U.S. ranchers are rushing to sell off some of their cattle as the worst drought in nearly 25 years dries up pastures, thins hay supplies and sends feed costs skyrocketing.
The more desperate in the U.S. Midwest are hauling water into areas where creeks have run dry and are scrambling to secure scarce and high-priced hay to keep their cattle fed and watered.
But some are giving up, or are about to.
The drought in the Midwest follows another one last year in the southern Plains. The 2011 drought was centred in the heart of cattle country in Texas and helped to shrink the U.S. herd to about 91 million head, the smallest in about 60 years, while sending beef prices to record highs.
A rush by ranchers to sell cattle, and in some cases hogs, could force consumers to dig deeper into their wallets next year as smaller herds can lead to higher beef and pork prices.
"The blasted heat… and no rain. The drought is really drying the pastures and stuff up," said Larry McCarty, who sold off more than a quarter of his 900-head cattle herd on Thursday.
He got $100 per head less than he did a month ago, as the high cost of feed has spooked away potential buyers (all figures US$).
McCarty’s cattle were part of an auction that sold more than 500 head on Thursday at the Appanoose County Livestock sale barn at Centerville, Iowa, about 130 km southeast of Des Moines.
Auction house owner Clarence Ballanger says a lot of his customers are really getting hurt by the drought. "That is a lot of people’s livelihoods… livestock."
He says there was no sign of any large-scale liquidation of cattle yet as ranchers were trying to hold on to their animals, but that could change if rain does not arrive in time to save the corn crop in the U.S., the world’s largest.
"What will happen here, if it does not rain, we’ll probably have some big runs," said Clarence, wearing a hat to shade him from the sun as pens of year-old black cattle breathed heavily behind him in the heat.
There has been a big jump in the number of cows slaughtered in the U.S. Cows are critical to growing the beef herd, fewer cows means fewer beef cattle later.
In the week ending June 30, 52,700 cows were slaughtered, three per cent more than a year ago during the peak of the Plains drought, USDA data showed.
"We’re just going to get down to tiny, tiny amounts of beef available per person in the country," said Chris Hurt, agriculture economist at Purdue University in West Lafayette, Indiana.
A key and growing concern for livestock producers is the supply of hay necessary to feed the millions of cattle that are produced across the U.S. Midwest.
Though hay is fed primarily through the winter months when pastures are covered in snow or are insufficient for grazing, this year, some cattlemen started feeding hay in June as their grass pastures burned up in 100 F heat.
Rainfall tallies through the Midwest are well below normal for this time of year, and grassland where hay is harvested is producing roughly half of what is typical.
The combination of a short hay crop to begin with and the early feeding have many in the industry fearing serious shortages of hay for feeding cattle this winter.
The U.S. Department of Agriculture said farmers were struggling already to locate hay, and producers who did have hay were holding tight to limited supplies.
The drought has prompted USDA to declare disaster areas in 26 states and more than 1,000 counties, many of which are in the Midwest
In south-central and southeast Missouri many producers "have culled cattle herds fairly deeply" as that part of the state suffers the most from the drought, according to the USDA.
Culling is starting elsewhere too.
"It is very serious," said Philip Ayres, executive director of the Adair County Farm Service Agency in Kirksville, Missouri. "A lot of pasture is completely gone."
USDA on Monday rated 87 per cent of Missouri’s pastures poor to very poor. Indiana pastures were 81 per cent poor to very poor, while Iowa pastures were somewhat better at 49 per cent poor to very poor.
Ayres estimated about 5,000 head have been liquidated in his area of north-central Missouri in recent weeks.
Missouri and many other states in the drought area have asked for federal approval to open up thousands of acres held for conservation in a Conservation Reserve Program (CRP) to allow for haying and grazing. The aim is to help ease the shortage and prevent widespread sell-offs of herds.
Seventy-five counties in Missouri will be released on an emergency basis Monday, and all Missouri counties will be opened for potential levels of haying and grazing depending on individual producers circumstances, according to the Missouri Farm Service Agency.
"There is no way we would have enough hay to feed cattle" without the CRP land, said Eddie Hamill, state executive director with the Missouri Farm Service Agency.
It may not be enough, said some agricultural experts. As cattle prices keep dropping and corn prices keep climbing, the only real solution, many say, will come from the skies.
"The markets are in complete turmoil," said McCarty. "We need rain. We just need a soaker to really help things out."
— Carey Gillam is a Reuters correspondent in the Kansas City area, covering U.S. ag commodity markets and agribusiness.