By Derrell S. Peel, Oklahoma State University Extension Livestock Marketing Specialist
USDA's August Cattle on Feed report showed larger than expected July placements, at 113% of last year. July marketings were 95% of one year ago, on par with pre-report expectations. The August 1 on-feed total was 98% of last year, higher than expected based on the large placements.
The report may cause some bearish views but should be interpreted in the context of last month's low placements. June and July placements taken together are up 2.5% over the previous year in the same two months. Much of the increase in placements was in lighter weight feeders, indicative of two factors; feedlot costs of gain have decreased with cheaper corn, which makes lighter weight feedlot placements more feasible; and the relatively tight supply of feeder cattle.
Much of Oklahoma has received substantial rain in the past two weeks. This means that conditions for early planting of wheat for fall forage are quite good. Moreover, wheat market conditions and input costs are very different than this time last year, and it appears that there will be much more interest in wheat pasture grazing this year compared to last.
Budgets for winter stocker grazing suggest some potential for decent return to cattle and wheat pasture. There is plenty of risk on all sides, including the purchase price of stockers, the selling price of feeders next spring and the cost of wheat pasture.
Producers interested in grazing should begin looking for opportunities to lock in the margin on both the purchase side and the selling side. There is potential for some counterseasonal strength in stocker prices this fall given the possible demand for stockers relative to the tight supplies of available feeder cattle.