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OSU's Derrell Peel Talks Climate and Cattle in His Weekly Analysis

Mon, 11 Apr 2016 10:58:58 CDT

OSU's Derrell Peel Talks Climate and Cattle in His Weekly Analysis Mondays, Dr. Derrell Peel, Oklahoma State University Extension Livestock Marketing Specialist, offers his economic analysis of the beef cattle industry. This analysis is a part of the weekly series known as the "Cow Calf Corner" published electronically by Dr. Peel and Dr. Glenn Selk. Today, Dr. Peel looks at current climatic conditions in Oklahoma and what that means for cattle producers.

"A good chunk of Oklahoma received some rain over the weekend with amounts ranging from very light to nearly 3 inches in spots. For the most part, the rain did not land on the driest areas of the northwest and Panhandle of Oklahoma but the line of heavy rain from the southwest corner of the state to the northeast corner will sort of serve as a fence to contain the growing region of dry and marginal drought areas. To north of the heaviest precipitation, the rain, though limited, was very timely to help alleviate drought stress in the wheat crop and forages. More rain will be needed soon in the region. Current forecasts indicate a good chance of more rain in the driest areas in the coming week.

"Above average temperatures and lots of wind have really dried out the surface the past month. Large wildfires have recently consumed roughly half a million acres of country in Oklahoma, Kansas and surrounding areas. Recent and forecast rains help control still burning fires; reduce the fire risk; and may indicate a different weather pattern that hopefully incudes less wind.

"For the most part, subsoil moisture is still pretty good across Oklahoma. April is a critical time for warm season pastures and hay and the current rain will go a long way to jump-starting forage growth and allowing forage to tap into deeper moisture reserves. Though it looks like forage potential remains pretty good for early 2016, producers should continue to monitor local conditions and plan well in advance if forage limitations begin to develop. Drought conditions could develop later in the summer, especially if El NiŮo fades this summer as some meteorologists are suggesting. This could impact summer pasture management and have implications for fall/winter grazing and hay requirements. There is considerable indication that a large percentage of wheat acres in Oklahoma are being grazed out or will be cut for hay.    

"In general, cattle prices may be just past, at, or near seasonal peaks. Both feeder and fed prices have struggled recently after a decent seasonal increase in the first quarter. Beef production is above year ago levels with slaughter beginning to increase both seasonally and as a trend with growing cattle numbers. Carcass weights are well above year ago levels and remain a big question going forward. Relatively low feedlot cost of gain will remain an incentive to push cattle weights higher but better feeder to fed price spreads and the prospect of stronger market signals to limit cattle weights may hold carcass weight in check later in the year. Last fallís experience with heavy cattle and carcasses was not good for the market, nor pleasant for feedlots or packers.

"Following early spring conditions in February and early March across much of the country, more winter weather has impacted northern regions recently. These winter storms have likely impacted meat demand, particularly in the Northeast; while snowy and muddy conditions impact feedlot production in the northern and central Plains and Midwest. The overall impact is probably negative to cattle markets, though moderate in magnitude. Another round of grilling demand in preparation for the Memorial Day holiday is likely to be reflected in boxed beef prices and perhaps fed cattle prices in late April into May. This will help support markets against growing seasonal supply pressure in the next few weeks but may not be enough to challenge price peaks already in place."



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