Western, Northern Drought Seen Expanding

Drought in the western US and the dry conditions in the upper Midwest are likely to expand while pastures and crops in the central and Southeastern states have a greater chance of seeing a more normal pattern, the National Weather Service said Thursday.

The NWS’ Climate Prediction Center also said it expects drought improvement across the hard red winter wheat belt, while drought conditions will expand in the western US.

Pastures in western regions will see more stress than they already have, possibly sending calves and even cows into other markets because there is no forage.

Drought also is expected to hit Minnesota and South Dakota.  These areas produce a wide variety of crops, including corn, soybeans, spring wheat and winter wheat.  Oats and alfalfa hay also are grown along with grass hay and pastures.

Market analysts and traders are worried about the climate predictions because of the area’s corn, soybeans and wheat output.  While not included in many of the US’ descriptions of the corn and soybean belt, the area is a significant contributor to the nation’s output.

 

DROUGHT MONITOR ALSO CONCERNS

 

The weekly US Drought Monitor from the National Oceanic and Atmospheric Administration shows drought and dryness conditions in a real-time context.  It shows the expanding area of exceptional drought, the worst category, in California and Nevada.

California is where much of the US’ vegetables and many of its nuts and fruits are grown.  Many immense dairies and chicken farms are there as well.  These crops have been cut significantly over the last four years of drought.  Cattle producers also have sold calves and cows to producers in other states.  More can be expected.

Equally as troubling, however, is the persistent area of exceptional drought and the surrounding areas of extreme and severe drought conditions across the Southwest and through the Plains states.  It must be remembered that normal conditions across the Southwest would be extremely dry by Midwestern standards, so to term current conditions as extreme drought is to call the area even drier.

The Plains states is where much of the US hard red winter wheat, or bread wheat, is grown.  Wheat can be fed to livestock as well, so the feed aspect of the area is watched carefully.

But the Plains also offers abundant grass for pastures if there is enough rain.  If drought conditions expand in the northern Plains states as predicted, it could present a challenge to cow/calf producers in the region.

 

CASH CATTLE MARKET TRADES LOWER

 

Cash cattle markets Thursday remained slow, but the USDA reported 1,846 head of steers selling this week at a weighted average of $162.48 per cwt on a live basis, steady to $1 lower than last week’s lightly tested $163 to $165.50 market.  Sales of 3,501 heifers were similarly priced at $162.36.

Dressed-basis prices also were lower, but trading has been very light.  A total of 1,017 steers sold at $255.96 per cwt this week, while 42 heifers changed hands at $256.00.  Last week’s dressed-basis trade ranged from $261 to $263.

The USDA’s choice cutout was higher at midday Thursday but fell by the afternoon report.  Choice was down $0.42 per cwt at $260.38, while select was off $0.25 at $250.97.  The choice/select spread narrowed to $9.41 from $9.58, and there were 125 loads of fabricated product sold into the spot market.

The CME Feeder Cattle Index for the seven days ended Wednesday was down $1.38 at $218.40 per cwt, compared with Wednesday’s settlement of the Apr futures contract at $215.80, up $0.57.