The dry weather in the South has set up the US for a "potentially explosive situation" in cattle markets – although only after sapping prospects for the current rally in prices.
US beef cow slaughter topped 75,000 head in the week to June 26, the latest data available, the highest total of 2011 - and in a period when liquidation typically shows a small decline.
The rise has been attributed by some analysts to strong demand, with the July 4 weekend typically seen as a peak in America's barbecue season.
"We are seeing demand picking up from a lot of packers," said Drax Wedermeyer at US Commodities, which estimated beef processors' margins topping a "large" $55 a head in mid-June, amid the slaughter spike.
Margins had fallen back to below $30 a head by the end of last week.
'Simply not enough grass'
However, "one of the most severe droughts in years" in many parts of a swathe of America from Arizona in the west to Maryland in the east may also be encouraging farmers to accept strong prices for cattle, two leading analysts said.
"There is simply not enough grass to support cow herds," Steve Meyer and Len Steiner said.
Official data overnight showed US pasture rated on average as 49% in "good" or "excellent" condition, compared with 65% a year before.
In Texas, where 86% of pasture was in "poor" or "very poor" health, "some livestock problems were encountered with cattle drinking high salinity water from wells and windmills", the US Department of Agriculture said.
With hay expensive too, "many cattlemen simply do not have the necessary resources to hang on", Dr Meyer and Mr Steiner said.
'Must be a reckoning'
The dent to breeding stock, at a time when the US herd is already at among its lowest levels in decades, looks set to dent future supplies – and lift prices.
"There must be a reckoning," the analysts said.
"The number of available calves must fall, setting up a potentially explosive situation for calf prices and, eventually, for feed cattle, fed cattle and beef."
Short-term blip?
However, it could curtail in the short-term the rise in prices of feeder cattle, those ready for fattening, if ranchers are opting to place stock in feedlots as well as take them to slaughter.
"It now appears that the drought and high fertilizer prices have reduced available grass pastures enough to push more cattle, even some spring calves, into yards.
"Our contacts tell us to not be surprised to see June placements [of feeder cattle on feedlots] at or above year-ago levels and easily high enough to keep feedlot inventories above year-ago levels.
"That would suggest higher live cattle numbers, year-on-year, through the end of this year."
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