U.S Cattle Herds Drop to lowest since 1958 – More signs of food problems?

By Elizabeth Campbell
Bloomberg

The cattle herd in the U.S. may be the smallest since 1958, when McDonald’s Corp. had just 79 hamburger restaurants, signaling tighter beef supplies and higher costs for companies including Tyson Foods Inc.Ranchers held 91.24 million head of cattle as of Jan. 1, down 1.5 percent from a year earlier, according to the average estimate of 10 analysts surveyed by Bloomberg News. That would be the smallest since Dwight Eisenhower was president. The U.S. Department of Agriculture is set to release its herd report at 3 p.m. in Washington.

A record drought in Texas last year and rising feed costs prompted ranchers to cull herds, even as beef exports surged from the U.S., the world’s largest producer. Cattle futures are up 15 percent since the end of June, reaching a record seven times this month, and the Livestock Marketing Information Center says retail-beef prices that reached an all-time high on an annual basis in 2011 will keep rising through next year.

“The drought certainly was the game changer of 2011,” Jim Robb, the director of the Livestock Marketing Information Center, a Denver-based researcher, said in a telephone interview. “Feedstuffs were record-high costs. The herd on a national basis declined.”

Cattle futures rallied to $1.29675 a pound on Jan. 25 on the Chicago Mercantile Exchange, the highest for a most-active contract since the commodity began trading on the CME in 1964. Prices may reach $1.399, said David Kruse, the president CommStock Investments Inc., a commodity broker in Royal, Iowa.

Wholesale beef rose 6.4 percent in the past year and reached $1.9707 a pound on Nov. 23, the highest since at least 2004, according to the USDA. Ground beef averaged $2.921 last month, the highest since at least 1984, and boneless round steak jumped to $4.723 in December, the highest since at least 1980, Bureau of Labor Statistics data show.

McDonald’s (MCD), the world’s biggest restaurant chain by revenue with more than 33,000 outlets worldwide, is forecasting higher beef costs. The Oak Brook, Illinois-based company is the largest user of beef among U.S. restaurants, according to CattleFax, an industry researcher in Centennial, Colorado.

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U.S. Snow Drought Could Have Serious Implications

By Meghan Evans
Scientific American

The snow drought across the U.S. so far this winter has raised questions about impacts on water supply, ski resorts and agriculture. Only 22 percent of the nation was covered by snow on Jan. 4, 2012.

A snow depth analysis on Jan. 4 from 2004-2012 reveals the smallest area of the U.S. is covered by snow this year. The year 2007 ranks as the second smallest area of the U.S. with snowcover of about 27 percent.

The Intermountain West, especially the Sierra of California and the mountains of Nevada and Utah, shows a substantial snow drought this year when compared to normal and past years. The northern Plains and the upper Great Lakes are other areas that have little snowcover compared to past years.

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