Texas drought could lead to lower beef prices

As the drought in Texas worsens, more and more ranchers are sending their cattle to slaughterhouses earlier than normal, due to the rising costs of trucking in hay from other states. As a result, the increase in beef supplies may lead to decreased costs for retail beef in the fall and winter, says the USDA.

Even though a glut of beef coming to the market could help consumer prices now, the concern is that next year hamburger prices may rise after so many cows are taken out of the system.

However, Derrell Peel of Oklahoma State University says the thinning of the herd in Texas is being made up in part by expanding herds in other regions. Drovers CattleNetwork reports Peel saying that, in fact, some of the cows leaving Texas are not being slaughtered, but sold to ranchers in other states. "The availability of heifers and breeding cows from drought-ravaged areas may help accelerate the herd expansion already in place in northern regions of the United States."

Phil Sadler runs a cattle operation in Wood County, about 75 miles east of Dallas. Last spring he had 650 head. Now he's down to 400, and he may get rid of even more cows. Sadler's being paid less for his cattle, while it's costing more to feed them. "This time last year, our feed costs were probably half of what we're having to pay now," he said.

Source: CNBC, CattleNetwork

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