DROUGHT Market and Management Considerations

Derrell S. PeelLivestock Marketing

Specialist

BOXED BEEF CUTOUT VALUEChoice 600-900 Lbs. Carcass, Weekly

135

145

155

165

175

185

195

JAN APR JUL OCT

$ Per Cwt.

Avg.2005-09

2010

2011

C-P-6204/25/11Livestock Marketing Information Center

Data Source: USDA-AMS

SLAUGHTER STEER PRICESSouthern Plains, Weekly

80

85

90

95

100

105

110

115

120

125

JAN APR JUL OCT

$ Per Cwt.

Avg.2005-09

2010

2011

C-P-5204/25/11Livestock Marketing Information Center

Data Source: USDA-AMS

MED. & LRG. #1 FEEDER STEER PRICES700-800 Pounds, Southern Plains, Weekly

9095

100

105110115120125

130135140

JAN APR JUL OCT

$ Per Cwt.

Avg.2005-09

2010

2011

C-P-4904/25/11Livestock Marketing Information Center

Data Source: USDA-AMS, Compiled & Analysis by LMIC

MED. & LRG. #1 STEER CALF PRICES400-500 Pounds, Southern Plains, Weekly

115

125

135

145

155

165

175

JAN APR JUL OCT

$ Per Cwt.

Avg.2005-09

2010

2011

C-P-49A04/25/11Livestock Marketing Information Center

Data Source: USDA-AMS, Compiled & Analysis by LMIC

SLAUGHTER COW PRICESSouthern Plains, 85-90% Lean, Weekly

40

45

50

55

60

65

70

75

80

85

JAN APR JUL OCT

$ Per Cwt.

Avg.2005-09

2010

2011

C-P-3504/25/11Livestock Marketing Information Center

Data Source: USDA-AMS

Market Impacts

• Limited…so far– Reduced summer stocker demand– Changed market timing of winter grazing– Cow market impacts just beginning

• In the next few weeks– More impacts on regional cow markets

• Long term – Pre-empt herd expansion and extend high prices

Spring Droughts are Tricky

• Risk of acting too soon– Rapid improvement is possible

• Risk of delaying actions– Loss of market value– Increased expenses– Production impacts

• Maximum cattle production and nutritional needs

Worst Drought Management Plan

Hold on

…to everything

…at all cost.

Drought Management Plan

• Start with worst case and work backwards to current situation.– Identify decision trigger points

• What has to be done• When decision must be made

Drought Management Plan

• Total Destocking– Lack of water – Total lack of forage production/infeasible to

purchase feed• Too late for rain to help

– Relocation of animals possible but difficult• Maintain Core Breeding Herd

– Young, dry, bred cows (7 years and less)– Reduce forage requirements

Reducing Forage Requirements

• Early weaning– Reduce forage and water requirements– Rebreeding – What to do with early weaned calves?

• Culling – Open cows/replacement heifers– Old cows, unsound (slaughter)– Older cows, physically sound (solo or maybe as pairs)– Cows over 7 years of age

Timing of Decisions from Late April• 2-4 Weeks

– Early weaning• Cows in early lactation will drop body condition rapidly and may not

rebreed– Cull open/old cows– Cull older cows if sold as pairs

• 1-2 months– Cull older cows

• With water, may be able to hold core herd for 3-4 months • Late Summer

– Total destocking or minimal core herd to winter

Post-Drought Plan

• Replacement females will be scarce and expensive

• Pastures need time for recovery– Depends on timing of end of drought

• Stocker production feasible while rebuilding breeding herd

ANNUAL AVERAGE CATTLE PRICESSouthern Plains

5565

758595

105

115125135

145155

1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011

$ Per Cwt

500-600lbSteerCalves

700-800lbFeederSteers

FedSteers

C-P-0604/22/11Livestock Marketing Information Center

Data Source: USDA-AMS, Compiled & Analysis by LMIC

Drought Resources

• DASNR drought web page– http://agwater.okstate.edu/research-extension/dr

ought/drought.

– Financial planning (IFMAPS)– Tax Implications– Pasture and feed management– Nutritional management

• Government Programs (including CRP use)– http://www.agecon.okstate.edu/agpolicy/news.as

p

THANK YOU!