Rate Of Cow Herd Liquidation
Could Be Highest Since 1978

WASHINGTON — Government statisticians say bad weather and poor grazing conditions are prompting cattlemen to liquidate their cow herds at what could be the highest rate since 1978.

There is no certainty that feed stocks can be replenished, especially in the drouth-stricken Southwest, says the Agriculture Department, although recent rains have improved grazing conditions in some areas.

"The same rains that are improving the forage outlook are increasing the uncertainty for replenishing grain stocks this year," USDA's Economic Research Service reported. Ironically, while drouth persists in the Southwest and parts of the Plains, excessive rainfall in areas of the Midwest has delayed planting to the point where grain farmers may be too late getting seed in the ground to mature a crop before frost.

"Without some relief from high grain prices, even with improved forage supplies, many cattle producers will be forced to cull more cows from the herd as feeder cattle prices will remain under pressure," the report said.

Cow slaughter in the second quarter is expected to be the largest since 1966. Unless slaughter slowed dramatically in the past several days, the second-quarter kill-off could be the largest since 1978.

The picture adds up to likely losses for producers until at least the second half of 1997, USDA said.

The increased slaughter, marketing of fed cattle and heavy animal weights mean beef production in the second quarter is estimated at 5.5 percent above a year ago.

That is translating into lower retail prices for Choice beef at the same time that a tighter-than-expected supply of pork is forcing up pork prices. USDA says pork producers' returns, which had been on the rise, are falling significantly because of escalating feed costs.

Composite pork prices at retail were nine percent higher during the first five months of the year. The Japanese are importing more U.S. pork and domestic demand is rising, in part due to the increasing use of bacon in fast-food products.