A third year of drought in Texas, the biggest U.S. cattle producer, is leaving the national herd at a six-decade low and Tyson Foods and Cargill fighting to boost margins amid excess slaughterhouse capacity.
Almost half the pastures in Texas are in poor or very poor shape because of hot, dry weather, according to the Department of Agriculture.
With more than three years of rising feed costs, farmers have had less incentive to maintain herd size. The slaughter of commercial cows during the first half may be the largest for that period since 1996, the USDA said June 18.
Cattle are raised on ranges or pastures for 12 to 18 months before they head to feedlots where they mostly eat corn. While a big corn crop and lower feed costs will help, rebuilding the herd will depend on grazing conditions, Tim Petry, a livestock market economist for the North Dakota State University in Fargo.
The USDA's projections indicate the U.S. beef cattle herd won't begin increasing until 2015 or 2016, he said.
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