Bad outlook for beef industry is good news for dairy farmers.
Severe drought and record high corn prices have made 2011 a nightmare for beef producers in Texas and surrounding states. One result, though, is the value of cull dairy cows has soared to levels milk producers never dreamed of.
That dream looks certain to continue in 2012 and probably 2013, as well.
These days the size of the total U.S. beef herd shrinks with each new market report, even though it was already at a 53-year low. Much of the blame is record high corn prices. A lot of the rest is the brutal drought in Texas and the Southwest.
Together they are forcing many ranchers to sell some or all of their herds because they can't feed them. A recent survey of members in the Texas and Southwestern Cattle Raisers Association found the average reduction in cow or bred heifer numbers is 34 percent.
Rebuilding those herds, even if corn suddenly becomes cheap and temperatures stay cool, will be impossible to do overnight. That means beef supplies in stores will remain tight and prices will stay high.
In fact, they are likely to go even higher. As bad as 2011 has been for beef supplies, USDA predicts supplies will be 4.5 percent lower in 2012.
That means cull dairy cows and any other cattle that milk producers can send to market will continue to find a welcome and high-paying home.