Feeder markets continue red hot
Widespread rains over the Memorial Day weekend may have curtailed holiday activities but were enthusiastically welcomed by cattle producers in the Southern Plains. Much of the worst drought areas in eastern New Mexico, western Texas and western Oklahoma received rainfall that was very timely for forage production. USDA’s Weekly Weather and Crop Bulletin reports that many locations across the region had five-day rain totals that equaled 50 to 90 percent of year to date rainfall totals. Rains were heavy enough in some regions to provide runoff and some replenishment of critically low stock water supplies. Some areas missed out, with limited rain totals in northwest Oklahoma, southeast Colorado and southwest Kansas.
Response to the rain was immediate with pastures greening up and forage growth starting by late last week. However, subsoil moisture is still critically low and follow-up moisture will be needed soon to sustain crop and forage growth. The recent rains are an encouraging start but there is still a long way to go for recovery in the region. Drought recovery heading into the heat of the summer is a challenging prospect at best.
Oklahoma auction totals were limited last week by the holiday weekend but feeder prices continued very strong. Four-weight, medium and large, number 1 steers were over $250/cwt and all steers up to 700 pounds brought over $200/ cwt. Prices for heifers under 600 pounds appear to be discounted slightly less than usual for this time of year, while heavier heifer prices were discounted slightly more than the seasonal average. Demand for replacement heifers may have diminished slightly in the Southern Plains in recent weeks (though demand appears strong in the Northern Plains) but there has been a noticeable increase in prices for cow/calf pairs in Oklahoma in May.
It is likely that feeder prices are near the top seasonally, though continued improvement in forage conditions could sustain more stocker demand this summer. Although feeder prices are high relative to fed prices, there is little reason to expect any significant weakness in feeder prices. Feedlots will face margin challenges with high feeder prices pushing up feedlot breakevens, despite prospects for continued moderate feed prices. However, tight feeder supplies combined with potentially expanding replacement heifer demand and stocker demand will keep feeder prices at or above record seasonal levels into the second half of the year. — Derrell S. Peel, Oklahoma State University Extension Livestock Marketing Specialist