OSU's Derrell Peel Says Winter Storm Impacts Markets in Many WaysMon, 02 Dec 2019 10:45:30
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 talks weather and it's impact on crops and cattle.
"A major winter storm disrupted Thanksgiving travel last week and will have a variety of impacts for some time. The latest snow and cold hampers an already difficult crop harvest. Though frozen conditions may increase access to muddy fields, deep snow in some areas will add additional delays to corn harvest and may further impact crop quality. On November 25, 84 percent of corn harvest was completed; well behind the average of 96 percent for the date. Corn harvest was 68 percent complete in South Dakota, 57 percent in Wisconsin, 56 percent in Michigan and just 30 percent in North Dakota. Many of these areas have been hit by significant snow and blizzard conditions in this latest storm.
"Winter weather often impacts cattle production, reducing production and increasing costs for ranches and feedlots. Severe weather inevitably means management challenges and higher costs for producers but may also have market impacts if poor conditions are widespread enough. The current blast of winter weather impacts a wide swath of cattle feedlots from Colorado, across parts of Nebraska and the Dakotas, part of Iowa and across Minnesota. It appears that the major cattle feeding areas in Kansas and Texas missed the bulk of this storm.
"While this storm may not be widespread enough to cause noticeable fed cattle market reactions, the storm may delay cattle finishing and disrupt slaughter flows in some regions and may help ensure that the seasonal peak is in for carcass weights. Steer and heifer carcass weights have pushed above year ago levels the past few weeks with the latest steer carcass weights at 912 pounds compared to 900 pounds last year and heifer carcasses at 841 pounds, up from 836 pounds one year ago on the same date. However, for the year to date, steer carcass weights are down 3.3 pounds and heifer carcasses are down 4.4 pounds. An early storm like this may set the stage for a long period of feedlot production challenges with impacts persisting and accumulating through the winter.
"Winter weather often impacts the demand side of the market. Winter storms may disrupt transportation and the flow of perishable products to markets. Though people continue to eat during storms, travel and business disruptions often reduce restaurant traffic and power disruptions may reduce meat demand as consumers hunker down and get through the storm with minimal cooking and more use of prepared and ready to eat products.
"For cattle and beef markets, winter weather may have negative impacts on both supply and demand depending on the location, severity and size of storm events. The net impact is uncertain and is often difficult to isolate in aggregate market prices. However, higher costs, lost production and reduced revenues impact the entire industry from cattle producers to beef retailers."
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