OSU's Dr. Derrell Peel on Drought and Forage ConditionsTue, 08 Sep 2020 07:08:33 CDT
Oklahoma State University Extension Livestock Marketing Specialist, Dr. Derrell Peel, offers his economic analysis of the beef cattle industry. This analysis is a part of the weekly series known as the "Cow Calf Corner" published electronically by Dr. Peel and Dr. Glenn Selk. Today, Dr. Peel talks about drought and forage conditions.
One-third of the U.S. is in drought, predominantly in the western half of the country. Only about seven percent of the country is in the worst drought categories (D3-D4), but 26 percent is in D1 and D2 drought and another 21 percent of the country is abnormally dry (D0). Table 1 shows the corresponding pasture condition ratings at the end of August. Nationally, 46 percent of the pastures are in poor and very poor condition with just 22 percent in good to excellent condition. The western region (West) has 50 percent of pastures in poor to very poor condition followed closely by the Great Plains (GP) and Southern Plains (SP) each with 42 percent of pastures in poor to very poor condition. At the current time, 41 percent of beef cows are in states that have at least 40 percent poor to very poor pasture conditions, compared to 19 percent one year ago.
There is no doubt that lack of pasture is creating management challenges in the worst drought areas and likely leading to some regional destocking and relocation of cows. However, it is not clear that drought has resulted in significant net herd liquidation thus far. Beef cow slaughter for the year to date is up 3.3 percent year over year but is down fractionally for the past four weeks.
Poor pasture conditions at the end of the grazing season makes the question of hay supplies more critical going into the fall and winter. USDA provided estimates for alfalfa and other hay production in the August Crop Production report. In total, 2020 alfalfa hay production is estimated to be down 5.9 percent year over year with other hay production is down 0.5 percent compared to last year (Table 1). The reduction in alfalfa hay production is generally more important in the northern half of the country and affects both beef and dairy cows.
In the western region, both alfalfa and other hay production are down year over year and, combined with the poor pasture conditions suggest the biggest regional challenges in the coming months (Table 1). The western region has just over 10 percent of the total beef cow herd. The Corn Belt (CB) region also has year over year decreases in both alfalfa and other hay production. However, pasture conditions are substantially better in the Corn Belt compared to regions farther west. Crop aftermath is likely a more significant component of total forage supplies in the CB region, which represents nearly 15 percent of the total beef cow herd. The Great Plains and Southern Plains regions combined, have over 50 percent of the beef cow herd and have reduced 2020 alfalfa hay production with small year over year increases other hay production. These two regions are vast and vary widely with conditions ranging from very good to very poor.
USDA reported July alfalfa hay prices of $174/ton, down from $179/ton in June and $183/ton one year ago. Only six states reported year over year higher prices in July. Other hay prices in July were $137/ton, up from $128/ton in June and higher year over year compared to $134/ton last year. Nine states reported year over year increases July other hay prices. Nevada and North Dakota were the only states in July with both alfalfa and other hay prices higher compared to last year.
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