STILLWATER — Oklahoma's drought in 2010-11 continues to affect numerous agricultural markets.
But to look at one in particular, Oklahoma State University Extension Livestock Market Economist Derrell Peel recently talked about its effects specifically on beef production and prices.
Q: What are some of the impacts you are seeing now in the cattle industry related to the drought?
A: We have seen record high prices this spring for all classes of cattle and for boxed beef. Even higher prices are expected later with the highest prices likely to occur in 2013 or perhaps even in 2014. We are at the moment still marketing cattle from feedlots that were placed last summer as a result of drought liquidation. Feedlot inventories are expected to decrease later in 2012 as smaller placements will follow current inventories.
Q: How long do you think we'll be seeing impacts from the 2011-12 drought and please explain?
A: Partly alluded to in the previous question. The small cattle inventory will support strong cattle prices through 2014 and likely longer. With small feeder supplies already supporting prices, higher prices are likely in 2013-2014 as the industry makes a more concerted effort to retain heifers and rebuild the cow herd.
Q: Are consumers seeing an impact in “retail beef prices”? If not, will they, possibly when, and how long do you think that will possibly go on?
A: Retail beef prices increased roughly 9 percent in 2011 even though beef production did not begin to drop until the fourth quarter. Retail prices will be under pressure to increase for the next two to three years minimum with anticipated decreases in beef production in 2012 and 2013 at least. The question of how high and how fast retail prices will increase is the biggest unknown in cattle and beef markets at this time. High gas prices, macroeconomic uncertainty in the U.S. and global markets seem to be limiting demand this spring.
Q: Any thoughts regarding wheat and graze out, or having pulled cattle off to harvest for grain? Any possible trends in that regard this year?
A: Though overall numbers of cattle grazing wheat was lower last winter, a significant number of those cattle grazed out wheat. Since the weather has been warmer than usual, many of the cattle on graze out wheat have already been marketed. In many cases the wheat performed so well with nearly ideal conditions this spring that there were not enough cattle to graze out all the wheat and the remainder has been baled for hay.