A record Texas drought is withering the smallest U.S. hay crop in more than a century, raising the cost of animal feed even higher and eliminating any chance to increase the size of the country’s cattle herd.

The price of alfalfa has surged 51 percent in the past year, reports Bloomberg, reaching a record of $186 a short ton in May. Farmers in Oklahoma and in Texas, the biggest producer of hay and cattle, may harvest only one crop from alfalfa and Bermuda grass this year, compared with three normally, said Larry Redmon, a state forage specialist at Texas A&M University. Cattle that usually graze on fields through September or October are instead being sold to feedlots, where they are confined in pens and eat mostly corn.

“We’re just running out of grass,” Bo Kizziar, the feedlot manager at Hansford County Feeders in Spearman, Texas. He said the company is moving its cattle into its feedlot three months earlier than normal, requiring the company to buy more corn.

The rising feed costs are prompting a reduction in cattle herds. The U.S. herd, including dairy cows and beef animals on feedlots and ranches, totaled 100 million head as of July 1, the fewest at that time of year since at least 1973, the USDA said July 22.

Feedlots also are accelerating sales to meatpackers, which will ultimately result in lower beef supplies and may send cattle to a record by the fourth quarter, said Don Close, a market director with the Texas Cattle Feeders Association in Amarillo. Cattle futures reached $1.21625 a pound on April 4 on the Chicago Mercantile Exchange, the highest ever, before retreating to $1.149 yesterday.

“Sale-barn receipts for cows and calves have been extremely heavy because guys are out of feed or out of water and don’t have a choice but to sell their cattle,” Close said. “It’s going to make a tight supply even tighter, as we get down the road.”

Source: Bloomberg