Cattle producers have many challenges working through the disruptions from COVID-19, but it looks like the overall feed situation will provide more flexibility for feeder and feedlots, said Derrell Peel Oklahoma State University Extension livestock marketing specialist, in a letter to Extension agents called Cow/Calf Corner.
However, emerging potential drought conditions are a threat and may reduce production and marketing flexibility in affected regions, Peel said.
DROUGHT POTENTIAL LOOMS
A large area of low-level drought is building from western Kansas to northern California and the Pacific Northwest, he said. Some of the worst drought areas were in Colorado and surrounding regions and in Oregon.
Drought in south Texas has improved somewhat, but some issues continue along the gulf coast from Texas to Florida, Peel said. In the latest National Oceanic and Atmospheric Administration Drought Monitor, 17.4% of the country was in some level of drought or excessive dryness, although nowhere was it extreme.
This is a critical growth period and any expansion of drought conditions may have significant implications for pasture and hay production, Peel said.
HAY STOCKS UP
The May 1 USDA hay stocks report showed total hay stocks at the beginning of the hay marketing year were 20.4 million short tons, up 37.0% year over year, he said. May 1 hay stocks were up in nine of the top 10 states ranging from a 25.0% increase in Kentucky to 193.8% in Missouri.
Of the top 10 states, only Montana was down 5.5% year over year, Peel said. Regionally, the biggest concern is the southeast with total May 1 stocks down 22.8% year over year in Alabama, Georgia, Florida, North and South Carolina and Tennessee. Florida’s stocks were even with last year.
LMIC PROJECTS 2020 ALFALFA PRODUCTION INCREASE
The Livestock Market Information Center projected 2020 alfalfa hay production to increase 4.0% from last year, resulting in larger ending stocks and season average prices down nearly 17% year over year to $150 a ton, Peel said. Total non-alfalfa hay production may decrease 1% to 2% this year but a slight buildup of ending stocks was projected to push season average prices down fractionally to $132.50 a ton.
Feedgrain supplies will be abundant with large ending stocks of corn this year getting larger, Peel said. Corn ending stocks were projected by the LMIC at 2.9 billion bushels by the end of August and growing to 3.3 billion by the end of the 2020-2021 crop year.
Corn production in 2020 was projected at a record 15.2 billion bushels, he said. The season average corn price was projected at $3.35 a bushel, dropping to $2.85 in the coming crop year.
Decreased ethanol production was forcing some producers to adjust rations because of a reduced supply of dried distiller’s grains, Peel said.
However, plenty of feedgrain supplies ensures that ration costs will be the lowest in several years, he said. Protein feeds were expected to remain abundant and affordable.
CATTLE, BEEF RECAP
Fed cattle trading was reported in the Plains at $119 to $120 per cwt on a live basis, steady to up $9 from last week’s $110 to $120 trading range. Dressed-basis trading was seen at $190 per cwt, steady to up $20.
The USDA choice cutout Tuesday was down $5.48 per cwt at $409.47, while select was off $26.00 at $388.87. The choice/select spread widened to $20.60 from $20.08 with 57 loads of fabricated product sold into the spot market.
The CME Feeder Cattle index for the seven days ended Monday was $126.84 per cwt, up $1.11. This compares with Tuesday’s May contract settlement of $127.42, up $0.82.