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Cow Culling Picks Up Seasonally

published: June 4th 2018
by: Charley Martinez
source: Texas A&M AgriLife Extension

 

 

Cow culling tends to pick up this time of the year and this year is no exception.  But, a growing drought in the Southern Plains, an expanding beef cow herd, and low milk prices are making the seasonal culling uptick a little more interesting. 

 

More Cows to Market

Through the first 19 weeks of 2018, cow slaughter is up from 1,525,000 in 2017 over the same period to 2,265,000 head.  At first glance, this could mean that we are contracting the national herd after several years of expansion, but in the great words of Lee Corso (for you college football fans), “Not so fast, my friend”.  Total cow slaughter is made up of dairy cows and beef cows.  Beef cow slaughter is up from 968,000 in 2017 to 1,073,000 in 2018 during the first 19 weeks of the year. That is the highest beef cow slaughter for the first 19 weeks of a year since 2013. As a percent of the beef cow herd, slaughter is slightly above the 2017 pace at 3.1%.   

 

A severe drought has been developing in the Southern Plains since the Fall.  It’s likely that by late April, some ranchers had to begin making some herd decisions.  Cow slaughter has increased in the region, but it does not appear to be enough to indicate widespread culling due to the drought.  Although, cow slaughter in the region is at it’s highest level since 2013.    

 

The Pacific Northwest has experienced a sharp increase in cow slaughter, but that is due to the opening of the Ida-Beef packing facility in Burley, Idaho.  The region is producing its highest beef cow slaughter numbers since the mid 1980s.

 

Dairy cow slaughter tends to surge early in the year then slack off in late Spring-early Summer.  Dairy cow culling was above a year ago early, but has slowed in recent weeks.  Milk prices have been disastrously low for many producers, to the point of forcing some producers out of business.  Large domestic and worldwide supplies have pressured prices lower.  But, prices have not been low enough to force more widespread culling of the dairy herd. 

 

On the price side of the slaughter cow market, prices are lower than in 2017, largely due to the increased supply in the market.  Cow prices made a nice early Spring rally along with the fed cattle market, but that has faded as supplies have climbed.  The new plant in the Northwest has provided some support for prices regionally.  Large supplies are likely to keep prices below a year ago for the remainder of 2018.

 

Most of U.S. beef imports are trimmings for ground beef.  Beef imports directly effect cow prices because most cow beef is also headed for the ground beef market.  Beef imports have remained close to year ago levels so far this year and that is likely contributing to lower cow prices.

 

A Few Implications

At this rate, the national beef cow herd is likely still expanding rather than contracting.  But, it seems clear that the rate of expansion has slowed dramatically.  The other contributor to herd size, heifer retention, is a good topic for later discussion.  It is worth remembering that a larger cow herd does result in more cows sent to slaughter, in absolute numbers.

 

A Little on the Cattle on Feed Report

USDA’s latest Cattle on Feed report indicated the second consecutive month of placements lower than last year.  Combined with higher marketings resulted in the number of cattle on feed up about 5 percent over May 1, 2017.  Early expectations are for continued lower placements over the next couple of months.  Smaller growth in the number of cattle on feed could provide the opportunity for a Fall price rally, just in time to help calf prices. 


Editors Note: Charley Martinez currently is a PhD student in the Agricultural Economics Department at Texas A&M University. Under the direction of Dr. John Park and Dr. David Anderson, his research interests revolve around the livestock industry. Charley, along with his wife, Vanessa and their son, Henry, reside in Bryan, Texas.

 

 

 

 

 

 

 

 

 

 

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