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CME: Better Drought Conditions Cause Pasture, Wheat Improvement

CME: Better Drought Conditions Cause Pasture, Wheat Improvement

21 May 2015

US - The conclusion to draw from USDA’s first two weeks of range and pasture condition ratings appears to be “All is well”, unless you live in California or Nevada, which has big implications for the cattle herd, write Steve Meyer and Len Steiner.

In total, only 12 per cent of the nation’s range and pasture land was rated in poor or very poor condition as of last Sunday. That compares to 22 per cent one year ago and an average of 19.8 per cent for 2009-2013.   

On the good end of the ratings, 57 per cent of acres were rated in good or excellent condition compared to only 46 per cent last year and a 5-year average of 53.2 per cent from 2009-2013.  

The most important portion of that increase in pasture condition has occurred in the Southern Plains where conditions in west Texas and Oklahoma have improved dramatically this spring.  

One year ago, over 40 per cent of the acres in  Texas and Oklahoma were in poor or very poor condition. This year that share stands at 11 and 10 per cent in the first two weeks of condition ratings.   

This improvement carries major implications for the US beef sector. One year ago, 31.3 per cent of the nation’s total beef cow herd resided in states that had 40 per cent or more of their range/pasture acres rated in poor over very poor condition. This year that figure is 0.8%.  

Last year, 54.6 per cent of the cow herd was in states with 40 per cent of more of their range/pasture acres in good or excellent condition. This year that number is 86.6 per cent.   

Growing the cow herd requires two things at a minimum: Economic incentive and resource availability.  

The economic incentive part has not been a problem for some time. Both calf and feeder cattle prices climbed from high to almost absurdly high last year and remain near those record-high levels.  

Feed and hay prices have fallen over the past two years and the combination of those factors put cow-calf profits at record highs. The Livestock Marketing Information Center pegged them at $534 per cow in 2014 and estimates they will be over $470 per cow this year.   

Ranchers have responded by holding heifers. But that process started in 2012 (after heifer retention hit its lowest level since 1951 (ie. 5.135 million on January 1) in 2011.  

Many of the higher number of heifers held in 2012 and 2013, however, did not end up in the cow herd.

The Midwestern drought of 2012 and lingering dry conditions in the Southern Plains and West in 2013 pushed a good portion of those heifers intended for motherhood back into the fed cattle flow, keeping the beef cow herd on the decline through 2013. 

It bottomed out in 2014 at 29.085 million head before growing 2 per cent to 29.693 million head in this year’s January Cattle (Inventory) report.  

We fully expect a normal (or perhaps normal-plus) proportion of the 5.774 million heifers held as replacements this past January 1 (4.1 per cent more than one year earlier) to be added to the herd given these much-improved pasture conditions.   

Unless of course the heat of Hades returns this summer. There is always an “on the other hand”, right?

A few other noteworthy items from this week’s Crop Progress report are:

  • Corn planting is now completed on 85 per cent of acres, up from 75 per cent last week and an average of 75 per cent over the past 5 years.   The “I” states (Iowa, Illinois and Indiana) that are critical to total production are all ahead of their 5-year paces with producers in Iowa and Illinois more than 90 per cent planted for corn.
  • Corn has emerged on 56 per cent of acres, a figure MUCH higher than last year’s 29 per cent and the 5-year average of 40 per cent.
  • Soybean planting is complete on 45 per cent of intended acres.  That is up from 31 per cent last week and comfortably ahead of the 5-year pace of 36 per cent.  Only Kansas (-14), Missouri (-11) and Nebraska (-10) trail their 5-year paces by any significant amount.
  • Soybean emergence (13 per cent) is right on track for mid-May.
  • Winter wheat condition remains significantly better than one year ago. 48 per cent of acres were rated as good or excellent this past week compared to just 29 per cent last year. Only 19 per cent was rated as poor or very poor where those two categories held 44 per cent of acres one year ago.  This is a direct reflection of the improved drought conditions in the Southern Plains - the same ones that have helped pasture/range conditions so dramatically. 

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