Continuing Drought Forces Cattle Producers to Revisit Difficult Marketing DecisionsTue, 07 Aug 2012 10:58:29 CDT
In the Cow/Calf Corner of this week’s extension newsletter, OSU Extension Livestock Marketing Specialist Derrell Peel says as drought conditions deepen, some cattle producers are experiencing déjà vu.
Oklahoma pasture and range conditions are deteriorating rapidly and some producers are facing decisions that are a bitter flashback to last year. However, conditions so far are nowhere near as severe as last year with the possible exception of the western tier and Panhandle counties where conditions never recovered much from last year. This is borne out in the most recent range and pasture conditions where 24 percent of the state is rated very poor compared to 57 percent at this time last year. Last year 86 percent of the state was rated poor or very poor at the end of July compared to 64 percent this year. However, just four weeks ago only 22 percent of Oklahoma range and pasture was rated poor to very poor, so the jump to 64 percent shows just how fast conditions are deteriorating.
Similarly, the production and marketing decisions for cattle producers have so far not been as challenging as last year. I have recently received several anecdotal reports of producers selling or moving cattle due to lack of forage but nothing compared to a year ago. In the last four weeks since July 4, total receipts of feeder cattle at the seven federally reported Oklahoma cattle auctions are down 40 percent from the same period one year ago. This amounts to some 64,000 head fewer feeder cattle marketed in the last month compared to one year ago. The decrease in cow sales is even more dramatic. Auction receipts of cows in the last four weeks are down 77 percent from last year. The fact that total Oklahoma cow numbers are down would explain some decrease in cow sales but the decrease this year clearly indicates that if herd liquidation in Oklahoma is occurring this year, it is at a significantly smaller rate than last year.
However, continued deterioration of conditions in Oklahoma will precipitate more cattle production and marketing decisions. At this point the prospects for significant additional hay production is minimal so winter feed supplies can be evaluated. If fall rains materialize, cool season pasture and wheat pasture may produce much needed fall and winter forage. In the absence of new forage production, producers should evaluate alternatives now and make plans for stretching current forage supplies through the winter. Limited forage supplies may mean that early calf weaning and early cow culling should be evaluated soon.
The fact that market impacts have been more severe this year complicates drought related marketing decision. Feeder calf prices have dropped significantly this summer as widespread drought conditions have developed across the country. There are indications that feeder as well as fed cattle prices have bottomed but uncertainty about forage as well as grain market conditions will persist into the fall. Continued tightening of feeder supplies for the remainder of the year will support feeder price recovery but it will depend critically on forage conditions this fall.
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