Drought conditions in Oklahoma remain very severe.  The latest Drought Monitor shows that, while a smaller portion of the state is in the worst drought category D4 (40 percent versus 69 percent last year), a larger portion of the state, 95 percent is in combined D3 and D4 categories, compared to 85 percent last year.  The water level in stock ponds is decreasing rapidly and lack of water may force destocking soon in some areas.  However, much of state received some rain in the last week with total ranging from less than one half inch to over one inch in some areas.  A few counties in the northeast corner of Oklahoma received over two inches of rain.  This rain will be reflected in the new Drought Monitor but may not change overall drought conditions much.

The rain is, however, very timely for winter wheat planting and will likely get wheat drills running across much of the state.  The recent rains provide some topsoil moisture to plant and germinate a crop but subsoil moisture is still very limited.  Wheat planted now for grazing will be vulnerable and will require additional timely moisture to continue development and provide fall forage. Nevertheless, producers will be thinking about how use any wheat forage that is available.  In some instances, wheat forage this year, like last year, may be needed to support cows and replacement heifers this winter.  Limited access wheat grazing for cows combined with limit feeding of hay can stretch winter forage very effectively.  The extra labor required is likely to be well rewarded given the alternative of purchasing very expensive hay and/or supplement.

Other producers will be looking at stocker cattle for the winter grazing season.  Feeder cattle prices across all weights have rallied since the late July lows.  Feeder prices still show a break with calf prices at a sharp premium up to the upper 500 pound range for steers followed by a much smaller price rollback for heavier weight feeders.  The most recent combined auction market report for Oklahoma shows a $19/cwt price drop from 419 pound steers to 523 pound steers.  Also in this report, as weight increases from 523 pounds to 625 pounds the price drops about $5/cwt. and from 625 pounds to 726 pounds, the price decreases by $2.66/cwt.  Though the feeder price patterns still favor heavier beginning stocker weights, a slight reduction in the four weight stockers and a slight increase in heavier feeder prices in the past couple of weeks enhances the stocker value of gain for those 400-500 pound stocker that are so popular in Oklahoma.  Moreover, Feeder cattle futures for 2013 all reflect expectations for higher feeder cattle prices with prices ranging from about $153/cwt. for March contracts to over $156/cwt. for May Feeder futures.  Stocker producers have considerable flexibility in implementing a wide variety of stocker programs with good potential value which can be locked in, thereby reducing risk.  Marketing stocker cattle will be relatively easy but production challenges remain.

Source: Derrell S. Peel, Oklahoma State University Extension Livestock Marketing Specialist