From Reuters (Rod Nickel and Tom Polansek):
…liquidations of breeding stock are expected to limit cattle production in the coming years, tightening North America’s beef supply and driving up consumer prices, according to two dozen ranchers and cattle experts.
The drought spanning much of western North America – from western Canada to California and Mexico – has cooked pastures and hay crops that fatten cattle. The ranchers’ plight is one impact of many from the punishing drought, which has also damaged wheat across North Dakota and cherries in Washington state, weakened bee colonies, and forced California to shut a major hydroelectric plant. In British Columbia, an entire town burned, while California is expected to see a record number of acres go up in flames this year. read more
Climate scientists say global warming makes extreme heat and drought occur more frequently, but some ranchers interviewed by Reuters dispute the link to climate change. They view the current drought as an unremarkable shift in the weather from which the industry will recover. read more…
Adding to ranchers’ problems, prices of feed alternatives such as corn, soy and wheat are the highest in years. There is so little feed available that Manitoba farmers have bought 280 tons of hay from as far away as Prince Edward Island, some 3,400 kms (2,000 miles) to the east.
In a normal year, 10% to 12% of breeding stock in western Canada, the country’s top beef-producing region, are culled due to age or other routine reasons, and farmers replace most of it, said Brian Perillat, senior analyst at CanFax.
This year, ranchers are likely to cull 20% to 30%, reducing the size of herds, according to industry group Alberta Beef Producers. That would be an unprecedented reduction of the breeding stock, based on records going back to 1970, Perillat said…
In the United States, the world’s third-biggest beef exporter, analysts expect a smaller impact because the herd is more spread out. Still, a third of U.S. cattle are in drought areas, according to the U.S. Drought Monitor, and producers are making the painful decision to send animals to slaughter early…
FEWER COWS, HIGHER BEEF PRICES
Sending female cows to slaughter in 2021, instead of keeping them for breeding, will reduce market-ready cattle inventories in 2023, economists say. The animals have long gestation periods and take time to fatten after birth.
“When we liquidate cow herds, these supply impacts last years,” said Mike von Massow, associate professor of food, agricultural and resource economics at University of Guelph, Ontario. “You have this hangover.”
Tyson Foods (TSN.N), the biggest U.S. meat company by sales, said in a recent earnings call it expects operating margins for its booming beef business to decline next year amid herd liquidation, though results should still be strong…
Consumers will also feel the pinch, analysts said. The USDA in August trimmed its estimates for U.S. beef production this year and next as ranchers are raising animals to lighter weights.
After a 2014 drought, beef prices in Canada rose about 25% over the following year, and stayed elevated for at least two years, von Massow said, citing Statistics Canada data. Beef prices are likely to increase as early as this fall, reflecting the higher prices to feed cattle, he said.
In Mexico, the northern state of Chihuahua has gone from around 1.2 million breeding cows in 2019, to about 700,000 because of drought, said Fernando Cadena, head of Mexican ranching company Carnes Ribe based in Ciudad de Chihuahua, just south of Texas.
Cadena said other major northern Mexican ranching states like Sonora, Coahuila, Nuevo Leon and Durango, saw similar rates of drought-induced slaughter, in addition to cows that died on parched land due to lack of food or water.
The hardest hit ranchers in northern Mexico will likely need two to four years to recover herd levels, he said.
Fewer cows in Mexico could impact the U.S. beef supply, as more than a million cows are imported across the southern border each year…
Ponds that used to provide drinking water for cattle are dried up in parts of California, said Tony Toso, 58, who raises cows and calves in the foothills of the Sierra Nevada mountains.