Although it is only August, some forage-only and dual-purpose wheat producers in Oklahoma are already thinking about planting winter wheat for winter grazing. Early planted winter wheat is fraught with agronomic challenges and risks. Soil moisture has generally been very short the last few weeks making wheat planting a bigger risk. Storms and rains in some regions of Oklahoma this past weekend may provide moisture to facilitate early wheat planting in some areas. In other cases, producers may “dust in” wheat into dry soil to await rain. High soil temperatures in late summer can delay germination in many years, though that seems to be less of a concern this year. Early planted wheat established in late August or September is subject to more weed and pest problems. Army worms are a particular threat to early emerging wheat in the fall. Grain-only wheat producers will not plant wheat until October and thus avoid or minimize some of these agronomic challenges.
Assuming wheat stands are established and wheat forage prospects develop, stocker producers will be planning purchases this fall and looking ahead to feeder market prospects next spring. Stocker production is tricky in the current market and requires careful planning. Stocker calf prices have risen farther and faster than feeder cattle prices since 2022. This means that the general buy/sell margin for stockers is narrowing. Generally uptrending feeder cattle markets have partially offset this with the time lag between stocker purchase and feeder sale allowing for feeder prices to close the gap somewhat. Risk management is important but feeder futures are not generally offering good opportunities to protect feeder cattle value. However, put options or LRP will provide minimum price protection from the enhanced volatility typical in current cattle markets.
In an average year, stocker calf prices would be expected to decrease seasonally from summer to a fall low. The current market is anything but average and seasonal patterns may not happen. Calf numbers will be relatively tight this fall, meaning that it may be hard to find stockers and they are likely to be expensive – especially if there is wheat pasture to keep stocker demand strong.
The cost of gain in feedlots has decreased this year and is expected to drop farther with corn prices remaining low in the coming months. This gives feedlots more ability to bid for feeder cattle and outcompete stocker producers for limited feeder cattle supplies. Feedlots are expected to place some feeder cattle that are lighter weight than usual as they attempt to maintain feedlot inventories. In the current market environment, prices across the spectrum of feeder cattle prices by weight generally suggest that stocker producers are increasingly relegated to the small end of feeder cattle – the basic signal is for stocker producers to purchase lighter cattle and turn them over more quickly. In general, the market signals are to move limited feeder cattle supplies through the system more intensively to keep beef production as high as possible with fewer cattle. This does not mean that other stocker programs, e.g. owning cattle longer and putting on more weight, will not work but will require careful planning at the outset.
A Rancher’s Thursday Webinar Series from 2020 covered the basics of wheat production for grazing, supplementation, grazing practices, and managing market expectations, these videos can be found at https://extension.okstate.edu/programs/beef-extension/ranchers-thursday-lunchtime-series/cattle-on-wheat-and-small-grains.html