• Allison Miles •
• Originally published January 13, 2009 at 5:34 p.m., updated January 13, 2009 at 5:34 p.m.

Things were relatively calm at the Hallettsville Livestock Commission's auction ring Monday - the calm before the storm of Tuesday's weekly auction.

But just like the weather, things have cooled down lately in the auction world.

Ranchers still sell their animals, but prices have dropped drastically - by about $150 or $200 a head for calves - said Mike Heller, a partner with the Hallettsville Livestock Commission.

Auction houses work on commission and, although lower prices mean better deals for the buyer, they also bring in less income for the auction house.

Heller estimated the decrease means the livestock commission is bringing in $6 to $8 less per head than usual.

"If their prices are good, our prices are good," Heller said. "If their prices are bad, ours are right along with them. It affects all of us."

Cuero's climate is about the same.

Although the amount of cattle sold has remained fairly steady for about 12 years - between about 70,000 and 96,000 head annually, according to the Cuero Livestock Commission Web site - the price decline has meant big changes, said Buddy Blackwell, president of the Cuero Livestock Commission.

Commodity prices began decreasing around Sept. 1, he said, attributing the drop partly to futures contracts that were designed to protect cattle feeders from capital losses.

"In the past year or so, any time the market gets a good bit of strength in it, some people who are handling a lot of these futures contracts ... are selling these contracts short," he said. "And by doing that they are forcing the live cattle market down by their will."

That short selling has resulted in as much as a 10-cent decrease per pound for an animal, Blackwell said, which can add up when the animal weighs hundreds of pounds.

But commodity markets aren't solely to blame.

Both men said the area's recent drought hasn't helped matters.

In the fall, cattle from this area typically go to the panhandle region, Colorado and New Mexico, Blackwell said, to graze on winter grazing crops.

With the dry conditions, however, those ranches don't have crops for the cattle, so the cattle go to feed yards where they get mixed feed.

"For the last couple of years we've been selling a majority of our cattle directly to cattle feeders," he said, explaining it's traditionally cheaper to put cattle on grass than a yard.

The future isn't all gloom and doom, though. Good things could be on the horizon.

There's a movement in Washington, D.C., to change the way futures contracts work, Blackwell said, which could level out market prices.

And even though it's likely people will have to tighten their belts a bit, Heller said that's true for most businesses.

Heller said he never proclaimed to be a "great prognosticator" but he thinks that once the economy improves, the livestock markets will follow suit.

"All the commodities are wanting to go up," he said. "We just need for everything to get a little bit better."

• VALUE OF UNITED STATES CATTLE AND CALF PRODUCTION

  2007: $36.1 billion

  2006: $35.6 billion

  2005: $36.6 billion

  2004: $34.8 billion

  2003: $32.1 billion

  2002: $27.1 billion

  Source: United States Department of Agriculture Web site

  CATTLE INVENTORY THROUGH THE ...

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VALUE OF UNITED STATES CATTLE AND CALF PRODUCTION

2007: $36.1 billion

2006: $35.6 billion

2005: $36.6 billion

2004: $34.8 billion

2003: $32.1 billion

2002: $27.1 billion

Source: United States Department of Agriculture Web site

CATTLE INVENTORY THROUGH THE YEARS

January 1, 2008

United States: 96.7 million head

Canada: 13.9 million head

January 1, 2007

United States: 97 million head

Canada 14.3 million head

January 1, 2006

United States: 96.7 million head

Canada: 14.8 million head

January 1, 2005

United States: 95.4 million head

Canada: 15.1 million head

January 1, 2004

United States: 94.9 million head (cyclical low)

Canada: 14.7 million head

January 1, 2003

United States: 96.1 million, down from 1996 peak of 103.5 million

Canada: 13.5 million head

Source: United States Department of Agriculture Web site

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