Drought-withered pastures, dwindling hay supplies and high prices could be accelerating current cattle herd reductions, said Derrell Peel, Oklahoma State University Extension livestock marketing specialist, in a letter to Extension agents called Cow-Calf Corner.
The August Crop Production report from the USDA’s National Agricultural Statistics Service Friday forecast 2022 alfalfa hay production at 49.1 million short tons, down 0.3% from 2021 and 13.6% from the 2011-2021 average, Peel said. All other hay production was forecast at 67.7 million tons, down 4.6% year over year and down 7.4% from the 10-year average.
Total 2022 US hay production was forecast at 116.8 million short tons, down 2.9% from one year ago and down 10.1% from the 2011-2020 average, he said. Alfalfa and other hay prices were at record levels in 2022.
DROUGHT CUTS HAY PRODUCTION
May 1 hay stocks were down 6.9% year over year but were down 16.9% from the 2011-2020 average, Peel said.
Total hay supplies for the 2022-2023 hay crop year (May-April) was projected to be down 3.4% year over year and down 11.0% from the 10-year average.
Among six of the top 10 hay states, reduced May 1 stocks, reduced 2022 hay production, or both, were contributing to significant reductions in hay supplies, he said. Low May 1 stocks reflect carryover drought effects from 2021.
Reduced 2022 hay production was the result of drought and/or high input costs including fertilizer and fuel, Peel said.
WHERE THE RUBBER MEETS THE ROAD
Texas, which had relatively less drought in 2021, May 1 stocks were up 33.3% year over year but a 28.7% production decrease this year results in a 22.5% reduction in 2022 hay supply, Peel said.
In contrast, South Dakota had severe drought in 2021 leading to a 50.5% decrease in May 1, 2022, stocks, he said. South Dakota is seeing a 65.5% year over year production increase in 2022. However, because of drought last year, total 2022 hay supply is up just 17.4% year over year compared to the 32-year low in 2021.
Eight of the top 10 hay states also are top beef cow states including Texas, Oklahoma, Missouri, Nebraska, South Dakota, Kansas, Montana and Kentucky, Peel said. These eight states had 15.7 million beef cows on Jan. 1, 2022.
The other two, California and Idaho, are the number one and three dairy cow states, respectively, he said. With the growing season winding down amid continuing drought, the 2022 hay supply data illustrate why so much herd liquidation has occurred this year.
CATTLE, BEEF RECAP
The USDA reported formula and contract base prices for live FOB steers and heifers this week ranged from $143.18 to $149.00 per cwt, compared with the last week’s range of $136.12 to $144.00. FOB dressed steers, and heifers went for $215.08 to $220.53 per cwt, versus $212.48 to $220.48.
The USDA choice cutout Wednesday was down $1.10 per cwt at $264.34 while select was down $1.23 at $237.89. The choice/select spread widened to $26.45 from $26.32 with 100 loads of fabricated product and 45 loads of trimmings and grinds sold into the spot market.
The USDA said basis bids for corn from feeders in the Southern Plains were unchanged at $2.40 to $2.70 a bushel over the Sep futures and for southwest Kansas were unchanged at $0.10 over Sep, which settled at $6.15, up $0.04.
No contracts were tendered for delivery against the Aug live cattle contract Wednesday.
The CME Feeder Cattle Index for the seven days ended Tuesday was $179.89 per cwt up $0.54. This compares with Wednesday’s Aug contract settlement of $183.25, up $1.72.