U.S. Cattle herd at Lowest Level in 50 years

[ArtS]

I wonder how this will effect leather prices.

Art

Drought, recession scorch Texas cattle ranchers

Reuters - March 8, 2009

PANDORA, Texas (Reuters) - Frates Seeligson recalls when his ranch last saw rain: September of last year.

That was around the time he took on an extra 200 cows to help a farmer whose fields were ravaged by Hurricane Ike.

Talk about a perfect storm. The worst drought on record in this parched part of south-central Texas means his withered land can hardly support his own dwindling herds.

Meanwhile, the worsening recession means that low-priced hamburger meat is replacing high-priced steak on American shopping lists, driving down beef prices.

"These cows aren't in good shape," Seeligson said recently as he scattered protein cubes or pellets for some of the cattle in his herd at the crack of dawn on a mist-shrouded morning.

The feed is meant to be supplemental but the grazing is so poor that it is now his herd's main source of nutrition.

"Look at this black cow; you can see its hip bones," Seeligson said as the cattle crowded around his pick-up truck looking for their feed.

Some of the calves have distended bellies and many of the cows look downright scrawny, with the outlines of ribs and backbones showing clearly through their hides. It is a sight that will break the heart of the hardest Texas cattleman.

Seeligson's woes are felt by cattle ranchers across the country as the recession bites, with the U.S. cattle herd at its lowest level in 50 years and the calf herd at a 57-year bottom. Operators of feedlots that fatten up cattle for steaks with grains and other nutrients are also suffering.

But the situation is particularly dire on the ranch lands around San Antonio and the Texas capital Austin.

According to the U.S. Drought Monitor, drought conditions there are now listed as "exceptional" -- its harshest rating -- highlighted on the map with a dark blood-red color.

It is the only part of the country that currently has such a rating, making it even more severe than California, where a drought emergency has been declared. Seeligson's two ranches just to the east of San Antonio are both in this red zone.

The National Weather Service says the area has just been through its driest 18-month period from September of 2007 to February 2009, and the short-term outlook is bleak.

Texas Governor Rick Perry asked for disaster relief assistance on Friday for drought-stricken farmers across the state.

"The forecast for the next three months is for below average rainfall for that area," said Victor Murphy, the Climate Service Program Manager at the Fort Worth, Texas-based Southern Region Headquarters of the National Weather Service.

SHRINKING HERDS

Seeligson's herd is normally about 1,300 head on his two ranches but right now it's about 1,000 -- and even that is too many given the poor state of his land.

Under normal conditions his operation is strictly grazing with no confined feeding and is a cow/calf farm aimed at producing animals that should eventually be used for further production or be taken to the feedlots for fattening.

Feeding his herd with supplements is getting too expensive and so he is caught in the classic drought and cattle vice: he will have to sell cattle but given the poor conditions and low beef price, no one in the area wants to buy any.

"No one wants to buy cattle for calf production. So instead of selling them as productive cows I'll have to sell them to the meat market. The only buyers right now are the killers who make them into hamburger meat," he says.

"McDonald's is doing good right now."

Pointing to one cow that he reckons weighs around 900 pounds (408 kg), he says he would get $400 for it instead of the $600 he would normally expect.

Other farmers in the area are also scaling back as they cut their losses, with local auctions in Texas reporting record low numbers of cattle on offer.

Todd Weiner, who farms southeast of Austin, said his herd was down to 10 cows from around 60 because he couldn't even find hay in the area.

WET AND DRY

The weather in much of Texas has been fluctuating wildly between wet and dry spells over the past five years. Increasing frequency of extreme weather events is regarded by some scientists as a sign of human-induced climate change caused by fossil fuel emissions.

But Murphy at the National Weather Service said it was "too short a time period to draw such assumptions."

Regardless of the causes, it is making farming difficult in central and south Texas and raising questions about the long-term sustainability of ranching in the area as fast-growing cities compete for scarce water supplies.

Seeligson says that over the past eight years he has seen two years of "incredible flooding" and three periods of drought -- enough to make any farmer's head spin.

Given this backdrop, and the expansion of nearby San Antonio, which is one of America's fastest-growing cities and now its seventh largest, does he think cattle ranching is a long-term and viable option here?

"There is a reason our forbearers started ranching here ... That was because the land was good, the rainfall was predictable. And now you have San Antonio and Austin and other cities growing into the area," said Seeligson, a fourth-generation rancher.

"I pump water for my business and there will be a time where the question will be, is that water going toward someone brushing their teeth in San Antonio, or is it going to toward water for my livestock," he said.

For now though, he just wishes it would rain.

http://www.reuters.com/article/environment...E52721X20090309

[Go2Tex]

We're supposed to get some showers this week. Thurs, Fri, and Sat.

[TrooperChuck]

It's not just in Texas... Up here in Washington state our cattle ranch neighbors have told us cattle prices are waaaaaaay down. They can't free-range the cattle all year, so they feed hay in the winter. If the market keeps falling they're worried they won't be able to make enough money to cover their winter hay costs.

I really worry for these folks. Many people don't realize that lots of ranchers make their whole year's worth of wages on one big sale of their cattle. All their bills and expenses are organized around that once a year payment. If they have a bad year, they are in REAL trouble.

[mtsadl]

My main business is the cattle business. The numbers are way down, lowest number of beef cattle since 1951. The economy is holding the price of cattle down but it is going to go thru the roof if the economy turns around. Exports are up almost to pre BSE levels. The value of a raw hide has dropped significantly and the packers are sitting on a bunch of them. The price the tanners are paying has dropped signifacantly but I havent noticed leather being cheaper nor have noticed beef selling cheaper in the stores. But I have sure noticed the price that I get being lower and the cost of production being alot higher. I think alot of the problem with the hides not moving comes from the drop in car sales because a good share get used for leather seats in cars. Hopefully we can all get off this financial roller coaster soon.

[Ian]

While New England is not a huge beef cattle producing area, there are many dairy farms. I have heard quite a few stories lately of dairy farms sending their herds to slaughter because the feed prices are so high that they cannot produce milk at a profit anymore.

Undoubtedly the beef cattle issues will effect leather prices.

On the other hand, I heard a story that 2 years ago auto makers were purchasing half the US output of cow hides. Maybe the lower recent car sales (along with reduced sales in the furniture industries) will help balance out leather prices. I don't know if leather jacket and garment sales are being affected by the poor economy (and it seems reasonable that they are), but that too will have an effect on leather prices. Who knows, with all of that, perhaps prices will come down.

[ArtS]

I received these replies from my post on another leather guild site. Very good info. I love it when I learn something (it happens every once in a while).

Art

Cattle numbers are really not that low. They have been declining for some time now because more people are eating chicken!!! Just like the commercial tells 'em to do.

As a point of reference, Jan2009 cattle inventory stood at 94.5 million compared to 96 million last year or down only 2%. Going back 5 and 10 years, Jan 2004 inventory was 94.9 and Jan 1999 was 98.5.

Gary

An old Ag Economist from VaTech

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Art,

It will have little short term effect on leather prices. Those prices seem to be more driven by demand than supply. That demand seems to mostly hinge on orders from the Asian tanners. With sagging auto and furniture sales, the demand will slow for hides processed into upholstery leather. There is yet another glut of dairy cows and many of those cows will coming on the market. Also the US is not the only source for hides globally.

Also like most other agriculture commodities, the cost of the raw material is a small part of the final consumer cost. Transportation, processing, and marketing add much more to the final price.

Bruce Johnson