In The Cattle Markets: Impact Of Southeastern Rains
11/03/2009 03:25PM
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The Southern US has been inundated with rain over the past two months. The Mississippi River corridor has been particularly hard hit by the excessive rains. Figure 1 shows rainfall as a percent of normal for the 60 days ending on November 2. Note that in parts of the Mid-South and Southeast, accumulated rainfall over the past 60 days has been as much as four or five times the normal amount. For row crop producers, this year’s rainfall event has been devastating, seriously degrading both the quantity and quality of crops remaining in the field. Soybeans and cotton have probably suffered the greatest losses due to the fact that October is generally the principal harvest season for these crops.
Figure 1. Precipitation over the past 60 days as a percent of normal
Source: US National Weather Service, Advanced Hydrologic Prediction Service. Online at http://water.weather.gov/index.php. Accessed November 2, 2009.
The effects of this year’s historic rainfall on Southern cattle producers are more subtle than for crop producers. In some respects, the weather has been beneficial.
Hay production earlier in the year was very good, and most states in the South will produce more hay in 2009 than in 2008, though getting late hay up in good condition has obviously been very difficult. In addition, most producers have enjoyed abundant fall pasture this year, with less than 15% of the pasture in most Southern states rated as Poor or Very Poor in the latest Crop Progress report. The quality of pastures in the South has probably not been as good as its outward appearance. Anecdotal reports in the Mid-South suggest that some producers have had to supplement fall pasture with hay due to the very low dry matter content of the grass this fall. This is common in the spring but rather unusual for fall pasture. The problems faced by the region’s row crop producers should create some opportunities for Southern cattlemen. Commodity feeds will be widely available in many areas, as grain that is too damaged for delivery to elevators is sold as livestock feed for salvage prices. This will be the fate of large quantities of soybeans in the Mid-South. Cattlemen will need to brush up on some basic management points before taking advantage of this feedstuff, including acceptable inclusion rates and any feeding restrictions related to pesticide (especially fungicide) applications.
There is a downside to this year’s wet weather for cattle producers. Conditions for working cattle have been generally abysmal. For producers backgrounding calves, the weather has not been particularly conducive to getting calves straightened out and on feed. Probably most significantly, stocker cattle producers who graze cattle on winter annuals have had considerable difficulty in getting those crops established. USDA Crop Progress reports indicate that small grain planting is well behind normal in much of the region. This fall’s weather has, at best, significantly shortened the winter annual grazing season for many producers in the South.
The Markets
The fed cattle market moved higher again this week. Texas and Kansas sales were $1 to $2.50 higher while Nebraska was called steady to $3 higher. The 5-area fed steer price was $86.90 on a liveweight basis, $2.31 higher than the week prior. The choice boxed beef price continued to rise as well, moving above the $140 mark for the first time in October. Early week calf sales were down last week but as the week moved along prices improved as fed prices improved and corn moved lower. The corn market, which had been as high as $4.13/bu on October 23rd, cooled most of last week and was at $3.82 ¼ on Monday – primarily a result of improvements in the US Dollar and lower oil prices. Despite the lower corn prices, DGS moved slightly higher this week.
Source: John D. Anderson, Ph.D., Extension Professor, John Michael Riley, Ph.D., Assistant Extension Professor, Department of Agricultural Economics, Mississippi State University