With the driest November on record behind us and no moisture in sight, drought management issues are on the minds of cattle producers across
Oklahoma.
While drought conditions have not had significant market impacts thus far, increasingly dry conditions will soon cause both cow-calf and stocker producers to take drastic management actions and may lead to market impacts at some point.
Dry conditions limited fall cool-season forage growth and, in conjunction with unprecedented fall calf prices, may have caused some calves to be weaned and sold earlier than usual this fall. Feeder cattle auction sales jumped, compared to last year, beginning in early October. Total auction volumes in October and November are up 33 percent from last year. Despite, the increase in auction sales, calf prices have remained extremely strong, showing no seasonal decline through the period.
Those same drought conditions have severely limited wheat pasture development in Oklahoma. At this time, there are significantly less cattle than usual on wheat pasture, perhaps 20 percent of normal, and most of the cattle on wheat pasture will run out of forage in the next few weeks without immediate moisture. It is possible that some stocker cattle will move back into the market well before intended marketing dates if forage supplies are depleted. However, many producers have intentionally understocked so as to extend existing standing forage supplies until moisture arrives and growth resumes. At this late date, moisture will not likely prompt much new cattle demand at least not until forage growth resumes in February after vernalization. At that point it will be a question whether stocker producers are interested in grazing out wheat rather than harvesting the crop.
In many years the lack of wheat pasture demand for lightweight cattle would tend to exaggerate seasonal calf price declines. This year, despite the fact that most cattle did not move to wheat pasture, demand was more than sufficient to keep prices firm. It appears that more and, to some extent, lighter than expected cattle moved into feedlots this fall. This was confirmed by the fact that October feedlot placements were roughly 3 percent higher than expected. All of this suggests that January 1 estimates of feeder supplies will likely be tighter than last year, at least in Oklahoma, as it appears that smaller numbers of feeder cattle are being carried over into 2006.
Cow markets have not been significantly affected as the drought has not yet resulted in forced sales. Many producers have substantial hay supplies and with cheap corn available there are several viable feeding strategies to winter cows. The drought is more of a management headache than a market situation at this time. However, lack of stock water is a bigger problem and could force some cattle movement if dry conditions persist.
Source: Derrell S. Peel, OSU Extension Livestock Marketing Specialist