Individual farmers' situations depend on their crop choices, marketing strategies, the weather and crop insurance, the report says, but livestock producers are worse off: "Estimates suggest that over 70 percent of all beef cows are in states with pasture conditions rated as poor to very poor. With two-thirds of U.S. hay production areas experiencing drought, alfalfa prices have jumped 15 percent since May. In an attempt to limit losses, ranchers weaned calves earlier than usual and increased the placement of feeder cattle into feedlots. Combined with the increased shipments of feeder cattle from Mexico, the influx of cattle into feedlots contributed to a 12 percent decline in feeder cattle prices since mid-June. . . . USDA expects feedlot operations to lose more than $200 per head this fall. . . . Hog and poultry enterprises are also bracing against rising feed costs and falling profits." But if short-term losses reduce livestock head count, prices are expected to rebound.
Henderson is the bank's vice president and Omaha branch executive. Kauffman is an economist. Their report also addresses the drought's effect on transportation, meatpacking, ethanol, food prices and all consumer prices. To read it, click here.