U.S. road trip reveals good crop and pasture conditions

Photo by John Wallace on behalf of NCBA

By Derrell S. Peel, Oklahoma State University Extension                    

For the past week I have been traveling, first for meetings, then for vacation.  However, a market analyst is never completely on vacation when there is a chance to observe agricultural conditions.  A week ago, we traveled through the Oklahoma Panhandle, where the last bit of wheat harvest was finishing.  Pastures appeared very green for that area for mid-July.  Into southeastern Colorado, wheat harvest was well underway and producers were reporting record winter wheat yields.  With excellent moisture conditions, even volunteer wheat and grow back after late grazing was producing good wheat yields.  Pasture conditions have been very good and cattle gains were excellent through winter and spring.  Like the Oklahoma Panhandle, the semi-arid region of southeastern Colorado looked very green for mid-July.

After a couple of days in Denver, we headed east on Interstate 70 where wheat harvest was not really started but the wheat looked very good.  Last week Colorado reported 33 percent of wheat harvested in the state compared to 46 percent for the five-year average.  Pasture conditions again looked very good with Colorado reporting 71 percent of pastures in good to excellent condition, up from 60 percent one year ago.  We traveled the entire length of Kansas west to east on I-70 to Kansas City.  As more corn appeared, it also looked in very good condition with the state reporting 67 percent of corn in good to excellent condition. In western Kansas, the majority of the corn is not yet or just beginning tasseling.  In eastern Kansas and across Missouri on I-70 more of the corn is tasseling and with no signs of stress on corn or soybeans.  Last week 71 percent of Missouri corn and 65 percent of soybeans were reported in good to excellent condition.

From St. Louis, we traveled across southern Illinois and Indiana on Interstate 64.  Corn conditions were very good with Illinois and Indiana reporting 76 percent and 74 percent in good to excellent condition.  While the majority of corn is tasseling, it is apparent that a significant portion of corn in this area was planted later, is 18 to 24 inches shorter, and not yet tasseling.  This later corn needs more time for pollination and is vulnerable yet for late July weather conditions.  Soybeans also look very good with the two states reporting 74 and 72 percent in good to excellent condition. A limited amount of late planted soybeans are still very small.

From Louisville we dropped into central Kentucky and then into north central Tennessee yesterday.  Pasture and crop conditions in both states appear very good, at least for the parts we have seen.  Looking at the drought monitor map, it is clear that we missed some dry areas including south central and eastern Tennessee and other parts of the southeast where Georgia, Alabama and the Carolinas are all reporting growing percentages of poor and very poor pasture conditions.  Some drier conditions exist in the northern Plains, the eastern Cornbelt and extend into the northeastern part of the country.  Parts of the West are still dry with California reporting 40 of poor to very poor pastures conditions but that is down from 50 percent this time last year.  Dry conditions have redeveloped in parts of the Pacific Northwest.

All in all, conditions are quite good in much of the country with summer well underway.  My travels this last week have revealed very good crop and pasture conditions across the middle of the country in a nearly 1200 mile line west to east from the Rocky Mountains to the Mid-South.

Marketing calves–already?

By Kelly Bruns and Erin Laborie, Nebraska Extension

Now is the time to start thinking about marketing opportunities for calves this fall. While prices are well below what was received last year at this time, considerations can be given to the seasonal aspects of feeder cattle prices and the opportunities that may exist to utilize risk management tools. Seasonal increases in feeder cattle prices have occurred in late July and early August during 10 of the past 14 years. Analyzing summer feeder cattle sales and the futures market in July will help determine the outlook of prices this fall. A run up in prices may create an opportunity to purchase Livestock Risk Protection for feeder cattle during a time when prices are seasonally higher than entering into the fall run. Additional information on utilizing LRP can be found in the NebGuide, “Livestock Risk Protection Insurance for Fed Cattle” (http://extensionpublications.unl.edu/assets/pdf/g2257.pdf).

When evaluating whether to retain or sell calves, value of gain (http://go.unl.edu/tak3) becomes an important factor. Value of gain is calculated as the difference in final and initial value of the animal, divided by the pounds of weight gain. The example below demonstrates how to calculate the value of gain of a 600-pound steer that will be grown to reach 850 pounds by the end of the backgrounding phase.

• Initial value: 600 lb steer at $1.45/lb = $870;

• Final value: 850 lb steer at $1.30/lb = $1,105;

• Difference in value: $1,105 – $870 = $235;

• Weight gain: 850 lb – 600 lb = 250 lb; and

• Value of gain: $235/250 lb = $.94/lb.

Retained ownership of calves is a cost-effective option when value of gain is greater than cost of gain. Backgrounding provides an opportunity to grow calves to heavier weights using inexpensive by-products, forages or crop residues. Calves can then be sold at a more favorable time after the surplus of newly weaned calves are sold in the fall. Average cost of gain summarized by Kansas State University Extension for Kansas Feedyards in April, averaged $81.65/cwt for 32,178 steers with an incoming weight of 789 pounds and out weight of 1,388 pounds (http://www.asi.k-state.edu/about/newsletters/focus-on-feedlots/). This compares to average cost of gain for steers in 2015 of $85.15/cwt, 2014 of $92.35/cwt and 2013 of $120.07/cwt. The higher costs of gain were driven primarily by higher corn prices which averaged $4.18, $4.70 and $6.72 per bushel for 2015, 2014 and 2013, respectively.

Cattle feeders have remained current in their marketing in the second quarter. Rather than holding on to cattle, feeders have kept pace in marketing and packers have increased slaughter resulting in slaughter weights below last year. The five-area weekly weighted average steer price has traded below the five-year average for much of the last three months. The cattle on feed report for June reported the greatest number of cattle on feed since 2011.

Developing and maintaining a marketing strategy will better assist producers in achieving production objectives and managing risk. For more information on creating a marketing plan, see “Marketing Plans for Your Livestock Operation” (http://go.unl.edu/gqqs).