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Record-Low Texas Water Reservoirs May Halt Cattle-Herd Expansion

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Sept. 10 (Bloomberg) -- Cattle ranchers may ditch plans to expand their herds in Texas, the biggest U.S. beef producer, as an expanding drought damages pastures and water reservoirs drop to record lows, according to Texas A&M University.

“We have had more dry years than wet years since 1996, and the cumulative effect has been to reduce the cattle herd,” David Anderson, an agricultural economist at Texas A&M, said in a telephone interview from College Station, Texas. “It all starts with the dry weather and the impact it has on pastures, crop development and keeping livestock watered. Everybody is concerned about the depleted water supply.”

Reservoirs may fall to the lowest on record in the next two weeks, the state climatologist said today in a report. Severe to exceptional drought conditions covered 65 percent of the state on Sept. 3, up from 40 percent a year earlier, according to the U.S. Drought Monitor.

Texas cattle producers who had reduced their herds to the smallest since 1967 said in January that they planned to increase the number of female cattle held out of feedlots by 9 percent from a year earlier, to begin rebuilding the calf herd, U.S. Department of Agriculture data show.

Hot, dry weather during the past three months is scuttling optimism that conditions would improve enough for expansion, Anderson said. About 59 percent of the state’s pastures were in poor or very poor condition on Sept. 8, up from 58 percent a year earlier, the USDA said this week.

“The drought is going to get some producers to sell those calves earlier to prevent further damage to pastures,” Anderson said. “This dry pattern limits what cattle producers can do relative to what they planned to do.”

Cattle futures on the Chicago Mercantile Exchange have fallen 5.5 percent this year.

To contact the reporter on this story: Jeff Wilson in Chicago at jwilson29@bloomberg.net

To contact the editor responsible for this story: Steve Stroth at sstroth@bloomberg.net

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