Good News for Cattle Producers--We Got Rain; the Bad News--We Still Need MoreMon, 11 Mar 2013 11:13:51 CDT
Derrell S. Peel, Oklahoma State University Extension Livestock Marketing Specialist, writes in the latest Cow-Calf Newsletter:
Weekend rains brought one to two inches of moisture to the critically dry northwest part of Oklahoma and added another 1.5 - 2.5 inches to the east central and southeastern parts of the state. The middle of the state from southwest to northeast received up to one half inch of rain. These rain totals will further improve the drought situation in the state. The latest drought monitor, which does not include this rain, showed that less than 10 percent of the state is in the D4 Exceptional (worst) drought category with another 52 percent of the state in the D3 Extreme drought category. Thatís down from three months ago when more than one third of the state was in the D4 category and more than 90 percent of the state was D3 or worse. Clearly there is short term moisture for cool season forage growth and there will some soil moisture for warm season forage growth to begin in the next month. All of that is the good news.
The bad news is that 100 percent of Oklahoma is still in D2-D4 drought. It will take several more inches of rain above normal to continue soil moisture replenishment. With warm and windy spring weather beginning, the current moisture will disappear quickly without regular additional rain. The latest Climate Prediction Center drought forecast through the end of May calls for persistent drought conditions based on precipitation probabilities of normal at best and below normal for the western half of the state. For cattle producers, an additional challenge remains. The drought moderation in the past month has provided little in the way of surface water recharge. The ability of many producers to utilize early forage growth will continue to be hampered by lack of pond water.
Stocker cattle prices were stronger last week with heavy feeders mostly steady. Some grass demand is building and stocker prices will continue to improve if grazing prospects also continue to improve. Sharply higher boxed beef and fed cattle prices have provided some relief to cattle feeders enduring extremely poor feedlot margins but have not yet translated into stronger demand for feedlot replacements. Many feedlots continue to struggle with wet and muddy conditions and the delays in cattle marketings resulting from recent snowstorms. Heavy feeder demand should build some over the next month as feedlots attempt to reload inventories. Feeder cattle demand will depend critically on the ability of boxed beef and fed cattle prices to hold onto recent gains and push even higher. Feeder supplies will remain very tight with poor winter grazing producing smaller feeder cattle marketings this spring combined with fewer feeder cattle imports and the likelihood of limited heifer retention beginning this spring. Also within the next month, the corn market will be actively anticipating new crop corn conditions and prices and the feeder market will begin to reflect those expectations for feed prices later in the year.
Cull cow prices have increased seasonally the past month though less this year compared to a year ago. Cull cow prices are likely to continue to increase seasonally into May unless drought forces more cow liquidation in the next month or two. Breeding cow values have not changed much the past month in Oklahoma but some demand strengthening is likely in the next month with better forage prospects.
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