2018 Winter Wheat Grazing Prospects

Oklahoma producers interested in dual-purpose or forage-only wheat for winter grazing often prefer to plant winter wheat in early to mid-September if conditions permit. For grain-only, winter wheat is typically planted mid to late October. Conditions are generally favorable for early wheat planting this year in Oklahoma. Wheat planted before the end of September can be ready for grazing by November 1 and allow for 120 days of winter grazing by early March and still permit harvesting wheat grain as a dual-purpose crop.

Stockers for winter grazing may be purchased over the next six to eight weeks. Timing of purchases will depend on expected availability of wheat pasture and the ability to receive and utilize other feed resources to hold stockers until wheat pasture is ready. Producers may be looking to buy stockers weighing from 450-600 pounds depending on a variety of factors but 475 pound steers are very commonly demanded for winter grazing. The availability of wheat pasture often coincides with seasonal low purchase prices for stockers. Typically, prices for stockers will decrease through September to seasonal lows in October. For example, 475 pound, Medium and Large, Number 1 steers in Oklahoma averaged about $170/cwt. in August and are expected to drop seasonally about 4.5 percent to October suggesting a price of roughly $162-$163/cwt. Heavier stockers over 550 pounds may drop 5.0 to 5.5 percent from August to October.

Feeder futures provide another means to estimate purchase price in October. October Feeder futures are currently around $149/cwt., showing little seasonal decline from August and September. With normal October basis for 475 steers of roughly $25/cwt., current October Feeder futures price would suggest an October cash price of $174/cwt. for 475 pound steers, roughly $10 -$12/cwt. over the projection above based on cash price seasonality. However, basis has been weaker than usual recently for lightweight feeder cattle suggesting that October prices for 475 pound steers will be lower than $174/cwt. Taken together, the cash seasonal and futures price projections suggest that the price of 475 pound steers (Medium/Large, Number 1) in Oklahoma is likely to average $163-$168/cwt. for an October low. Exceptionally good wheat pasture demand could hold prices at the upper end of the range or higher while any delays in wheat pasture development could allow prices to drop to the low end of the range or below.

Profitability of winter stockers will depend on numerous budget factors including purchase price, length of grazing period, rate of stocker gain, wheat pasture cost and, of course, selling price in late February or early March. The current March Feeder futures contract price is $145-$146/cwt. This implies an Oklahoma price for 750 pounds steers in early March of $146-$148/cwt. given an expected basis of roughly $1.50/cwt. Budget assumptions can vary widely but this appears to be a price that more than covers breakeven cost of production for winter grazing. Producers should develop and evaluate budgets which reflect their particular situation. It may be that current futures prices offer an opportunity to protect a decent margin for winter grazing programs.