Prospects for fall and winter grazing look good for wheat producers, said Oklahoma State University Extension Livestock Marketing Specialist Derrell Peel in a letter to Extension agents.
Much of Oklahoma has received variable amounts of rain the past two weeks, Peel said. It appears available moisture and favorable soil temperatures will support plans for early planted wheat for fall and winter grazing.
Additionally, generally good fall native and introduced pasture conditions may provide more flexibility for fall grazing programs, he said.
UNCERTAINTY AROUND FEEDER MARKETS
Early winter grazing budgets highlight the huge uncertainty affecting feeder cattle markets, Peel said. While the effects of the Tyson plant fire likely will diminish soon, feeder cattle markets remain nervous and defensive about the corn market situation, increasingly shaky macro-economic conditions and continued global economic turmoil.
Expectations about the 2019 corn crop vary widely as do emotions about the crop situation, he said. Private crop tour estimates suggest a lower corn yield than USDA estimates, and acres harvested remains an unknown.
One thing that seems clear is that much of the corn crop maturity is sharply delayed and the risk of an early or even normal frost in the Corn Belt is high, Peel said.
The latest USDA Cattle on Feed report presented slightly friendly news with July placements at 97.9% of last year, somewhat lower than expected, and strong July marketings at 106.9%. The total feedlot inventory, for feedlots of more than 1,000 head capacity, on Aug. 1 was 11.1 million head, 100.2% of last year.
Virtually all aspects of a winter wheat grazing budget are subject to variation at this point, Peel said. Seasonal patterns for calf prices suggest lower calf prices by October but it sometimes happens in Oklahoma that good fall forage and wheat pasture conditions provide enough stocker demand to hold prices closer to steady through the fall.
And corn market developments into harvest may have a significant effect on feeder markets this fall and beyond, Peel said.
Generalized winter grazing budgets vary from decent profitability to little or no returns depending, of course, on cattle prices, but also on cattle performance, health costs and forage costs, he said.
The cost to establish dual-purpose wheat pasture depends on wheat prices (assuming some yield loss from winter grazing) and costs for additional fertilizer and seed, Peel said. Cattle producers renting wheat will pay a market price above the wheat pasture cost.
The uncertainty and volatility in feeder cattle markets likely will continue this fall and winter, he said, increasing the risks of winter stocker production, but they also may present short term opportunities for buying or selling cattle.
At this point, forage conditions appear favorable for stocker cattle production, Peel said. The best advice at this point is to evaluate and re-evaluate possibilities frequently and remain as nimble as possible.
CATTLE, BEEF RECAP
Cash cattle trade was reported this week at $105 to $108 per cwt on a live basis, steady with last week. Dressed-basis trade was at $170 to $173, down $2 to $5.
The USDA choice cutout Thursday was down $0.77 per cwt at $232.19, while select was up $0.97 at $212.78. The choice/select spread narrowed to $19.41 from $21.15 with 87 loads of fabricated product sold into the spot market.
Eleven heifer and three steer contracts were tendered for delivery Thursday at zero.
The CME Feeder Cattle index for the seven days ended Wednesday was $138.69 per cwt, up $0.07 from the previous day. This compares with Thursday’s Aug contract settlement of $138.75, unchanged, and the Sep contract settlement of $133.40, up $0.55.