Beef prices may be headed upward due to a severe, lingering drought in the southern United States which is putting a major financial squeeze on the region’s cattle producers.

Livestock auctions have been unusually busy across Texas cattle country. As grazing lands dried up, cattlemen have been selling their livestock earlier in the season and at a younger age than normal.

"It's been tough," says Amarillo-area rancher Ashley Nolan. "We've sold pretty much all of our herd throughout the summer little by little waiting on the rain, and it never came. The well dried up."

In fact, just one-fifth the normal amount of rain and snow have fallen this year in the north Texas ranching communities in the Texas Panhandle.

"I was arrogant enough to say I'd been through some droughts before. I'm over 60. I hadn't.", said Rancher Rick Kellison, adding that it's the worst he's ever seen.

Kellison has had to cut his herd nearly in half in response to the drought. As grazing land has dried up, hay prices have shot up to five times their normal price. That has Kellison looking for alternatives.

"Gin trash," or unwanted parts of the cotton plant produced as a by-product of the region's many cotton gins, usually provides a cheap source of feed. But the drought has devastated the region's cotton crop, too. The price of gin trash has risen by up to a factor of 10.

For more than a decade, Kellison has been selectively breeding cows to produce more meat with less feed. Now, the fruits of his labor are in jeopardy.

"When I have to liquidate a 5- to 6-year-old cow that's in her prime, I've sold my factory," he says.

Some in his situation are getting out of the business, Kellison says. "If you just look at the numbers, and there's no emotions involved, the thing to do is sell out and punt." "Most of these cows have names. They're what we take care of first," but he says it's a bad idea for a cattleman to get attached to his livestock. So he and his family are holding on for now.

The good news for Texas ranchers is that their cattle are still getting fairly good prices at auction despite the glut on the market. That's helping many cattlemen get through the drought.

The bad news for consumers is that the rapidly shrinking beef herd means prices will likely be going up. And that herd will take years to rebuild.

However, Kellison adds, "The fear I have is, it's not over yet. And we don't know when it'll be over."

This year's drought was due in part to the La Niña weather pattern, which appears to be back for another year. Dryer-than-normal weather could last for a decade or more, Texas weather officials say. The state's farmers and ranchers have carried costs of more than $5 billion from the drought, and it is not through with them yet.