Agricultural News
Dr. Derrell Peel says Lack of Moisture will Threaten Winter Grazing
Mon, 05 Oct 2020 09:32:12 CDT
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 about how the Lack of Moisture threatens winter grazing.
Most of western Oklahoma has received little or no moisture in the past two to three weeks advancing drought conditions once again. From the worst levels in early July, drought conditions in Oklahoma had generally improved until mid-September. In the past two weeks, the Drought Monitor map for Oklahoma shows conditions once again deteriorating. The Drought Monitor includes a Drought Severity & Coverage Index (DSCI), which provides an indication of how severe and widespread drought conditions are based on the Drought Monitor categories. The DSCI for Oklahoma was highest (indicating worse drought conditions) at 143 in early July. The DSCI improved to 55 by mid-September and has increased again to 64 in the latest Drought Monitor. Nationally, the DSCI has worsened since May and currently stands at 148, with the majority of drought conditions in the western half of the country.
La Niña conditions have developed this fall in the Pacific Ocean and are expected to persist through the winter. The presence of La Niña in the winter typically results in drier than average conditions across the southern U.S. As a result, the drought outlook for the remainder of the year, provided by the Climate Prediction Center, indicates persistent drought in current drought areas with drought conditions expanding eastward into the central and southern plains, including much of Oklahoma. Current Oklahoma weather forecasts are consistent with these broader indications with scant precipitation prospects likely for the next two weeks.
Wheat pasture development and growth is likely to slow or even reverse if forecast weather conditions are realized. This, in turn, may reduce stocker cattle demand in the coming weeks. On average, Oklahoma calf prices are at or near the seasonal low in the late September/early October period. With larger fall runs of calves expected in October and November, the lack of wheat pasture demand may add additional seasonal pressure to calf markets this fall. Lack of wheat pasture or other forages may change the timing of calf and feeder cattle sales this fall.
A feeder cattle price pattern has developed this fall in Oklahoma that is very typical at this time of year. The price slides across steer weights are very different for feeder cattle below 600 pounds compared to cattle over 600 pounds. A larger price slide for the lightweight cattle means that the value of gain is lower. For example, steer prices last week (Oklahoma combined auctions) showed that the value of increasing steer weight from 500 to 550 pounds increased animal value by $30/head or $0.60/lb. value of gain. From 550 to 600 pounds, steer value increased by $29/head or $0.58/lb. of gain. In contrast, steers from 600-650 pounds increased in value by $69/head or a value of gain of $1.37/lb. The same is true for heavier weight feeder animals. The same pattern is true for heifers with the price break occurring at about 550 pounds.
The current feeder price patterns mean that producers should consider the implications of current animal weight, short-term weight gain and timing as they evaluate fall marketing alternatives. In the current market for example, the value of 50 to 100 pounds of gain will be significantly lower for steers less than 600 pounds compared to steers over 600 pounds.
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