Oklahoma cow-calf producers face critical decisions
Oklahoma State University's Division of Agricultural Sciences and Natural Resources is recommending that cow-calf producers plan now for the next two-to-four months, regardless of whether the producer has a spring- or fall-calving herd.
"Recent revisions to cattle data, weather conditions that can greatly affect production costs and various potential market effects underscore the importance of making sound decisions when it comes to driving a cattle operation to profit," said Derrell Peel, Oklahoma State University Cooperative Extension livestock marketing specialist.
Oklahoma beef cow numbers declined a modest 1.3 percent in 2012, down to1.754 million head. The U.S. Department of Agriculture's recent cattle report cited revisions to its previously reported 2012 numbers, which included increasing the Jan. 1, 2012 estimate of Oklahoma beef cows to 1.778 million head.
With these revisions, it now appears the loss of beef cows in 2011 was 238,000 head, a decrease of 11.8 percent from the Jan. 1, 2011 total. The latest inventory of beef replacement heifers indicated a decrease of 12.5 percent below the revised 2012 figure.
"The inventory of beef replacement heifers was 280,000 head, which represents slightly less than 16 percent of the beef cow herd," Peel said. "This is the lowest beef replacement heifer percentage in Oklahoma in more than 20 years."
Relative to the national numbers, it appears that Oklahoma managed to hold onto more beef cows in 2012 but kept fewer potential replacement heifers.
In addition, critical drought conditions continue in Oklahoma, with the entire state in D2 severe to D4 exceptional categories on the Drought Monitor, with 90 percent of the state rated as being in D3 extreme or D4 levels of drought.
As an example, Oklahoma Mesonet data for Stillwater indicates that total rainfall for the 28-month period since October 2010 is less than 31 inches of normal.
"Total rainfall received is 62 percent of normal for the period and in the last 28 months, only six months have had average or greater monthly rainfall totals," said Nathan Anderson, Payne County Extension director and agricultural educator.
Soil moisture is severely depleted across much of Oklahoma. Oklahoma entered this winter with 69 percent of pastures and ranges in poor or very poor condition.
"Total hay production in Oklahoma the last two years has been 63 percent of average, leading to December 2012 hay stocks estimates that are also 63 percent of average, the lowest state level since 1984," Peel said.
Most of Oklahoma has a Palmer Drought Index rating of minus 3.0 to minus 3.9. This indicates that three to 12 inches of rain are needed to bring the index to the more acceptable level of minus 0.5, depending on the specific location.
"For many cattle producers, lack of water is a more critical factor than feed and forage availability," Anderson said. "Dry ponds and cattle that get stuck in the mud trying to reach low water are two common problems being reported."
Some producers that have been relying on rural water districts to water livestock are being restricted to household-use only because of low water supplies in those systems. The stock water situation means that it is not merely a question of receiving rain soon but receiving the right kinds of rain to replenish water supplies.
"It will likely require two to four heavy rains in a relatively short time period to produce the amount of runoff necessary to recharge ponds," Anderson said. "A number of cattle producers are simply hoping spring arrives on time and that conditions will improve as a result."
Unfortunately, some producers will have to make decisions before then and many more will be forced to do so soon thereafter.
Peel cautions that Oklahoma can expect another significant round of cow liquidation in the April-to-June period if conditions remain largely unchanged. In short, cow-calf producers should be thinking now about potential choices relative to how and when they might best market their animals.
"As always, a producer needs to evaluate the best marketing scenario for his or her operation," Anderson said. "If a producer determines he or she needs to sell spring-calving cows that are about ready to give birth, potential options include selling now as heavy bred cows, selling right after calving as cow-calf pairs or trying to hold the cows until the calves can be early weaned."
At the current time, the market for bred cows and cow-calf pairs is relatively soft. At the same time, the slaughter cow market is improving seasonally and is likely to increase more in the next month or so.
Cull cows are currently about $85 per hundredweight with a per head value of roughly $1,050. Middle-aged bred cows are mostly bringing $1,050 to $1,200 per head. Bred cow values are relatively low compared to slaughter cow values.
"Bred cow and cow-calf pair prices likely will remain soft and may weaken a bit if drought persists and more producers are selling," Peel said. "The cull cow market is likely to hold stronger. This may make the early weaning option more attractive, with cows being sold as soon as possible after early weaning plus the opportunity to sell their calves later."
In this scenario, cows will have to be retained longer until calves can be weaned, which may require additional arrangements for water and feed for the cows until weaning, plus feed and water requirements for the calves.
Peel cautions this option will require more planning and management but may help producers avoid the worst possible outcome of selling into a weak breeding-cow market.
For producers with fall-calving herds, early weaning is easier but still means that a plan is needed for retaining the calves.
Cattle and calves represent the number one agricultural commodity produced in Oklahoma, accounting for 46 percent of total agricultural cash receipts and adding approximately $2 billion to the state economy, according to National Agricultural Statistics Service data. NASS data indicates Oklahoma is the nation's fifth-largest producer of cattle and calves, with the third-largest number of cattle operations in a state.