The storm this past weekend brought significant ice and damage to western and northwestern Oklahoma but the ice was generally less severe than expected in central Oklahoma. Most of the state, however, received very beneficial rain totaling one to three inches in many areas. The rain totals included record daily rainfall for several locations on Sunday, January 15, 2017. This moisture will help alleviate rapidly expanding drought conditions across the state. The latest Drought Monitor showed that 88 percent of the state had drought conditions ranging from D1-D4. This compares to just three months ago when 62 percent of the state had no dry conditions. Dry and cold conditions through December and early January slowed or stopped wheat growth and left wheat pastures in increasingly poor condition. Many stocked wheat pastures are very short which has forced producers to increase hay feeding or move cattle to other pastures or to market.
Amidst a slew of USDA reports last week was December 1 hay stocks, included in the January Crop Production report. Total U.S. hay stocks on December 1 were up 0.9 percent from one year ago; however, state totals differed widely. The report confirms the impact of drought in the southeast with Alabama hay stocks down 34.4 percent year over year, Georgia down 13.6 percent and Mississippi down 5.3 percent from one year ago. December hay stocks were lower as well in Tennessee and Kentucky compared to last year. Texas, which has typically had the largest state hay stocks in the past fifteen years, was up a whopping 25 percent to the largest state level since 2007. Nearby, Oklahoma, with the third largest December hay stocks, was up 4.6 percent year over year along with Arkansas, up 11.4 percent and Kansas (fifth largest state stocks), up 3.9 percent from last year. Farther north, December hay stocks were 9.1 percent lower year over year in South Dakota, with the second largest hay stocks, as were North Dakota, down 7.8 percent; Nebraska, down 9.8 percent; Missouri (fourth largest hay stocks), down 4.5 percent; and Iowa, down 19.2 percent. Hay stocks were larger year over year in Montana, Wyoming and Idaho along with Wisconsin and Minnesota.
Cash feeder cattle prices have started 2017 generally stronger, especially for calves. The combined Oklahoma weekly auction volume for the first full week of January was over 44,000 head, sharply higher than the 28,000 for the same week last year, which may reflect cattle sales due to poor wheat pasture conditions as well as cattle carried over from the end of 2016 for tax reasons. Some producers may be selling one set of stockers now, hoping to buy a second set for wheat graze-out, assuming wheat pasture conditions improve in the next few weeks. Cash fed cattle prices have carried end of year strength from 2016 into 2017. Immediate feedlot supplies may be relatively tight due to aggressive marketing in late 2016 and weather impacts that have slowed cattle performance in feedlots. Live and Feeder cattle futures have been extremely volatile so far in January with volatility likely to continue which will continue to hamper the usefulness of futures as risk management tools. Boxed beef prices dropped sharply in the first ten days of January as packers apparently flushed out the beef pipeline following the holidays. However, Choice boxed beef prices appeared to stabilize at the end of last week. The next couple of weeks will likely provide a better picture of underlying trends in boxed beef, as well as cattle markets, going forward.