Most of western Oklahoma has received little or no moisture in the past two to three weeks advancing drought conditions once again and threatening winter grazing, said Derrell Peel, Oklahoma State University Extension Livestock Marketing Specialist, in a letter to Extension Agents called Cow/Calf Corner.
From the worst levels in early July, drought conditions in Oklahoma had improved until mid-September, Peel said. In the past two weeks, the US Drought Monitor for Oklahoma shows conditions again deteriorating.
DROUGHT MONITOR WORSENS
The Drought Monitor includes a Drought Severity & Coverage Index, which provides an indication of how severe and widespread drought conditions are. The DSCI for Oklahoma was highest at 143 in early July. The DSCI improved to 55 by mid-September and increased again to 64, he said.
Nationally, the DSCI has worsened since May and currently stands at 148, with the majority of drought conditions in the western half of the country, Peel said.
La Niña conditions have developed this fall in the Pacific Ocean and are expected to persist through the winter, he said. The presence of La Niña in the winter typically results in drier-than-average conditions across the southern US.
As a result, the drought outlook for the remainder of the year, provided by the Climate Prediction Center, indicates persistent drought in current drought areas with drought conditions expanding eastward into the central and southern plains, including much of Oklahoma, he said.
Wheat pasture development and growth is likely to slow or even reverse if forecast weather conditions are realized, he said. This, in turn, may reduce stocker cattle demand.
On average, Oklahoma calf prices are at or near their seasonal low in the late September/early October period, Peel said. With larger fall runs of calves expected in October and November, the lack of wheat pasture demand may add additional seasonal pressure to calf markets this fall.
FEEDER CATTLE PRICES
A feeder cattle price pattern has developed this fall in Oklahoma that is very typical at this time of year, Peel said. The price slides across steer weights are very different for feeder cattle below 600 pounds compared with cattle over 600 pounds.
A larger price slide for the lightweight cattle means that the value of gain is lower, he said. Steer prices last week (Oklahoma combined auctions) showed the value of increasing steer weight from 500 to 550 pounds increased animal value by $30 a head or $0.60 per pound value of gain.
From 550 to 600 pounds, steer value increased by $29 a head or $0.58 per pound of gain, Peel said. In contrast, steers from 600-650 pounds increased in value by $69 a head or a value of gain of $1.37 per pound.
CATTLE, BEEF RECAP
Fed cattle trading last week was seen at $107 per cwt on a live basis, up $2 to $3 from the previous week. Dressed-basis trading was reported at $167 to $168 per cwt, up $3 to $4.
The USDA choice cutout Tuesday was down $0.74 per cwt at $216.24, while select was off $1.17 at $206.84. The choice/select spread widened to $8.97 from $8.97 with 115 loads of fabricated product and 53 loads of trimmings and grinds sold into the spot market.
There was one steer retender at 1 against the Oct live cattle futures contract Tuesday and one demand at 1.
The CME Feeder Cattle Index for the seven days ended Monday was $143.10 per cwt, up $0.36. This compares with Tuesday’s Oct contract settlement of $138.12 per cwt, down $1.92.