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CME: Winter Wheat Graze Out Offers Opportunities to Improve Margins

05 October 2016

US - The USDA-NASS publishes pasture and range condition updates in their weekly Crop Progress reports on Mondays from the beginning of May through the end of August, according to the latest Daily Livestock Report published by Steiner Consulting Group.

These reports show estimates of the percentage of a state’s pasture and range acres that is ranked as either “very poor”, “poor”, “fair”, “good”, or “excellent”. These values are used to gauge the ability of livestock producers to graze their animals during the summer, as well as give analysts insight as to growing conditions for hay over the summer.

The graphs show the US’s per cent of pasture acres rated as “very poor” and “poor” for the current season, and compared to past years. The US as a whole had a decently mild summer and there were some favourable pasture and range grazing conditions out in the country.

By region, the western region was the only area with consistently better pasture conditions than last year.

Although California is still dealing with severe drought, moisture conditions improved in the state this year compared to 2015.

The Great Plains, Southern Plains, Cornbelt, and Southeast regions all showed conditions that were fairly similar to last year, although those four regions were slightly drier than a year ago from July into August. The Southern region and Cornbelt region all currently show improved conditions from this time last year.

The Great Plains and Southeast regions are both currently slightly drier than they were a year ago.

The Northeast region is the only area that has experienced severely drier conditions all season compared to last year and its past five year average.

With generally favourable pasture and range conditions throughout most of the US, livestock producers did not have to use large supplies of hay this summer (similar to last summer), even though ample supplies of hay are currently available.

With large domestic and international supplies of wheat, prices have been quite depressed. This would suggest winter wheat acres planted this year will remain depressed. However, winter wheat planting conditions have been favourable this year.

The Crop Progress report showed aggressive wheat planting progress in Oklahoma specifically, compared to the past five year average, for the last few weeks and anecdotal reports indicate stands are lush already.

We mention Oklahoma specifically as it is the state where grazing cattle on winter wheat is a common production practice. This production practice is also common in parts of Texas.

We believe that this aggressive winter wheat planting indicates more winter wheat grazing than normal but also much more winter wheat graze out than normal due to the price levels of wheat and feeder cattle.

The key difference here, for an educational moment, is winter grazing versus winter wheat graze out. Winter wheat grazing is common, but cattle will be pulled off wheat pastures before the plants show the first hollow stem. This allows the crop to continue growing so it is ready for grain harvest later in the year.

Winter wheat graze out will have the cattle on the pasture past the first hollow stem, meaning the field will not be harvested for grain and will allow for a longer grazing season.

Calf and yearling prices have been trending down all year, but some of the best opportunities to make margins could be in stocker operations using winter wheat graze out rather than using the wheat for grain harvest.

TheCattleSite News Desk

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