News Update
Sept. 3, 2009

Cattle Prices Could Move Higher as a Result of Less Supply

With more people eating at home as a result of the recession, an improved economy could encourage consumers to spend more money eating out in the coming months, which could be good news for cattle producers later this year and into 2010, said a Texas AgriLife Extension Service livestock economist.

“Do you think a new trend has been started with fewer people eating out and more eating at home?,” asked David Anderson, AgriLife Extension Service livestock marketing economist at the recent 55th Texas A&M Beef Cattle Short Course. “Some of my colleagues think so. If the economy rebounds, I think not. That’s going to lead to higher cattle prices when taking into consideration fewer overall cow inventory numbers.”

Cattle prices will continue to their seasonal lows this summer, an expected pattern as producers sell off calf crops. But there’s higher volume at auction markets in certain parts of the state due to drought. From Austin extending throughout south-central Texas, ranchers are coping with one of the worst droughts ever, Anderson said.

The southern region of the country is in the most extreme drought area, according to the U.S. Drought Monitor, and accounts for 6% of the nation’s total beef supply (more than 2 million beef cows are in the area) as ranchers further reduce herds, Anderson said.

AgriLife Extension economists have estimated $3.6 billion in losses, and that number could eclipse the $4.1 billion mark set in 2006. The only alternatives for ranchers who don’t have grass is either to move animals to rented pasture where forage is sufficient or sell herds that have taken years to assemble.

With ongoing drought, Texas beef cow numbers continue to decrease. Nationally, that’s having an effect on the overall U.S. beef cow inventory, Anderson said.

“We’re producing fewer cows and consequently less beef,” Anderson said.

Dairy producers are also taking a hit. The average producer cost for milk is $16 per hundredweight (cwt.) and income is $11 per cwt. When you factor in the woes of both the dairy and beef industry, it doesn’t paint a bright picture on the supply side.

“I’m projecting fewer beef cows for next year and on into 2011,” he said.

The downturn in the economy has also led to more consumption of lower-priced beef, Anderson said. The recession is the main cause as consumers continue to be cautious on how they spend their money and are looking for value at grocery outlets.

He expects cattle prices to move upward in 2010 if the current cow slaughter continues. That, coupled with an improved economy, could “trend calf prices even higher,” Anderson said.

For more information about the beef short course, visit http://beef.tamu.edu.

To view beef short course blog posts, visit the media blog at http://agrilifeblogs.tamu.edu/mt/Agnews/.

— Release provided by Texas AgriLife Extension Service & AgriLife Research.

Rains Help Break Heat Wave in Deep South Texas

Soaking rains in portions of the Lower Rio Grande Valley have busted the record-breaking heat of summer and knocked the drought down a notch, according to the National Weather Service.

“The drought is not over by any means, but it has been dented a little bit,” said Barry Goldsmith, warning coordination meteorologist for the National Weather Service in Brownsville. “The good news is that the worst of the heat is over as the nights get longer and evenings cool off quicker. In fact, we’ll soon start to see dew on the ground again.”

Hot temperatures may still be in the near future but not as relentless as they have been the past few months, he said.

“The September sun is not as intense as the June sun; plus, there are no high winds forecast during the next week to dry things out faster,” Goldsmith said.

The official explanation for the long-awaited showers is “a moisture shield related to the subtropical jet stream,” which Goldsmith said created an unstable, rain-prone atmosphere.

But so far, it hasn’t been enough to end the drought of 2009 that has seen virtually no cases of widespread, soaking rains in the area for almost a year.

“Until we get a more thorough soaking in the soil, we’ll remain in a severe- to extreme-drought classification in the Valley.”

The meteorological conditions that promoted the soaking rains likely won’t persist for the Labor Day weekend and beyond, but the potential for afternoon sea breeze showers on some days will help moisture levels as the area enters what is normally its peak rainy season, he said.

Regardless, the rains were a welcome sight for many, especially agricultural interests, who have taken a major hit from the heat and drought.

Texas AgriLife Extension Service economists peg the state’s losses so far this year at $3.6 billion and estimate they could top $4 billion by year’s end.

“These rains are a blessing, but they were just too late for our cotton, corn and grain crops this year,” said Enrique Perez, an AgriLife Extension agent in Cameron County.

Luis Ribera, an AgriLife Extension economist, said cotton, corn and grain losses to the drought in the four-county area are currently at $11 million but could reach $27 million when final tallies are tabulated in October.

Goldsmith said the rains soaked portions of counties from Zapata east to Cameron County, but mostly missed the still-parched Coastal Bend areas, including Kleberg, San Patricio and Nueces counties.

Cotton and related losses this year to Kleberg County alone, home of the legendary King Ranch and its cotton acreage, totaled $50 million, according to Texas AgriLife economists.

— Adapted from release provided by Texas AgriLife Extension Service & AgriLife Research.

Ag Secretary Announces Support for Domestic Nutrition Programs, Pork Producers

Agriculture Secretary Tom Vilsack today announced USDA’s intention to purchase an additional $30 million in pork products in FY 2009 for federal food and nutrition assistance programs. USDA will survey potential suppliers to seek the lowest overall cost by publicly inviting bids and awarding contracts to responsible bidders. Altogether, USDA has purchased approximately $151 million in pork products for food and nutrition assistance programs this year through annual appropriation and Recovery Act funding.

The pork products scheduled for purchase will reflect the variety of food products USDA provides each year to support the National School Lunch Program, the School Breakfast Program, the Summer Food Service Program, the Food Distribution Program on Indian Reservations, the Commodity Supplemental Food Program and The Emergency Food Assistance Program. USDA also makes emergency food purchases for distribution to victims of natural disasters.

For more information on purchase details, interested suppliers should contact Duane Williams, Contracting Officer, Livestock and Seed Program at 202-720-2650 or duane.williams2@ams.usda.gov. The AMS Commodity Procurement Web page is www.ams.usda.gov/lscp.

— Adapted from release provided by USDA.

— compiled by Shauna Rose Hermel, editor, Angus Productions Inc.