What is in this article?:
For almost 20 years, I’ve coordinated a year-end review of the beef industry by independent cattle consultants. While opinions have differed significantly in previous years, these eight consultants concur that widespread drought was the major event in 2012.
For 2013, improved industry profitability will be dependent on the weather. Meanwhile, continued drought could be devastating, and students of history know that severe droughts are often several years in duration.
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Last year continued the dry trend established in 2011. While the Southern Plains enjoyed some respite from crippling drought, the area remains very dry and subsoil moisture is nonexistent. Early rains provided promise for winter wheat pasture, but dryland wheat all but vanished when continued rains didn’t materialize.
Cow liquidation has slowed, thanks mostly to fewer cows left in the drought-affected areas following 2011’s massive liquidation. Many ranches are available for lease, but have little grass or water available to support livestock.
Feedlot occupancy is mixed, with some yards at or above capacity, and others below 50% capacity. Feed costs and feeder cattle prices are high, and breakeven projections are miserable at best.
Ground cornstalks, wheat straw and other low-quality roughages have displaced most alfalfa hay in all but starter rations in the Southern Plains. And by-products continue to be used extensively to replace high-basis corn in feedlot rations. The high corn basis has caused the outlook for ethanol production in the Southern Plains to be very hazy due to high production costs.
Performance in feedyards has been excellent, given the thin condition of most placements and the total lack of any weather events to date. However, profits have eroded and losses are escalating. Continue to pray for rain!