Weekly slaughter levels of 700,000 or higher are needed through at least July and August to improve feedlot bargaining positions. Compounding the feedlot problem for Southern cow-calf producers is the drought. Weather conditions this spring and summer for most of the Southeast has been disastrous. The drought in Texas is well known. Typically, we experience a seasonal drop in calf prices in April.
Prices decline and then regain some strength and decline again as fall calf sales begins.
This year, in April, prices started down and they have continued to decline. Part of this decline is due to the large beef supplies in U.S. feedlots but the steep decline over the last month is directly related to the growing drought problem. Texas, and a large portion of the Southern Plains, rely on spring rainfall to get their pastures through the spring. This year, very little rainfall occurred during this time period. If it doesn't rain during the spring, additional rain is typically scarce until fall.