Even as national herd expansion continues, producers in Texas and some other parts of the nation are being forced to liquidate as dry conditions worsen.

Large runs of cattle have been reported at auction barns in dry areas of Texas, which means a lot of culling decisions have been made and there are a lot of weaned calves moving, says David Anderson, Texas Cooperative Extension Service livestock marketing economist. In eastern Oklahoma, ranchers are hauling water and some areas of the Corn Belt also are parched, he says.

In fact, according to the National Drought Monitor, most of Texas is abnormally dry, and a fair portion of the state -- primarily a wide band from South Texas to North Texas -- is immersed in drought conditions ranging from severe to extreme. Extreme drought conditions also prevail in southeast Oklahoma, southwest Arkansas, and parts of Illinois and Indiana.

"Has this drought contributed to bringing prices down somewhat? In some instances, it has," Anderson says. "We had a big corn crop that created a large level of stocks, but the big risk for corn is the coming year. Those stocks will disappear really quickly if this dry weather continues. What's really a concern is we don't have soil-moisture levels built up when we begin to think about spring planting. That, I think, is creating some uncertainty in the market, particularly for feeder cattle."

Though Anderson predicts lower but still historically high cattle prices next year, he cautions, "We've got higher production costs with the price of fuel and fertilizer. I think we'll see a lot less fertilizer on pasture next year, which will affect hay production and all of the segments associated with that... It's certainly taking a bite out of people's disposable income. There may be some consumers out there even switching to some lower price cuts to offset the decline in disposable income because of these high fuel prices."

Go to www.drought.unl.edu/dm/monitor.html to view the nations' drought map.