Nov. 14 (Bloomberg) -- The worst crop conditions for U.S. winter wheat in at least 27 years are compounding feed costs for cattle producers in the Great Plains already reeling from a drought that sent corn prices to a record in August.
A dry spell that moved from the Midwest into the Plains states of Kansas and Oklahoma has left 36 percent of winter-wheat fields in good or excellent condition as of Nov. 11, compared with 50 percent on average the previous five years, the U.S. Department of Agriculture said yesterday. That’s the lowest rating since the government began tracking the data in 1985 and will reduce the amount of land available for cattle to graze on during the winter months.
The Midwest drought was the worst since 1956, cutting corn output by 13 percent and forcing cattle ranchers to shrink the U.S. herd to a 39-year low, government data show. In Kansas, the biggest grower of winter wheat, there has been little or no rain for a month to nourish newly planted crops that go dormant until about March and are harvested in June. Wheat futures in Chicago are up 33 percent this year, more than any of the 23 other commodities in the Standard & Poor’s GSCI Spot Index.
“We haven’t bought any cattle this year,” said Keith Kisling, 65, who normally has 1,500 animals grazing his wheat fields near Burlington, Oklahoma. “It’s drier than I can ever remember and I’ve been farming for 40 years. A lot of wheat hasn’t emerged yet, and some are up but they’re spotty because they didn’t get any rain. It’s gotten progressively worse.”
Cattle often graze on dormant wheat leaves before snow covers the crop. Once plants resume their growth and leaves start to regenerate, ranchers send livestock into the fields to feed again before the animals are sent to feedlots to be fattened on corn. When wheat yields are expected to be low, as they are this year, ranchers don’t let cattle into the fields, Kisling said.
The 44 percent jump in corn prices since mid-June has been the primary cause of rising costs for beef and dairy farmers, who held 97.8 million head of cattle on July 1, down 2.2 percent from a year earlier, the USDA said on July 20 in a semi-annual report. That’s the smallest since at least 1973, when the USDA complemented an annual tally of the domestic herd with mid-year statistics.
Wheat futures on the Kansas City Board of Trade advanced 40 percent since mid-June to $9.0475 a bushel, while wheat on the Chicago Board of Trade gained 38 percent to $8.6575 a bushel.
Farmers in Kansas probably will see a drop in yields below last year’s mark of 43 bushels an acre without rain, Darrell Holaday, the president of Advanced Market Concepts in Wamego, Kansas, said by telephone. Even plants that already have emerged from the ground are at risk, he said.
“If the wheat has emerged, it’s not good for it to get too dry,” Holaday said. “Wheat that hasn’t come up isn’t going to do very good. Even if it comes up under the snow, it’s going to cut yield potential. The second concern is the grazing area because it’s going to increase feed needs.”
Dry soil has created scenes reminiscent of the 1930s Dust Bowl era, closing roads last month and blowing away much-needed seed that hadn’t yet established roots, said Mark Hodges, the president of Plains Grains Inc. in Stillwater, Oklahoma, said by telephone.
The wind storms that caused blowing dust in southern Kansas and northern Oklahoma will increase costs for farmers who have to put more seed in the ground, and hot weather that’s sapped what little moisture was in the ground may prevent recently sown plants from growing at all, Hodges said. Ranchers also will have to buy grain for feed or cut back on their herds, he said.
“The dust storm we had in Oklahoma a couple weeks ago, some of that seed got blown out and we had to replant,” Hodges said. “And we’ve had such high temperatures. We have no moisture or limited moisture. What little soil moisture we had in the subsoil, those high temperatures will pull that out.”
There’s still time for snow or rain to revive crops and boost yields, said Jim Shroyer, an agronomist at Kansas State University in Manhattan. Stands, a measure of plants in a certain area, are thin in the state’s western and south-central counties, he said. Some growers may need to plant additional seed to ensure a higher plant population, he said.
“I don’t think there’s an area in the state that couldn’t use some good rain,” Shroyer said. “I wouldn’t call the stands uniformly thick at this point. You have some good stands and some so-so stands. It’s all over the board at this point. We’ve had situations where the winds blew the wheat seeds out of the ground.”
Kisling, the Oklahoma farmer who lives about eight miles south of the Kansas border, said the lack of cattle on his farm and lower wheat yields will cut into his income this year. To recoup some of his costs, he is selling feed stockpiles he’d normally give to his animals.
“I offered to sell all of my hay because I’m not going to use it,” Kisling said. “Usually wheat doesn’t make a lot of money, but the cattle makes some. The wheat price has been pretty good, but if you don’t have the yields, then you don’t have any income. We’re looking at a pretty short year.”
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