How will summer drought and this fall’s corn crop affect feeder cattle?

Here’s what you can expect as we approach the fall cattle run.

Burt Rutherford, Senior Editor

August 10, 2017

3 Min Read
How will summer drought and this fall’s corn crop affect feeder cattle?

Several factors are at play that may have a significant effect on the fall feeder cattle and calf run, says Brian R. Williams, assistant Extension professor in the Department of Agricultural Economics at Mississippi State University. One is how the corn and soybean harvest will play out, given extremes in summer weather in the Midwest.

The other is drought in the Northern Plains. “Although many spring-calving producers will likely not market their calves for another month or two, we could see a few more feeder cattle than normal hit the market during August and September,” he says, writing for the Livestock Marketing Information Center.

“Much of North Dakota, South Dakota, Montana, and even a large portion of the Sandhills in Nebraska are in a severe drought or worse. I fully expect to see many producers in the drought-stricken Northern Plains begin to pull calves off of pasture and market them earlier than usual to relieve some of the stress on pastures and to cut down on the amount of hay that has to be fed.”

But, where will those cattle go? “It is a bit too early for them to be sent south to go on wheat pasture. Producers in the Corn Belt are going to be more concerned with getting their crops out of the field than taking on stocker cattle in August or September,” he says.

That really only leaves two places for them to go: back to grass further south or to the feedlot. The latest Cattle on Feed report has already shown evidence of the latter. June placements in South Dakota were up a whopping 67% from a year ago.

“While those were likely not spring-born calves, it does show signs that producers in the Northern Plains are trying to relieve some of the grazing pressure on the dry pastures. As we move forward, it is likely that northern feedlots will be looking to pick up some discounted lightweight feeder calves and grow them on cheap corn ... that is, if the corn is actually cheap.”

Cheap corn may be in the offing, in spite of indications that we will have a smaller harvest than we did a year ago, he says. The most recent Crop Progress report has the U.S. corn crop at 61% good or excellent condition compared with 66% good or excellent condition a year ago at this time.

“At this point in the season, it looks like we will fall short of the record yields that were posted a year ago and some suggest that we may even see yield fall below the trend. However, even with lower corn production than a year ago, there is still a whole lot of corn still sitting in storage,” he says.

And, while yields may fall short of the trend line yields, it won't be all that bad. “That is going to continue to pressure corn prices lower, particularly as we inch closer to harvest. December corn futures have already begun a slow downward march, trading a full 30 cents lower than the early July high.”

That may portend lower corn prices as harvest approaches. “If the weather holds out across the Corn Belt and there are no major hiccups over the course of the next month, the fundamentals suggest that corn will continue to trend lower through harvest. While lower corn prices will be a disappointment for U.S. crop producers, it could provide a much-needed boost to the cattle industry,” he says.

“Lower corn prices could help to boost feedlot demand for lighter weight cattle at a time when we will likely see larger supplies of those same cattle. That could help to add some support for feeder cattle prices just as many producers are looking to unload.” 

About the Author(s)

Burt Rutherford

Senior Editor, BEEF Magazine

Burt Rutherford is director of content and senior editor of BEEF. He has nearly 40 years’ experience communicating about the beef industry. A Colorado native and graduate of Colorado State University with a degree in agricultural journalism, he now works from his home base in Colorado. He worked as communications director for the North American Limousin Foundation and editor of the Western Livestock Journal before spending 21 years as communications director for the Texas Cattle Feeders Association. He works to keep BEEF readers informed of trends and production practices to bolster the bottom line.

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