Cull Cow Prices Could Find Seasonal Support

Seasonal tightening of cull beef cow supplies are expected to have prices following closely to a normal increase going into 2019, but for now, prices are struggling to find a bottom, said Oklahoma State University Extension Livestock Marketing Specialist, Derrell Peel in a letter to Extension agents.

The cull cow market may have reached a seasonal low in November but it has been difficult to understand this market this year, Peel said.  Prices for breaker cows in Oklahoma City averaged $50.13 per cwt in November, nearly 11% lower than a year earlier, while Boning cows averaged $47.88, more than 16% lower than one year ago.

Cull cow prices have been counter-seasonally lower from May through October and have averaged 13% to 15% lower for the last seven months.




Cull cow prices typically begin a slight recovery in December following the November seasonal low, he said.  Cull prices average a much stronger seasonal increase after Jan. 1, increasing 6.7% in January from the November low, with February up 16.2%, March up 18.75%, April up 19.6% and May up 21.1%.

From current levels, this would suggest breaking cow prices of $53.47 per cwt in January, $58.26 in February, $59.53 in March, $59.94 by April and $60.85 by May.

The question is whether the normal seasonal price increase can be expected given how weak the cull cow market has been since May of this year, Peel said.

One of the big factors contributing to weak cull cow prices has been weak cow boxed beef prices in the second half of 2018.  In the last week of November, cow boxed beef prices were 7.8% lower than year-earlier levels and have averaged 8.3% lower year over year since mid-year.




Increased supplies of cow beef doubtless are part of the cause for lower cow beef (and cull cow) prices, he said.  Total cow slaughter is projected to be up 7.2% in 2018, with a projected 9.6% year-over-year increase in beef cow slaughter and 4.9% increase in dairy cow slaughter.

That is higher than the 2017 annual increase of 6.3% in total cow slaughter, which in 2019 is forecast to be flat to slightly lower than 2018 and should reduce the supply pressure a bit following three years of increasing slaughter, Peel said.

Beef imports, the bulk of which are processing beef that compete with cow beef, have been flat in 2018 and are forecast to decrease 3% to 5% in 2019.

Beef demand has been strong this year, but cow-beef demand is more uncertain as it faces competition from large pork and poultry supplies, he said.




At the Fed Cattle Exchange video auction Wednesday, 219 head of fed cattle sold at an average $117.83 per cwt, up from $116.75 the previous Wednesday.

Cash cattle traded last week late at mostly $118 up to $118.50 per cwt on a live basis, up $1 to $2 from the bulk of the previous week’s action.  On a dressed basis, cattle traded at mostly $183 up to $183.50 per cwt, up $3 to $3.50.

The USDA choice cutout Wednesday was down $0.60 per cwt at $213.26, while select was down $0.65 at $196.86.  The choice/select spread widened to $16.40 from $16.35 with 114 loads of fabricated product sold into the spot market.

The CME Feeder Cattle index for the seven days ended Tuesday, was $146.39 per cwt, down $0.33.  This compares with Wednesday’s Jan settlement of $145.47, up $1.07.