say it's almost worse than the drought of '88. Ranchers are forced to liquidate what was already the nation's smallest cow herd and corn prices have nearly doubled as a result of the past three months of weather. Hay is already becoming a scarcity and those soybeans that did end up doing okay barely have anything in the pods. It's a scary sight driving down the highways and backroads of the Midwest. While the entire nation is suffering from this seemingly endless drought- Missouri and Illinois, two of the largest cattle and corn producing states in the country, are enduring the worst. And no matter if you make your living driving a tractor, feeding cows, or operating the cash register at the local convenience store, the drought of 2012 affects us all.

Many pastures are nearly bare from the lack of rain
As I said before, last year the nation's beef herd had reached the lowest number of animals since 1953. While many factors were involved, the drought experienced last year was a major player. The top two cow/calf producing states, Texas and Oklahoma, were hit with brute force and over 600,000 head of cattle were shipped north across the Texas border to states such as Minnesota, Montana, and Nebraska, with the majority going directly to the slaughter house. This combined with higher input costs and the strongest cattle prices ever seen caused many producers to find NOT selling cattle extremely difficult, if not impossible to avoid.

This year is a whole different ballgame. Those already impacted from last year's drought didn't stand a chance of holding on once June and July arrived with no rain and scorching temperatures. They were forced to liquidate herds and in some cases, entire ranches. Those intent of keeping ownership of their herd were then faced with purchasing hay, if they could find it, or forking over hundreds of dollars for feed.

Ears of corn like this are very hard to find in fields this year.
Courtesy of
Which leads us to the second part of the dilemma. Last year's drought left farmers being lucky to harvest 50 bushels of corn per acre (56 lbs=1 bushel). Normally, the AVERAGE would be well over 100 bushels per acre. The shortage of last year's crop put a slight rise in prices this year from the beginning. Speculation ensued at the end of June when yields began to be questioned. As soon as it was apparent the corn crop was being affected, the price per bushel quickly began escalating, as economists stated the nation would use 95% of the previous year's crop this year alone. Farmers began praying the insurance to help carry them to next year and cattle producers found themselves between a rock and a hard spot, forced to either buy feed or sell cattle. But by this time cattle prices had already fallen nearly .50/lb below what had been the best market price EVER!!!

So this is where the consumer fits in. At this time, the nation's cow herd is down over 7 million head of where it should be. As I'm sure many consumers have noticed, beef is not getting cheaper in the grocery store. At the same time, the export market is not slowing up either. It's the simple economics of supply and demand, and the demand is driving the dollar. Likewise the corn crop, expected to make another measly 30-50 bushels/acre yield, will put very tight restraints on domestic and foreign supply.

But don't plan on solving the issue by switching meats. Poultry and pork are being seriously affected too, as the main diets for these animals consist of corn and soybeans. In essence, experts say consumers should expect to see a 10% increase in all proteins this year, and possibly more next year.

The drought of 2012 is taking its toll on everyone. And although consumers are being forced to spend more money on proteins and quality food, its the farmers and ranchers that will be hurt the most. In many cases their livelihood depends on making top corn yields or shipping a load of heavy weaned or yearling calves to the feedlot or slaughter house. This year, those yields will only be a dream and the shipments of cattle, well there likely won't be much profit coming off the truck.

Consumers should expect to pay a premium for beef for a while
Courtesy of
While I hope that Brad Paisley song doesn't play true, unless rain comes soon and stays for a while, it's likely things may get interesting for the ag world and the supermarket meat cooler.

Until next time, you can find me off the beaten path and ridin' for the brand!!!

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