The drought is certainly forcing livestock producers into a corner. The decision will likely be different for large-scale producers with huge investments in buildings and stock than for smaller operations, especially if their facilities are paid for and they can still survive if they jump out of livestock.
For smaller producers with small beef herds or sheep flocks, the reality is that pastures are gone, assuming they were cool-season greases. Hay is selling for $4 to $5 for grass hay and $8 or more per small square bale for legume or mixed hay, if you can find either one.
Corn is currently around $8 per bushel. Corn is 15 cents per pound for feed, and 25 to 40 cents per pound as finished feed if you can't buy in volume. Soybean meal was last reported at around $500 per ton. Many people, both small and large producers with cattle or sheep, have been feeding hay for a month to six weeks already, dipping into supplies meant for next winter. How much high-priced hay and feed can you afford to feed to a cow or ewe and still expect to make profit, or at least break-even, based on the female producing twin lambs or a single calf?
If you run the numbers, animal maintenance costs are way up. Unless you can find alternative sources of feed, like corn stalks for cattle later this fall, it's possible that the costs could outstrip what you could hope to gain back from selling the offspring once they're raised.
Other considerations are whether you want to sacrifice genetics that you have built up over time, and the salvage price for older animals at markets. You'll have to answer the first question based upon how you value the genetics of your current herd.
Livestock auction results appear to be bouncing around somewhat over the last few weeks. Old ewes at a local auction in central Indiana bought 75 cents per pound, highest of the season, last week. Yet two weeks ago lambs sold for 90 cents per pound, lowest in two years or more. Last week auction lamb prices appeared to be back up around $1.10 to $1.30 per pound, depending upon size of the lamb.
Here's the tough bottom line. It's time to run the calculator hard to see if it will pay to hold on to breeding stock without culling harder or not. If you're just holding on for sentimental reasons, sentiment could prove costly.