He says input costs, which have skyrocketed over the last five years, will continue to rise, and in spite of higher beef prices, rebuilding a herd will be limited by higher prices for breeders and stockers.

“One problem I see is we have maximized productivity of a cow, so as input costs increase and productivity remains the same, we may reach maximum investment, the total amount a producer is willing to pay to rebuild his herd. Instead of rebuilding cow inventories, this could result in even smaller herds,” Bevers adds.

While the USDA report last month shows overallcattle inventory numbers and values of all cattle and calves were down nationwide, Texas and Oklahoma, two of the hardest hit by the drought, had other significant setbacks.

  • In the number of beef cow replacements (heifers at 500 pounds or more) since January a year ago, Oklahoma is down 15 percent. Texas is down 10 percent.
  • In calves under 500 pounds, Oklahoma is down 14 percent from last year at this time, while Texas is down 15 percent. A year ago, in January 2011, the calf crop total was down 3 percent in both Oklahoma and Texas.
  • The number of cows that have calved in Texas is down from 2011 numbers by 12 percent. Oklahoma is down in the same category by 14 percent.

Economist say a costly emergency solution for Texas cattle producers suffering drought conditions last year was to transport large numbers of cows from Texas to other states where pastures could support grazing and where forage costs were lower. While this resulted in lower numbers of cows in Texas and Oklahoma, some states, like Nebraska, actually increased cow numbers.

In Nebraska, cattle inventories increased 4 percent, or 250,000 for the year, the most for any state, putting it ahead of Kansas as the second largest cattle producing state. As Texas cattle arrived in the state however, many Nebraska landowners were concerned over the effect it may have on real estate markets and row crop production.

The largest destination states for Texas breeding cattle last year were New Mexico, Nebraska, Florida, South Dakota and Kansas. Those states were also the top destinations for Texas cattle in 2010.