Beef Buzz News
2012 Drought Spreads Northward, Pressures Grain and Cattle Markets
Mon, 09 Jul 2012 14:41:08 CDT
Derrell Peel talks about the effects of the 2012 drought on cattle markets.
Drought conditions in Oklahoma this year are not yet as bad as they were a year ago, but they are worse in Nebraska through the Dakotas and Wyoming. Oklahoma State University Extension Livestock Marketing Specialist Derrell Peel said the dry conditions are definitely having their effects on the cattle markets.
"The June Cattle on Feed Report for May showed a bigger placements number even though everybody was looking for a fairly big number, and some of that was in fact due to drought-enhanced movements. We'll probably see some additional movement here as we go forward. And we can move them early just like we did last year, but that means at some point there will be less in behind them. So, once again, we're changing the supply of a limited number of feeder cattle."
Hopes that Oklahoma ranchers would be rebuilding herds liquidated due to drought last year are evaporating. As ranchers in Missouri, Kansas, and Nebraska are now feeling the 2012 drought's full force, markets are responding, Peel said.
"This year, already, we're seeing more direct impacts, more negative impacts on cattle prices more like you would expect with a drought.
"The biggest surprise of 2011 was the fact that we saw relatively muted negative impacts on prices despite the volume of cattle that were reported to move, both feeder cattle and culled cows.
"This year, it looks like the market is a little more vulnerable to that. I think it's a combination of those direct-route effects that the feed price affects and the fact that we're still bringing in lots of feeder cattle from south of the border right now to bolster the supply short-term."
Peel said that higher feed grain prices and deteriorating forage conditions in last year's drought areas are not good news for the cattle marketplace.
"It certainly is not when you look at the level of losses that the feedlots have already been enduring. They were pinning a lot of hopes on a big corn crop and at least some relief in feed prices. That's all just evaporated very quickly here in recent days and, now, the feedlots face an even dimmer prospects in terms of higher feeder cattle prices, high feed prices, and continued limited supply of the cattle all of which are going contribute to continued losses, and significantly large losses for that sector of the industry.
The Beef Buzz is a regular feature heard on radio stations around the region on the Radio Oklahoma Network- but is also a regular audio feature found on this website as well. Click on the LISTEN BAR below for today's show- and check out our archives for older Beef Buzz shows covering the gamut of the beef cattle industry today.
Click on the LISTEN BAR below to hear Derrell Peel's full analysis of the impact of the 2012 on cattle markets.
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